Blueprint
 
 

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________________________
 
FORM 10-Q/A
(Amendment No. 1)
 
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
for the quarterly period ended June 30, 2017
or
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
for the transition period from ___________________ to _________________
 
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)
 
(I.R.S. 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)
 
Indicate by check mark whether the registrant (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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒    No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
☐ (Do not check if a smaller reporting company)
Smaller reporting company
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
 
Number of shares outstanding of Common Stock, $.01 par value, as of August 3, 2017 was 11,834,615.
 

 
 
 
 
EXPLANATORY NOTE
 
We filed our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 with the Securities and Exchange Commission (“SEC”) on August 4, 2017 (the “Original Filing”). We are filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) for the sole purpose of including a corrected Exhibit 32 certification in order to correct an inadvertent reference to a prior quarterly period.
 
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, and guidance provided by the staff of the SEC, this amendment contains the complete text of the Original Filing. We have not modified or updated other disclosures presented in the Original Filing. This Amendment does not amend, update or change the financial statements or any other disclosures in the Original Filing and does not reflect events occurring after the filing of the Original Filing. This Amendment should be read in conjunction with our other filings with the SEC subsequent to the filing of the Original Filing.
 
 
 
 
 
Insignia Systems, Inc.
 
TABLE OF CONTENTS
 
 
PART I.
FINANCIAL INFORMATION
Page
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
Condensed Balance Sheets – June 30, 2017 (unaudited) and December 31, 2016
1
 
 
 
 
Statements of Operations and Comprehensive Loss – Three and six months ended June 30, 2017 and 2016 (unaudited)
2
 
 
 
 
Statements of Cash Flows – Six months ended June 30, 2017 and 2016 (unaudited)
3
 
 
 
 
Notes to Financial Statements – June 30, 2017 (unaudited)
4
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results
8
 
of Operations
 
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
13
 
 
 
Item 4.
Controls and Procedures
13
 
 
 
 
 
 
PART II.
OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
14
 
 
 
Item 1A.
Risk Factors
14
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
14
 
 
 
Item 3.
Defaults upon Senior Securities
14
 
 
 
Item 4.
Mine Safety Disclosures
14
 
 
 
Item 5.
Other Information
14
 
 
 
Item 6.
Exhibits
15
 
i
 
PART I.               FINANCIAL INFORMATION
Item 1.                 Financial Statements
 
 
Insignia Systems, Inc.
 
 
CONDENSED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
June 30,
 
 
December 31,
 
 
 
2017
 
 
2016
 
 
 
(Unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash and cash equivalents
 $3,200,000 
 $12,267,000 
Accounts receivable, net
  9,839,000 
  9,879,000 
Inventories
  345,000 
  325,000 
Income tax receivable
  424,000 
  775,000 
Prepaid expenses and other
  607,000 
  689,000 
Total Current Assets
  14,415,000 
  23,935,000 
 
    
    
Other Assets:
    
    
Property and equipment, net
  2,706,000 
  2,430,000 
Other, net
  1,631,000 
  1,863,000 
 
    
    
Total Assets
 $18,752,000 
 $28,228,000 
 
    
    
LIABILITIES AND SHAREHOLDERS' EQUITY
    
    
Current Liabilities:
    
    
Accounts payable:
    
    
Cash dividend declared ($0.70 per share)
 $ 
 $8,233,000 
Other
  2,375,000 
  2,530,000 
Accrued liabilities:
    
    
  Compensation
  766,000 
  762,000 
  Other
  450,000 
  498,000 
Deferred revenue
  696,000 
  62,000 
Total Current Liabilities
  4,287,000 
  12,085,000 
 
    
    
Long-Term Liabilities:
    
    
Deferred tax liabilities
   
  205,000 
Accrued income taxes
  568,000 
  554,000 
Deferred rent
  247,000 
  275,000 
Total Long-Term Liabilities
  815,000 
  1,034,000 
 
    
    
Commitments and Contingencies
   
   
 
    
    
Shareholders' Equity:
    
    
Common stock, par value $.01:
    
    
Authorized shares - 40,000,000
    
    
Issued shares - 11,943,000 at June 30, 2017 and 11,866,000 at December 31, 2016
    
    
Outstanding shares - 11,746,000 at June 30, 2017 and 11,661,000 at December 31, 2016
  117,000 
  117,000 
Additional paid-in capital
  15,258,000 
  14,992,000 
Accumulated deficit
  ( 1,725,000)
   
Total Shareholders' Equity
  13,650,000 
  15,109,000 
 
    
    
Total Liabilities and Shareholders' Equity
 $18,752,000 
 $28,228,000 
 
    
    
See accompanying notes to financial statements.
 
 
1
 
 
Insignia Systems, Inc.
 
 
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
  Six Months Ended      
 
 
 
June 30
 
 
  June 30      
 
 
 
2017
 
 
2016
 
 
  2017      
 
 
2016
 
Services revenues
 $5,512,000 
 $6,163,000 
 $9,816,000 
 $11,780,000 
Products revenues
  337,000 
  454,000 
  800,000 
  915,000 
Total Net Sales
  5,849,000 
  6,617,000 
  10,616,000 
  12,695,000 
 
    
    
    
    
Cost of services
  4,105,000 
  4,199,000 
  7,924,000 
  7,982,000 
Cost of goods sold
  246,000 
  302,000 
  565,000 
  630,000 
Total Cost of Sales
  4,351,000 
  4,501,000 
  8,489,000 
  8,612,000 
Gross Profit
  1,498,000 
  2,116,000 
  2,127,000 
  4,083,000 
 
