NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(unaudited)
Note 1 – Basis of Presentation
As used in this report, “Trans-Lux,” the “Company,” “we,” “us,” and “our” refer to Trans-Lux Corporation and its subsidiaries.
Financial information included herein is unaudited, however, such information reflects all adjustments (of a normal and recurring nature), which are, in the opinion of management, necessary for the fair presentation of the Condensed Consolidated Financial Statements for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”) and therefore do not include all information and footnote disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). The Condensed Consolidated Financial Statements included herein should be read in conjunction with the Consolidated Financial Statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Condensed Consolidated Balance Sheet at December 31, 2020 is derived from the December 31, 2020 audited financial statements.
The following new accounting pronouncements were adopted in 2021:
In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20). ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Public business entities should apply the amendments in ASU 2018-14 for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years (i.e., January 1, 2021). Early application is permitted. The adoption of this standard did not have a material effect on the Company’s consolidated financial position and results of operations.
The following new accounting pronouncements, and related impacts on adoption, are being evaluated by the Company:
None.
Note 2 – Liquidity and Going Concern
A fundamental principle of the preparation of financial statements in accordance with GAAP is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. This principle is applicable to all entities except for entities in liquidation or entities for which liquidation appears imminent. In accordance with this requirement, the Company has prepared its accompanying Consolidated Financial Statements assuming the Company will continue as a going concern.
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Due to the onset of the COVID-19 pandemic in 2020, the Company experienced a reduction in sales orders from customers. As a result, the Company incurred a net loss of $2.8 million in the nine months ended September 30, 2021 and had a working capital deficiency of $8.6 million as of September 30, 2021. In addition, the Company has past due principal and interest payments on our outstanding 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) and 9½% Subordinated debentures due 2012 (the “Debentures”).
The Company is dependent on future operating performance in order to generate sufficient cash flows in order to continue to run its businesses. Future operating performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control, including the impact of the current economic environment, the spread of major epidemics (including coronavirus) and other related uncertainties such as government-imposed travel restrictions, interruptions to supply chains, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn delayed certain deliveries to our customers.
If we are unable to (i) obtain additional liquidity for working capital, (ii) make the required minimum funding contributions to the defined benefit pension plan, (iii) make the required principal and interest payments on the Notes and the Debentures and/or (iv) repay our obligations under our Loan Agreement (hereinafter defined) with Unilumin (assigned from MidCap Business Credit LLC (“MidCap”) in July 2021), there would be a significant adverse impact on our financial position and operating results. The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements and fund potential new opportunities. Due to the above, there is substantial doubt as to whether we will have adequate liquidity, including access to the debt and equity capital markets, to operate our business over the next 12 months from the date of issuance of this Form 10-Q.
Note 3 – Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of this standard, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of this standard, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales tax, value added tax and other taxes collected on behalf of third parties are excluded from revenue.
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Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of September 30, 2021.
We recognize revenue in accordance with two different accounting standards: 1) Accounting Standards Codification (“ASC”) Topic 606 and 2) ASC Topic 842. Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. Our contracts with customers generally do not include multiple performance obligations. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services.
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Disaggregated Revenues
The following table represents a disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2021 and 2020, along with the reportable segment for each category:
|
|
|
Three months ended
|
Nine months ended
|
|
In thousands
|
|
September 30, 2021
|
September 30, 2020
|
September 30, 2021
|
September 30, 2020
|
|
Digital product sales:
|
|
|
|
|
|
|
|
|
|
|
Catalog and small customized products
|
|
$
|
2,393
|
$
|
2,405
|
$
|
6,882
|
$
|
5,257
|
|
Large customized products
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
2,393
|
|
2,405
|
|
6,882
|
|
5,257
|
|
Digital product lease and maintenance:
|
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
196
|
|
240
|
|
615
|
|
755
|
|
Maintenance agreements
|
|
|
276
|
|
251
|
|
841
|
|
846
|
|
Subtotal
|
|
|
472
|
|
491
|
|
1,456
|
|
1,601
|
|
Total
|
|
$
|
2,865
|
$
|
2,896
|
$
|
8,338
|
$
|
6,858
|
Performance Obligations
The Company has two primary revenue streams which are Digital product sales and Digital product lease and maintenance.