    
    
    
    
Operating Expenses:
    
    
    
    
Selling
  831,000 
  1,036,000 
  1,719,000 
  2,144,000 
Marketing
  427,000 
  257,000 
  853,000 
  527,000 
General and administrative
  814,000 
  1,110,000 
  1,867,000 
  2,270,000 
Total Operating Expenses
  2,072,000 
  2,403,000 
  4,439,000 
  4,941,000 
Operating Loss
  ( 574,000)
  ( 287,000)
  ( 2,312,000)
  ( 858,000)
 
    
    
    
    
Other income
  2,000 
  15,000 
  5,000 
  32,000 
Loss Before Taxes
  ( 572,000)
  ( 272,000)
  ( 2,307,000)
  ( 826,000)
 
    
    
    
    
Income tax benefit
  ( 38,000)
  ( 185,000)
  ( 582,000)
  ( 417,000)
Net Loss
 $( 534,000)
 $( 87,000)
 $( 1,725,000)
 $( 409,000)
 
    
    
    
    
Other comprehensive loss, net of tax:
    
    
    
    
Unrealized gain on available for sale securities
   
  2,000 
   
  11,000 
Comprehensive Loss
 $( 534,000)
 $( 85,000)
 $( 1,725,000)
 $( 398,000)
 
    
    
    
    
Net loss per share:
    
    
 
    
Basic
 $( 0.05)
 $( 0.01)
 $( 0.15)
 $( 0.04)
Diluted
 $( 0.05)
 $( 0.01)
 $( 0.15)
 $( 0.04)
 
    
    
    
    
Shares used in calculation of net
loss per share:
    
    
    
    
Basic
  11,674,000 
  11,612,000 
  11,667,000 
  11,618,000 
Diluted
  11,674,000 
  11,612,000 
  11,667,000 
  11,618,000 
 
    
    
    
    
 
See accompanying notes to financial statements.
 
    
    
 
 
2
 
 
Insignia Systems, Inc.
 
 
STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
Six Months Ended June 30
 
2017
 
 
2016
 
Operating Activities:
 
 
 
 
 
 
Net loss
 $( 1,725,000)
 $( 409,000)
Adjustments to reconcile net loss to
  net cash used in operating activities:
    
    
Depreciation and amortization
  665,000 
  785,000 
Changes in allowance for doubtful accounts
  26,000 
  19,000 
Deferred income tax expense
  ( 205,000)
   
Stock-based compensation expense
  274,000 
  108,000 
Changes in operating assets and liabilities:
    
    
Accounts receivable
  14,000 
  1,589,000 
Inventories
  ( 20,000)
  ( 179,000)
Income tax receivable
  351,000 
  ( 464,000)
Prepaid expenses and other
  82,000 
  ( 36,000)
Accounts payable
  ( 276,000)
  ( 973,000)
Accrued liabilities
  ( 72,000)
  ( 947,000)
Income tax payable
  14,000 
  ( 184,000)
Deferred revenue
  634,000 
  232,000 
Net cash used in operating activities
  ( 238,000)
  ( 459,000)
 
    
    
Investing Activities:
    
    
Purchases of property and equipment
  ( 644,000)
  ( 393,000)
Proceeds from sale or maturity of investments
   
  3,288,000 
Net cash provided by (used in) investing activities
  ( 644,000)
  2,895,000 
 
    
    
Financing Activities:
    
    
Cash dividends paid ($0.70 per share)
  ( 8,177,000)
   
Proceeds from issuance of common stock, net
  ( 8,000)
  60,000 
Repurchase of common stock, net
   
  ( 247,000)
Net cash used in financing activities
  ( 8,185,000)
  ( 187,000)
 
    
    
Increase (decrease) in cash and cash equivalents
  ( 9,067,000)
  2,249,000 
 
    
    
Cash and cash equivalents at beginning of period
  12,267,000 
  8,523,000 
Cash and cash equivalents at end of period
 $3,200,000 
 $10,772,000 
 
    
    
Supplemental disclosures for cash flow information:
    
    
Cash paid during the period for income taxes
 $2,000 
 $238,000 
 
    
    
Non-cash investing and financing activities:
    
    
Purchases of property and equipment included in accounts payable
 $65,000 
 $ 
 
    
    
See accompanying notes to financial statements.
    
    
 
 
3
 
 
 
Insignia Systems, Inc.
Notes To Financial Statements
(Unaudited)
 
 
1.          
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®) in-store marketing program, thermal sign card supplies for the Company’s Impulse Retail System, and laser printable cardstock and label supplies.
 
Basis of Presentation. Financial statements for the interim periods included herein are unaudited; however, they contain all adjustments, including normal recurring accruals, which in the opinion of management, are necessary to present fairly the financial position of the Company at June 30, 2017, its results of operations for the three and six months ended June 30, 2017 and 2016, and its cash flows for the six months ended June 30, 2017 and 2016. Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
The financial statements do not include certain footnote disclosures and financial information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America and, therefore, should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.
 
The Summary of Significant Accounting Policies in the Company’s 2016 Annual Report on Form 10-K describes the Company’s accounting policies.
 
Inventories. Inventories are primarily comprised of sign cards and roll stock. Inventory is valued at the lower of cost or market using the first-in, first-out (FIFO) method, and consisted of the following as of the dates indicated:
 
 
 
June 30,
 
December 31,
 
 
2017
 
 
2016
 
Raw materials
 $79,000 
 $123,000 
Work-in-process
  24,000 
  27,000 
Finished goods
  242,000 
  175,000 
 
 $345,000 
 $325,000 
 
 
 
 
 
4
 
 
Property and Equipment. Property and equipment consisted of the following as of the dates indicated:
 
 
 
June 30,
 
 
December 31,
 
 
 
2017
 
 
2016
 
Property and Equipment:
 
 
 
 
 
 
Production tooling, machinery and equipment
 $4,000,000 
 $4,000,000 
Office furniture and fixtures
  322,000 
  322,000 
Computer equipment and software
  1,316,000 
  1,301,000 
Leasehold improvements
  577,000 
  577,000 
Construction in-progress
  1,177,000 
  523,000 
 
  7,392,000 
  6,723,000 
Accumulated depreciation and amortization
  ( 4,686,000)
  ( 4,293,000)
Net Property and Equipment
 $2,706,000 
 $2,430,000 
 
Depreciation expense was approximately $214,000 and $433,000 in the three and six months ended June 30, 2017, respectively, and $196,000 and $390,000 in the three and six months ended June 30, 2016, respectively.
 
Stock-Based Compensation. The Company measures and recognizes compensation expense for all stock-based awards at fair value using the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The Company recognizes stock-based compensation expense on a graded-attribution method over the requisite service period of the award.
 
In November 2016, our Board of Directors amended the 2003 Incentive Stock Option Plan (the “2003 Plan”) and the 2013 Omnibus Stock and Incentive Plan (the “2013 Plan”) to permit equitable adjustments to outstanding awards in the event of a special dividend. In March 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 up to 150,476 additional shares. Total stock-based compensation expense for the modifications was approximately $79,000, of which $78,000 was recorded during the six months ended June 30, 2017.
 
During the six months ended June 30, 2017, no other stock option awards were granted by the Company beyond the modification discussed above. During the six months ended June 30, 2016, the Company issued options to purchase an aggregate of 20,000 shares of common stock under its 2013 Omnibus Stock and Incentive Plan, as amended, with a weighted average exercise price of $2.90. The Company estimated the fair value of these awards using the following weighted average assumptions: expected life of 2.5 years, expected volatility of 41%, dividend yield of 0% and risk-free interest rate of 1.00%. 
 
During the six months ended June 30, 2017, the Company issued 8,424 restricted stock units under the 2013 Plan. The shares underlying the awards were assigned a value of $1.51 per share, which was the closing price of our common stock on the date of grant, and are scheduled to vest over a weighted average of 1.5 years following the date of grant. During the six months ended June 30, 2016, the Company issued 100,000 shares of restricted stock under the 2013 Plan. The shares underlying the awards were assigned a value of $2.33 per share, based on the stock price on the date of the grant, and are scheduled to vest over five years.
 
The Company estimated the fair value of stock-based awards granted during the six months ended June 30, 2017, under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 years, expected volatility of 51%, dividend yield of 0% and risk-free interest rate of 0.89%.
 
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 six months ended June 30, 2017. During May and June 2016, members of the Board of Directors received grants totaling 54,036 fully vested shares of common stock pursuant to the 2013 Plan. The shares were assigned a weighted average value of $2.19 per share, based on the stock prices on the applicable grant dates, for a total value of $119,000, of which $109,000 is included in stock-based compensation expense for the six months ended June 30, 2016 and $10,000 was accrued for and expensed in 2015.
 
 
5
 
 
Total stock-based compensation expense recorded for the three and six months ended June 30, 2017 was $127,000 and $274,000, respectively, and for the three and six months ended June 30, 2016 was $82,000 and $108,000, respectively.
 
During the three and six months ended June 30, 2017, there were no options exercised. During each of the three and six months ended June 30, 2016, there were approximately 61,000 shares issued pursuant to stock option exercises, for which the Company received proceeds of $16,000. A portion of the stock option exercises in the three and six months ended June 30, 2016 were completed on a cashless basis.
 
Net Loss per Share. Basic net loss per share is computed by dividing net loss by the weighted average shares outstanding and excludes any potential dilutive effects of stock options and restricted stock units and awards. Diluted net loss per share gives effect to all diluted potential common shares outstanding during the period.
 
Due to the net loss incurred during the three and six months ended June 30, 2017 and 2016, all stock awards were anti-dilutive for both periods.
 
Weighted average common shares outstanding for the three and six months ended June 30, 2017 and 2016 were as follows:
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30
 
 
June 30
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Denominator for basic net loss per share - weighted average shares
  11,674,000 
  11,612,000 
  11,667,000 
  11,618,000 
Effect of dilutive securities:
    
    
    
    
Stock options and restricted stock units
   
   
   
   
Denominator for diluted net loss per share - weighted average shares
  11,674,000 
  11,612,000 
  11,667,000 
  11,618,000 
 
Dividends. 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 of $8,233,000, of which $8,163,000 was paid on January 6, 2017, and an additional $14,000 was paid on May 15, 2017.
 
2. 
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 on a straight-line basis over the 10-year term of the arrangement. Amortization expense, which was $100,000 and $200,000 in both of the three and six months ended June 30, 2017 and 2016, respectfully, and is expected to be $400,000 per year over the next three years and $117,000 in the year ending December 31, 2021, is recorded within cost of services in the Company’s statements of operations and comprehensive loss. The net carrying amount of the selling arrangement is recorded within other assets on the Company’s condensed balance sheet.
 