Digital Product Sales
The Company recognizes net revenue on digital product sales to its distribution partners and to end users related to digital display solutions and fixed digit scoreboards. For the Company’s catalog products, revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. For the Company’s customized products, revenue is either recognized at a point in time or over time depending on the size of the contract. For those customized product contracts that are smaller in size, revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. For those customized product contracts that are larger in size, revenue is recognized over time based on incurred costs as compared to projected costs using the input method, as this best reflects the Company’s progress in transferring control of the customized product to the customer. The Company may also contract with a customer to perform installation services of digital display products. Similar to the larger customized products, the Company recognizes the revenue associated with installation services using the input method, whereby the basis is the total contract costs incurred to date compared to the total expected costs to be incurred.
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Revenue on sales to distribution partners are recorded net of prompt-pay discounts, if offered, and other deductions. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method to which the Company expects to be entitled. In the case of prompt-pay discounts, there are only two possible outcomes: either the customer pays on-time or does not. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company believes that the estimates it has established are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the estimated amounts to vary. The Company offers an assurance-type warranty that the digital display products will conform to the published specifications. Returns may only be made subject to this warranty and not for convenience.
Digital Product Lease and Maintenance
Digital product lease revenues represent revenues from leasing equipment that we own. We do not generally provide an option for the lessee to purchase the rented equipment at the end of the lease and do not generate material revenue from sales of equipment under such options. Our lease revenues do not include material amounts of variable payments. Digital product maintenance revenues represent revenues from maintenance agreements for equipment that we do not own. Lease and maintenance contracts generally run for periods of one month to 10 years. A contract entered into by the Company with a customer may contain both lease and maintenance services (either or both services may be agreed upon based on the individual customer contract). Maintenance services may consist of providing labor, parts and software maintenance as may be required to maintain the customer’s equipment in proper operating condition at the customer’s service location. The Company concluded the lease and maintenance services represent a series of distinct services and the most representative method for measuring progress towards satisfying the performance obligation of these services is the input method. Additionally, maintenance services require the Company to “stand ready” to provide support to the customer when and if needed. As there is no discernable pattern of efforts other than evenly over the lease and maintenance terms, the Company will recognize revenue straight-line over the lease and maintenance terms of service.
The Company has an enforceable right to payment for performance completed to date, as evidenced by the requirement that the customer pay upfront for each month of services. Lease and maintenance service amounts billed ahead of revenue recognition are recorded in deferred revenue and are included in accrued liabilities in the Condensed Consolidated Financial Statements.
Revenues from equipment lease and maintenance contracts are recognized during the term of the respective agreements. At September 30, 2021, the future minimum lease payments due to the Company under operating leases that expire at varying dates through 2028 for its rental equipment and maintenance contracts, assuming no renewals of existing leases or any new leases, aggregating $1,786,000 are as follows: $165,000 – remainder of 2021, $516,000 – 2022, $365,000 – 2023, $292,000 – 2024, $200,000 – 2025 and $248,000 thereafter.
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Contract Balances with Customers
Contract assets primarily relate to rights to consideration for goods or services transferred to the customer when the right is conditional on something other than the passage of time. The contract assets are transferred to the receivables when the rights become unconditional. As of September 30, 2021 and December 31, 2020, the Company had no contract assets. The contract liabilities primarily relate to the advance consideration received from customers for contracts prior to the transfer of control to the customer and therefore revenue is recognized on completion of delivery. Contract liabilities are classified as deferred revenue by the Company and are included in customer deposits and accrued liabilities in the Condensed Consolidated Balance Sheets.