3. 
Income Taxes. For the three and six months ended June 30, 2017, the Company recorded an income tax benefit of $38,000 and $582,000, or 6.6% and 25.2% of loss before taxes, respectively. For the three and six months ended June 30, 2016, the Company recorded income tax benefit of $185,000 and $417,000, or 68.0% and 50.5% of loss before taxes, respectively. The income tax benefit for the three and six months ended June 30, 2017 and 2016 is comprised of federal and state taxes. The primary differences between the Company’s June 30, 2017 and 2016 effective tax rates and the statutory federal rate are expenses related to stock-based compensation, nondeductible meals and entertainment and for the three and six months ended June 30, 2017, a valuation allowance was recognized of $192,000 as it was determined that it is more likely than not that the Company will not realize the full amount of its net deferred tax assets. The Company reassesses its effective rate each reporting period and adjusts the annual effective rate if deemed necessary, based on projected annual taxable income (loss).
 
 
 
 
 
6
 
 
 
Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustment to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria.
 
As a result of significant losses in 2016 and through June 2017, as well as the current market conditions and their impact on the Company’s future outlook, management has reviewed its deferred tax assets and concluded that the uncertainties related to the realization of its assets have become unfavorable. As of June 30, 2017, the Company had net deferred tax assets of approximately $192,000 which is comprised of temporary differences, including Federal and state net operating losses to be carried forward. Management has considered the positive and negative evidence for the potential utilization of the net deferred tax assets and has concluded that it is more likely than not that the Company will not realize the full amount of net deferred tax assets. Accordingly, the Company has recorded a valuation allowance of $192,000 against these deferred tax assets as of June 30, 2017.
 
As of June 30, 2017 and December 31, 2016, the Company had unrecognized tax benefits totaling $568,000 and $554,000, respectively, including interest, which relates to state nexus issues. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $568,000. Due to the current statute of limitations regarding the unrecognized tax benefits, the unrecognized tax benefits and associated interest is not expected to change significantly in 2017.
 
4. 
Concentrations. During the six months ended June 30, 2017, two customers accounted for 25% and 9%, respectively, of the Company’s total net sales. During the six months ended June 30, 2016, two customers accounted for 36% and 10% respectively, of the Company’s total net sales. At June 30, 2017 and December 31, 2016, two customers accounted for 44% and 45% of the Company’s total accounts receivable, respectively.
 
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.
 
5. 
Share Repurchases. On October 30, 2015, the Board of Directors authorized the repurchase of up to $5,000,000 of the Company’s common stock on or before October 30, 2017. The plan allows the repurchases to be made in open market or privately negotiated transactions. The plan does not obligate the Company to repurchase any particular number of shares, and may be suspended at any time at the Company’s discretion. During the three and six months ended June 30, 2017, there was no share repurchase activity. As of June 30, 2017, the approximate dollar value of shares that may yet be purchased by the Company under the plan was $4,676,000.
 
6. 
Recently Issued Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (FASB) issued guidance creating Accounting Standards Codification (ASC) Section 606, “Revenue from Contracts with Customers”, which establishes a comprehensive new model for the recognition of revenue from contracts with customers. This model is based on the core principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company has performed a review of the requirements of the new guidance and has identified which of its revenue streams will be within the scope of ASC 606. The Company is working through an adoption plan which includes a review of customer contracts, applying the five-step model of the new standard to the customer contracts and comparing the results to our current accounting. As part of this, we are assessing changes that might be necessary to information technology systems, processes, and internal controls to capture new data and address changes in financial reporting. As part of this, we are expecting to utilize the modified retrospective transition method of adoption. Effective January 1, 2018, the Company will be revising its revenue recognition accounting policy and expanding revenue disclosures to reflect the requirements of ASC 606, which include disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts,
 

 

 
 
 
7
 
 
significant judgements and assets recognized from the costs to obtain or fulfill a contract. Because of the nature of the work that remains, at this time the Company is unable to reasonably estimate the impact of adoption on its financial statements.
 
In February 2016, the FASB issued ASU 2016-2, Leases, under which lessees will recognize most leases on the balance sheet. This will generally increase reported assets and liabilities. For public entities, this ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-2 mandates a modified retrospective transition method for all entities. The Company is in the process of determining the impact that the updated accounting guidance will have on our financial statements.
 
In March 2016, the FASB issued ASU 2016-9, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, this ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted the guidance in the first quarter of 2017. The adoption of the guidance did not have a material impact on our financial statements.
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with the Company’s financial statements and related notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q and the "Risk Factors" described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, our Current Reports on Form 8-K and our other SEC filings.
 
Company Overview
 
Insignia Systems, Inc. “Insignia,” “we,” “us,” “our” or the “Company”) is a developer and marketer of innovative in-store products, programs and services that help consumer packaged goods (“CPG”) manufacturers and retail partners drive sales at the point of purchase. The Company was incorporated in 1990. Since 1998, the Company has focused on managing a retail network, made up of approximately 22,000 store locations, for the primary purpose of providing turn-key at-shelf market access for CPG manufacturers’ marketing programs. Insignia provides participating retailers with benefits including incremental revenue, incremental sales opportunities, increased shopper engagement in-store, and custom creative development and other in-kind services.
 
Insignia’s primary product is the Point-Of-Purchase Services (POPS®) in-store marketing program. Insignia POPS program is a national, account-specific, shelf-edge advertising and promotional tactic. Internal testing has indicated the program delivers incremental sales for the featured brand. The program allows manufacturers to deliver vital product information to consumers at the point-of-purchase, and to leverage the local retailer brand and store-specific prices to provide a unique “call to action” that draws attention to the featured brand and triggers a purchase decision. CPG customers benefit from Insignia’s nimble operational capabilities, which include short lead times, in-house graphic design capabilities, post-program analytics, and micro-marketing capabilities such as variable or bilingual messaging.
 
The Company discontinued the sale of The Like MachineTM upon the expiration of its distribution agreement on March 31, 2017. The Company did not have significant sales of this offering. As part of its strategic plan, the Company has several new products in development and test markets.
 
 
 
8
 
 
 
2017 Business Overview
 
Summary of Financial Results
 
For the quarter ended June 30, 2017, the Company generated revenues of $5,849,000, as compared with revenues of $6,617,000 for the quarter ended June 30, 2016. For the six months ended June 30, 2017, the Company generated net sales of $10,616,000, as compared with net sales of $12,695,000 in the six months ended June 30, 2016. Net loss for the quarter ended June 30, 2017 was $534,000, as compared to $87,000 for the quarter ended June 30, 2016. Net loss for the six months ended June 30, 2017 was $1,725,000, as compared to $409,000 for the six months ended June 30, 2016. The net loss for the three-month and the six-month periods ended June 30, 2017 are inclusive of a $192,000 tax valuation allowance.
 
During the six months ended June 30, 2017, cash and cash equivalents decreased $9,067,000 from $12,267,000 at December 31, 2016, to $3,200,000 at June 30, 2017. The special dividend paid/distributed on January 6, 2017 used cash of $8,177,000. The Company had no debt as of June 30, 2017. The remaining uses of cash are further explained in the Liquidity and Capital Resources section below.
 
Results of Operations
 
The following table sets forth, for the periods indicated, certain items in the Company’s Statements of Operations and Comprehensive Loss as a percentage of total net sales.
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30
 
 
June 30
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Net sales
  100.0%
  100.0%
  100.0%
  100.0%
Cost of sales
  74.4 
  68.0 
  80.0 
  67.8 
Gross profit
  25.6 
  32.0 
  20.0 
  32.2 
Operating expenses:
    
    
    
    
Selling
  14.2 
  15.6 
  16.2 
  16.9 
Marketing
  7.3 
  3.9 
  8.0 
  4.2 
General and administrative
  13.9 
  16.8 
  17.6 
  17.9 
Total operating expenses
  35.4 
  36.3 
  41.8 
  39.0 
Operating loss
  (9.8)
  (4.3)
  (21.8)
  (6.8)
Other income
  0.0 
  0.2 
  0.0 
  0.3 
Loss before taxes
  (9.8)
  (4.1)
  (21.8)
  (6.5)
Income tax benefit
  (0.6)
  (2.8)
  (5.5)
  (3.3)
Net loss
  (9.2)  %
   (1.3)%
  (16.3)%
  (3.2)%
 
 
Three Months and Six Months Ended June 30, 2017 Compared to Three Months and Six Months Ended June 30, 2016
 
Net Sales. Net sales for the three months ended June 30, 2017 decreased 11.6% to $5,849,000 compared to $6,617,000 for the three months ended June 30, 2016. Net sales for the six months ended June 30, 2017 decreased 16.4% to $10,616,000, compared to $12,695,000 for the six months ended June 30, 2016.
 
Service revenues for the three months ended June 30, 2017 decreased 10.6% to $5,512,000 compared to $6,163,000 for the three months ended June 30, 2016. The decrease was primarily due to a 7.6% decrease in the number of signs placed, partially due to programming shifts from second quarter to third quarter to support CPG new item launches, and a 4.5% decrease in average price per sign, which was the result of program and customer mix. Service revenues for the six months ended June 30, 2017 decreased 16.7% to 9,816,000 compared to $11,780,000 for the six months ended June 30, 2016. This decrease was primarily due to a 10.5% decrease in the number of signs placed, the decrease was primarily due to the factors described above in addition to the first quarter impact from two customers who experienced significant budget cuts early in their planning cycles and organizational structuring, and a 7.3% decrease in average price per sign, which was a result of program and customer mix.
 

 
 
 
9
 
 
 
Product revenues for the three months ended June 30, 2017 decreased 25.8% to $337,000 compared to $454,000 for the three months ended June 30, 2016. Product revenues for the six months ended June 30, 2017 decreased 12.6% to $800,000 compared to $915,000 for the six months ended June 30, 2016. The decreases in both periods were primarily due to lower sales of sign card supplies due to lower customer demand.
 
Gross Profit. Gross profit for the three months ended June 30, 2017 decreased 29.2% to $1,498,000, or 25.6% as a percentage of net sales, compared to $2,116,000, or 32.0% as a percentage of net sales, for the three months ended June 30, 2016. Gross profit for the six months ended June 30, 2017 decreased 47.9% to $2,127,000, or 20.0% as a percentage of net sales, compared to $4,083,000, or 32.2% as a percentage of net sales, for the six months ended June 30, 2016.
 
Service revenues: Gross profit from our service revenues for the three months ended June 30, 2017 decreased 28.4% to $1,407,000 compared to $1,964,000 for the three months ended June 30, 2016. The decrease was primarily due to a decrease in sales, as our gross profit is highly dependent on sales levels due to the relatively fixed nature of a portion of our payments to retailers, combined with a decreased average price per sign, and partially offset by decreased expense due to the discontinued sale of The Like Machine. The Company is currently undertaking actions to reduce the fixed portion of the cost to place signs in our retailers. For the three months ended June 30, 2017, the Company incurred costs of approximately $50,000 associated with the development of its new IT operating infrastructure compared to approximately $80,000 for the three months ended June 30, 2016. For the six months ended June 30, 2017, the Company incurred costs of approximately $150,000 associated with the development of its new IT operating infrastructure compared to approximately $175,000 for the six months ended June 30, 2016. The project is expected to be substantially completed during the fourth quarter of 2017, with estimated incremental expense of $150,000 in the remainder of 2017. Gross profit from our service revenues for the six months ended June 30, 2017 decreased 50.2% to $1,892,000 compared to $3,798,000 for the six months ended June 30, 2016. The decrease was primarily due to the factors described above.
 