The following table presents the balances in the Company’s receivables and contract liabilities with customers:
|
In thousands
|
|
September 30,
2021
|
December 31,
2020
|
|
Gross receivables
|
|
$
|
2,134
|
$
|
2,042
|
|
Allowance for bad debts
|
|
|
428
|
|
660
|
|
Net receivables
|
|
|
1,706
|
|
1,382
|
|
Contract liabilities
|
|
|
328
|
|
618
|
During the three and nine months ended September 30, 2021 and 2020, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods:
|
|
|
Three months ended
|
Nine months ended
|
|
In thousands
|
|
September 30,
2021
|
September 30,
2020
|
September 30,
2021
|
September 30,
2020
|
|
Revenue recognized in the period from:
|
|
|
|
|
|
|
|
|
|
|
Amounts included in the contract liability at
the beginning of the period
|
|
$
|
|
$
|
149
|
$
|
484
|
$
|
82
|
|
Performance obligations satisfied in previous periods
(for example, due to changes in transaction price)
|
|
|
|
|
|
|
|
|
|
Transaction Price Allocated to Future Performance Obligations – alternative more qualitative presentation
Remaining performance obligations represent the transaction price of contracts for which work has not been performed (or has been partially performed). The guidance provides certain practical expedients that limit this requirement and, therefore, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed. As of September 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations for digital product sales was $3.0 million and digital product lease and maintenance was $1.8 million.
The Company expects to recognize revenue on approximately 75%, 14% and 11% of the remaining performance obligations over the next 12 months, 13 to 36 months and 37 or more months, respectively.
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Costs to Obtain or Fulfill a Customer Contract
The Company capitalizes incremental costs of obtaining customer contracts. Capitalized commissions are amortized based on the transfer of the products or services to which the assets relate. Applying the practical expedient in paragraph 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in General and administrative expenses.
The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. When shipping and handling costs are incurred after a customer obtains control of the products, the Company also has elected to account for these as costs to fulfill the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of finished products to customers are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer.
Note 4 – Inventories
Inventories consist of the following:
|
|
|
September 30
2021
|
December 31
2020
|
|
In thousands
|
|
|
Raw materials
|
|
$
|
964
|
$
|
1,124
|
|
Work-in-progress
|
|
|
244
|
|
324
|
|
Finished goods
|
|
|
13
|
|
94
|
|
|
|
$
|
1,221
|
$
|
1,542
|
Note 5 – Rental Equipment, net
Rental equipment consists of the following:
|
|
|
September 30
|
December 31
|
|
In thousands
|
|
2021
|
2020
|
|
Rental equipment
|
|
$
|
3,714
|
$
|
3,714
|
|
Less accumulated depreciation
|
|
|
3,242
|
|
3,058
|
|
Net rental equipment
|
|
$
|
472
|
$
|
656
|
Depreciation expense for rental equipment for the nine months ended September 30, 2021 and 2020 was $184,000 and $215,000, respectively. Depreciation expense for rental equipment for the three months ended September 30, 2021 and 2020 was $61,000 and $72,000, respectively.
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Note 6 – Property, Plant and Equipment, net
Property, plant and equipment consists of the following:
|
|
|
September 30
|
December 31
|
|
In thousands
|
|
2021
|
2020
|
|
Machinery, fixtures and equipment
|
|
$
|
2,923
|
$
|
2,923
|
|
Leaseholds and improvements
|
|
|
23
|
|
23
|
|
|
|
|
2,946
|
|
2,946
|
|
Less accumulated depreciation
|
|
|
933
|
|
746
|
|
Net property, plant and equipment
|
|
$
|
2,013
|
$
|
2,200
|
Machinery, fixtures and equipment having a net book value of $2.0 million and $2.2 million at September 30, 2021 and December 31, 2020, respectively, were pledged as collateral under various financing agreements.