Gross profit as a percentage of service revenues for the three months ended June 30, 2017 decreased to 25.5% compared to 31.9% for the three months ended June 30, 2016. The decrease was primarily due to the factors described above. Gross profit as a percentage of service revenues for the six months ended June 30, 2017 decreased to 19.3% compared to 32.2% for the six months ended June 30, 2016. The decrease was primarily due to the factors described above.
 
Product revenues: Gross profit from our product revenues for the three months ended June 30, 2017 decreased 40.1% to $91,000 compared to $152,000 for the three months ended June 30, 2016. The decrease was primarily due to a decrease in sales, partially offset by decreased facilities, production, and tooling costs. Gross profit from our product revenues for the six months ended June 30, 2017 decreased 17.5% to $235,000 compared to $285,000 for the six months ended June 30, 2016. The decrease was primarily due to a decrease in sales, partially offset by decreased facilities, production, and tooling costs.
 
Gross profit as a percentage of product revenues was 27.0% for the three months ended June 30, 2017 compared to 33.5% for the three months ended June 30, 2016. The decrease was primarily due to the factors described above. Gross profit as a percentage of product revenues was 29.4% for the six months ended June 30, 2017 compared to 31.1% for the six months ended June 30, 2016. The decrease was primarily due to the factors described above.
 
Operating Expenses
 
Selling. Selling expenses for the three months ended June 30, 2017 decreased 19.8% to $831,000 compared to $1,036,000 for the three months ended June 30, 2016. The decrease was primarily due to lower variable compensation related to lower sales, fewer sales personnel and decreased staff related expenses. Selling expenses for the six months ended June 30, 2017 decreased 19.8% to $1,719,000 compared to $2,144,000 for the six months ended June 30, 2016. The decrease was primarily due to lower variable compensation related to lower sales, fewer sales personnel and decreased staff related expenses.
 
Selling expenses as a percentage of net sales decreased to 14.2% for the three months ended June 30, 2017 compared to 15.6% for the three months ended June 30, 2016. The decrease was primarily due to the factors described above, partially offset by decreased sales. Selling expenses as a percentage of net sales decreased to 16.2% for the six months ended June 30, 2017 compared to 16.9% for the six months ended June 30, 2016. The decrease was primarily due to the factors described above.
 

 
 
 
10
 
 
 
Marketing. Marketing expense for the three months ended June 30, 2017 increased 66.1% to $427,000 compared to $257,000 for the three months ended June 30, 2016. Increased marketing expenses were primarily due to increased staffing and staff related costs, partially due to the filling of previously open positions. Marketing expense for the six months ended June 30, 2017 increased 61.9% to $853,000 compared to $527,000 for the six months ended June 30, 2016. The increase was primarily due to the factors described above.
 
Marketing expense as a percentage of net sales increased to 7.3% for the three months ended June 30, 2017 compared to 3.9% for the three months ended June 30, 2016. The increase was primarily due to the factors described above, combined with decreased sales. Marketing expense as a percentage of net sales increased to 8.0% for the six months ended June 30, 2017 compared to 4.2% for the six months ended June 30, 2016. The increase was primarily due to the factors described above, combined with decreased sales.
 
General and administrative. General and administrative expenses for the three months ended June 30, 2017 decreased 26.7% to $814,000 compared to $1,110,000 for the three months ended June 30, 2016. The decrease was primarily due to decreased legal fees, and other consulting fees. General and administrative expenses for the six months ended June 30, 2017 decreased 17.8% to $1,867,000 compared to $2,270,000 for the six months ended June 30, 2016. The decrease was primarily due to the factors described above, as well as, decreases in executive recruiting and onboarding costs, partially offset by increased employee compensation costs.
 
General and administrative expenses as a percentage of net sales decreased to 13.9% for the three months ended June 30, 2017 compared to 16.8% for the three months ended June 30, 2016. The decrease was primarily due to the factors described above, partially offset by decreased sales. General and administrative expenses as a percentage of net sales decreased to 17.6% for the six months ended June 30, 2017 compared to 17.9% for the six months ended June 30, 2016. The decrease was primarily due to the factors described above, partially offset by decreased sales.
 
Other Income. Other income for the three months ended June 30, 2017 was $2,000 compared to $15,000 for the three months ended June 30, 2016. Other income for the six months ended June 30, 2017 was $5,000 compared to $32,000 for the six months ended June 30, 2016. The decrease was primarily due to lower average cash, cash equivalent, and available-for-sale investment balances due to the payment of the special dividend on January 6, 2017. Other income is comprised of interest earned on cash, cash equivalents, and previously for available-for-sale investment balances.
 
Income Taxes.  For the three and six months ended June 30, 2017, the Company recorded income tax benefit of $38,000 and $582,000, or 6.6% and 25.2% of loss before taxes, respectively. For the three and six months ended June 30, 2016, the Company recorded income tax benefit of $185,000 and $417,000, or 68.0% and 50.5% of loss before taxes, respectively. The income tax benefit for the three and six months ended June 30, 2017 and 2016 is comprised of federal and state taxes. The primary differences between the Company’s June 30, 2017 and 2016 effective tax rates and the statutory federal rate are expenses related to stock-based compensation, nondeductible meals and entertainment and for the three and six months ended June 30, 2017, a valuation allowance was recognized of $192,000 as it was determined that it is more likely than not that the Company will not realize the full amount of its net deferred tax assets. The Company reassesses its effective rate each reporting period and adjusts the annual effective rate if deemed necessary, based on projected annual taxable income (loss).
 
Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustment to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria.
 
As a result of significant losses in 2016 and through June 2017, as well as the current market conditions and their impact on the Company’s future outlook, management has reviewed its deferred tax assets and concluded that the uncertainties related to the realization of its assets have become unfavorable. As of June 30, 2017, the Company had net deferred tax assets of approximately $192,000 which is comprised of temporary differences, including Federal and state net operating losses to be carried forward. Management has considered the positive and negative evidence for the potential utilization of the net deferred tax assets and has concluded that it is more likely than not that the Company will not realize the full amount of net deferred tax assets. Accordingly, the Company has recorded a valuation allowance of $192,000 against these deferred tax assets as of June 30, 2017.
 
 
 
11
 
 
 
Net Loss. For the reasons stated above, net loss for the three and six months ended June 30, 2017 was $534,000 and $1,725,000, respectively, compared to $87,000 and $409,000, respectively, for the three and six months ended June 30, 2016.
 
Other Comprehensive Income. Other comprehensive loss is composed of unrealized gains, net of tax, from available-for-sale investments.
 
Liquidity and Capital Resources
 
The Company has financed its operations with proceeds from stock sales and sales of its services and products. At June 30, 2017, working capital was $10,128,000 compared to $11,850,000 at December 31, 2016. During the six months ended June 30, 2017, cash and cash equivalents decreased $9,067,000 from $12,267,000 at December 31, 2016, to $3,200,000 at June 30, 2017. 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, of $8,233,000, of which $8,163,000 was paid on January 6, 2017, and an additional $14,000 was paid on May 15, 2017.
 
Operating Activities: Net cash used in operating activities during the six months ended June 30, 2017, was $238,000. Net loss of $1,725,000, plus non-cash adjustments of $760,000 and changes in operating assets and liabilities of $727,000 resulted in the $238,000 of cash used in operating activities. The largest component of the change in operating assets and liabilities was deferred revenue which increased $634,000, which will fluctuate based on normal business conditions. The non-cash adjustments consisted of depreciation and amortization expense, changes in allowance for doubtful accounts, deferred income tax benefits, and stock-based compensation expense. In the normal course of business, our accounts receivable, accounts payable, accrued liabilities and deferred revenue will fluctuate depending on the level of revenues and related business activity, as well as billing arrangements with customers and payment terms with retailers.
 
Investing Activities: Net cash used in investing activities during the six months ended June 30, 2017 was $644,000, which was related to the purchase of property and equipment. These expenditures related primarily to the IT operating infrastructure project, and were for hardware, purchased software and capitalization of costs for internally developed software. Additional capital costs for this project are expected to be approximately $300,000 for the last six months of 2017.
 
Financing Activities: Net cash used in financing activities during the six months ended June 30, 2017 was $8,185,000, which mainly related to the January 6, 2017 payment of the one-time special dividend of $0.70 per share declared by the Board on November 28, 2016.
 
The Company believes that based upon current business conditions and plans, its existing cash balance and future cash generated from operations will be sufficient for its cash requirements for at least the next twelve months.
 
Critical Accounting Policies
 
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.
 
Our significant accounting policies are described in Note 1 to the annual financial statements as of and for the year ended December 31, 2016, included in our Form 10-K filed with the Securities and Exchange Commission on March 7, 2017. The Company believes our most critical accounting policies and estimates include the following:
 
revenue recognition;
allowance for doubtful accounts;
impairment of long-lived assets;
income taxes; and
stock-based compensation.
 
 
12
 
 
Cautionary Statement Regarding Forward-Looking Statements
 
Certain statements made in this Quarterly Report on Form 10-Q that are not statements of historical or current facts, are “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. The words “anticipates,” “believes,” “expects,” “seeks” and similar expressions identify forward-looking statements. Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team regarding, for instance: (i) our belief that our cash balance and cash generated by operations will provide adequate liquidity and capital resources for at least the next twelve months; (ii) that we expect fluctuations in accounts receivable and payable, accrued liabilities, and deferred revenue; and (iii) plans to repurchase Company stock. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement was made. These forward-looking statements are based on current information, which we have assessed and which by its nature is dynamic and subject to rapid and even abrupt changes.
 
Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (i) the risk that management may be unable to fully or successfully implement its business plan to achieve and maintain increased sales and resultant profitability in the future; (ii) the risk that the Company will not be able to develop and implement new product offerings, including mobile, digital or other new offerings, in a successful manner; (iii) prevailing market conditions, including pricing and other competitive pressures, in the in-store advertising industry and, intense competition for agreements with retailers and consumer packaged goods manufacturers; (iv) potentially incorrect assumptions by management with respect to the financial effect of current strategic decisions, the effect of current sales trends on fiscal year 2017 results and the benefit of our relationship with News America; (v) termination of all or a major portion of, or a significant change in terms and conditions of, a material agreement with a consumer packaged goods manufacturer, retailer, or News America; (vi) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company’s business generally; (vii) our ability to successfully implement our new IT operating infrastructure; and (viii) our ability to attract and retain highly qualified managerial, operational and sales personnel. Our risks and uncertainties also include, but are not limited to, the risks presented in our Annual Report on Form 10-K for the year ended December 31, 2016, any additional risks presented in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. We undertake no obligation (and expressly disclaim any such obligation) to update forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to update reasons why actual results would differ from those anticipated in any such forward-looking statements, other than as required by law.
 
 
Item 3.        Quantitative and Qualitative Disclosures about Market Risk
 
Not applicable.
 
Item 4.        Controls and Procedures
 
(a) Evaluation of Disclosure Controls and Procedures
 
The Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. Disclosure controls and procedures ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosures.
 
 
13
 
 
(b) Changes in Internal Control Over Financial Reporting
 
There was no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
PART II. OTHER INFORMATION
 
Item 1.        Legal Proceedings
 
None.
 
Item 1A.     Risk Factors
 
We described the most significant risk factors applicable to the Company in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016. We believe there have been no material changes from the risk factors disclosed in that Form 10-K.
 
Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds
 
On October 30, 2015, the Board of Directors authorized the repurchase of up to $5,000,000 of the Company’s common stock on or before October 30, 2017. The plan allows the repurchases to be made in open market or privately negotiated transactions. The plan does not obligate the Company to repurchase any particular number of shares, and may be suspended at any time at the Company’s discretion. As of June 30, 2017, the approximate dollar value of shares that may yet be purchased under the plan was $4,676,049.
 
Issuer Purchases of Equity Securities
 
Period
 
Total number of shares purchased
 
 
Average price paid per share
 
 
Total number of shares purchased as part of publicly announced plans or programs
 
 
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
 
April 1–30, 2017
   
   
   
 $4,676,049 
May 1–31, 2017
  6,554(a)
 $1.05 
   
 $4,676,049 
June 1–30, 2017
   
   
   
 $4,676,049 
Total
  6,554 
 $1.05 
   
 $4,676,049 
 
(a) 
Represents shares surrendered to the Company to satisfy minimum statutory federal, state, and local tax withholding obligations arising from the vesting of a restricted stock award. The shares were forfeit pursuant to the participant’s instructions in accordance with the terms of the applicable award agreement and the 2013 Plan and are not part of any publicly announced stock repurchase program.
 
 
Item 3.       Defaults upon Senior Securities
 
None.
 
Item 4.       Mine Safety Disclosures
 
Not applicable.
 
Item 5.       Other Information
 
None.
 
 
 
14
 
 
 
 
Item 6.         Exhibits
 
Unless otherwise indicated, all documents incorporated herein by reference to a document filed with the SEC pursuant to the Exchange Act are located under SEC file number 001-13471.
 
Exhibit Number
 
Description
 
 
 
3.1
 
Composite Articles of Incorporation of Registrant, as amended through July 31, 2008 (incorporated by reference to Exhibit 3.1 to annual report on Form 10-K for the year ended December 31, 2015)
 
 
 
3.2
 
Composite Bylaws of Registrant, as amended through December 5, 2015 (incorporated by reference to Exhibit 3.2 to annual report on Form 10-K for the year ended December 31, 2015)
 
 
 
10.1*
 
Employment Agreement with Jeff Jagerson, dated June 30, 2017 (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed June 30, 2017)
 
10.2*
 
Change in Control Agreement with Jeff Jagerson, dated June 30, 2017 (incorporated by reference to Exhibit 10.2 to current report on Form 8-K filed June 30, 2017)
 
31.1
 
Certification of Principal Executive Officer
 
 
 
31.2
 
Certification of Principal Financial and Accounting Officer
 
 
 
32
 
Section 1350 Certification
 
 
 
 
101
 
The following materials from Insignia Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets; (ii) Statements of Operations and Comprehensive Loss; (iii) Statements of Cash Flows; and (iv) Notes to Financial Statements.
 
 
*Management compensatory contract or arrangement required to be included as an exhibit to this quarterly report on Form 10-Q.
 
15
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
INSIGNIA SYSTEMS, INC.
 
 
 
 
 
 
 
Dated: August 14, 2017
/s/ Kristine A. Glancy
 
 
Kristine A. Glancy
 
 
President and Chief Executive Officer
 
 
(on behalf of registrant)
 
 
 
 
Dated:  August 14, 2017
/s/ Jeffrey A. Jagerson
 
 
Jeffrey A. Jagerson
 
 
Chief Financial Officer and Treasurer
 
 
(principal financial and accounting officer)
 
 
 
 
16
 
 
EXHIBIT INDEX
 
Exhibit Number
 
Description
 
Method of Filing
 
 
 
 
 
3.1
 
Composite Articles of Incorporation of Registrant, as amended through July 31, 2008
 
Incorporated by Reference
 
 
 
 
 
3.2
 
Composite Bylaws of Registrant, as amended through December 5, 2015
 
 
Incorporated by Reference
 
10.1
 
Employment Agreement with Jeff Jagerson, dated June 30, 2017 (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed June 30, 2017)
 
 
Incorporated by Reference
10.2
 
Change in Control Agreement with Jeff Jagerson, dated June 30, 2017 (incorporated by reference to Exhibit 10.2 to current report on Form 8-K filed June 30, 2017)
 
Incorporated by Reference
 
 
 
 
 
31.1
 
Certification of Principal Executive Officer
 
Filed Electronically
 
 
 
 
 
31.2
 
Certification of Principal Financial and Accounting Officer
 
Filed Electronically
 
 
 
 
 
32
 
Section 1350 Certification
 
Furnished Electronically
 
 
 
 
 
101
 
The following materials from Insignia Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets; (ii) Statements of Operations and Comprehensive Loss; (iii) Statements of Cash Flows; and (iv) Notes to Financial Statements.
 
Filed Electronically