Depreciation expense for property, plant and equipment for the nine months ended September 30, 2021 and 2020 was $187,000 and $194,000, respectively. Depreciation expense for property, plant and equipment for the three months ended September 30, 2021 and 2020 was $56,000 and $59,000, respectively.
Note 7 – Long-Term Debt
Long-term debt consists of the following:
|
|
|
September 30
|
December 31
|
|
In thousands
|
|
2021
|
2020
|
|
8¼% Limited convertible senior subordinated notes due 2012
|
|
$
|
302
|
$
|
352
|
|
9½% Subordinated debentures due 2012
|
|
|
220
|
|
220
|
|
Revolving credit line – related party
|
|
|
439
|
|
|
|
Revolving credit line
|
|
|
|
|
612
|
|
Term loans – related party
|
|
|
1,000
|
|
1,000
|
|
Term loan
|
|
|
641
|
|
811
|
|
Total debt
|
|
|
2,602
|
|
2,995
|
|
Less deferred financing costs and debt discount
|
|
|
84
|
|
180
|
|
Net debt
|
|
|
2,518
|
|
2,815
|
|
Less portion due within one year
|
|
|
2,518
|
|
2,546
|
|
Net long-term debt
|
|
$
|
|
$
|
269
|
On September 16, 2019, the Company entered into a loan agreement (the “Loan Agreement”) with MidCap. On June 3, 2020, March 23, 2021 and May 31, 2021, the Company and MidCap entered into modification agreements to the Loan Agreement. On July 30, 2021, MidCap assigned the loan to Unilumin. The Loan Agreement has a term of three years, unless earlier terminated by the parties in accordance with the termination provisions of the Loan Agreement. The Loan Agreement allows the Company to borrow up to an aggregate of $4.0 million at an interest rate of the 3-month LIBOR interest rate plus 4.75% (7.93% at September 30, 2021) on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. As of September 30, 2021, the balance outstanding under the Loan Agreement was $439,000. The Loan Agreement also requires the payment of certain fees, including a facility fee, an unused credit line fee and a collateral monitoring charge. The Loan Agreement contains financial and other covenant requirements, including financial covenants that require the Company to attain certain EBITDA amounts for certain periods, including the nine months ended September 30, 2021. The Company was not in compliance with this covenant. The Loan Agreement is secured by substantially all of the Company’s assets.
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On April 23, 2020, the Company entered into a loan note (the “Loan Note”) with Enterprise Bank and Trust (“Lender”) as lender under the CARES Act of the Small Business Administration of the United States of America (“SBA”), dated as of April 20, 2020. Under the Loan Note, the Company borrowed $810,800 from Lender under the Paycheck Protection Program (“PPP”) included in the SBA’s CARES Act, $641,000 of which is outstanding as of September 30, 2021. The Loan Note proceeds are forgivable as long as the Company uses the loan proceeds for eligible purposes including payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leave; rent; utilities; and maintains its payroll levels. Certain employees were not retained by the Company, so the potential amount of loan forgiveness will be reduced. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1.00%, with a deferral of payments for the first six months. While the Company believes that its use of the loan proceeds will meet the conditions of forgiveness of the loan, we cannot assure you that we will not take actions that could cause the Company to be ineligible for forgiveness of the loan, in whole or in part.
The Company has a $500,000 loan from Carlisle Investments Inc. (“Carlisle”) at a fixed interest rate of 12.00%, which matured on April 27, 2019 with a bullet payment of all principal due at such time. Interest is payable monthly. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020, and has not made any such demands as of the date of this filing. As of September 30, 2021, the entire amount was outstanding and is included in current portion of long-term debt in the Consolidated Balance Sheets. As of September 30, 2021 and December 31, 2020, the Company had accrued $225,000 and $180,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets.
The Company has an additional $500,000 loan from Carlisle at a fixed interest rate of 12.00%, which matured on December 10, 2017 with a bullet payment of all principal due at such time (the “Second Carlisle Agreement”). Interest is payable monthly. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020, and has not made any such demands as of the date of this filing. As of September 30, 2021, the entire amount was outstanding and is included in current portion of long-term debt Consolidated Balance Sheets. As of September 30, 2021 and December 31, 2020, the Company had accrued $225,000 and $180,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Under the Second Carlisle Agreement, the Company granted a security interest to Carlisle in accounts receivable, materials and intangibles relating to a certain purchase order for equipment issued in April 2017.
As of September 30, 2021 and December 31, 2020, the Company had outstanding $302,000 and $352,000, respectively, of Notes. The Notes matured as of March 1, 2012 and are currently in default. As of September 30, 2021 and December 31, 2020, the Company had accrued $301,000 and $329,000, respectively, of interest related to the Notes, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Notes outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately. On January 15, 2021, holders of $50,000 of the Notes accepted the Company’s offer to exchange each $1,000 of principal, forgiving any related interest, for $400 in cash, for an aggregate payment by the Company of $20,000. As a result of the transaction, the Company recorded a gain on the extinguishment of debt, net of expenses, of $77,000 in the nine months ended September 30, 2021.
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Table of Contents
As of September 30, 2021 and December 31, 2020, the Company had outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of September 30, 2021 and December 31, 2020, the Company had accrued $247,000 and $232,000, respectively, of interest related to the Debentures, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.
Note 8 – Pension Plan
As of December 31, 2003, the benefit service under the pension plan had been frozen and, accordingly, there is no service cost. As of April 30, 2009, the compensation increments had been frozen and, accordingly, no additional benefits are being accrued under the pension plan.
The following table presents the components of net periodic pension cost for the three and nine months ended September 30, 2021 and 2020:
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
In thousands
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Interest cost
|
|
$
|
64
|
$
|
96
|
$
|
190
|
$
|
289
|
|
Expected return on plan assets
|
|
|
(210)
|
|
(203)
|
|
(630)
|
|
(610)
|
|
Amortization of net actuarial loss
|
|
|
80
|
|
70
|
|
240
|
|
211
|
|
Net periodic pension (benefit) expense
|
|
$
|
(66)
|
$
|
(37)
|
$
|
(200)
|
$
|
(110)
|
As of September 30, 2021 and December 31, 2020, the Company had recorded a current pension liability of $128,000 and $1.0 million, respectively, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets, and a long-term pension liability of $4.0 million and $3.7 million, respectively, which is included in deferred pension liability and other in the Condensed Consolidated Balance Sheets. The minimum required contribution in 2021 is expected to be $388,000, of which the Company has contributed $306,000 as of September 30, 2021.
Note 9 – Leases
The Company leases administrative and manufacturing facilities through operating lease agreements. The Company has no finance leases as of September 30, 2021. Our leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common area or other maintenance costs). The facility leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion, therefore, the renewals to extend the lease terms are not included in our right of use (“ROU”) assets or lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and, when they are reasonably certain of exercise, we include the renewal period in our lease term.
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Table of Contents
Operating leases result in the recognition of ROU assets and lease liabilities on the Condensed Consolidated Balance Sheets. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate at the commencement date to determine the present value of lease payments. Most real estate leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. The primary leases we enter into with initial terms of 12 months or less are for equipment.
Supplemental information regarding leases:
|
|
|
September 30
2021
|
|
In thousands, unless otherwise noted
|
|
|
Balance Sheet:
|
|
|
|
|
ROU assets
|
|
$
|
639
|
|
Current lease liabilities – operating
|
|
|
306
|
|
Non-current lease liabilities - operating
|
|
|
363
|
|
Total lease liabilities
|
|
|
669
|
|
Weighted average remaining lease term (years)
|
|
|
1.9
|
|
Weighted average discount rate
|
|
|
8.9%
|
|
Future minimum lease payments:
|
|
|
|
|
Remainder of 2021
|
|
$
|
94
|
|
2022
|
|
|
348
|
|
2023
|
|
|
295
|
|
Thereafter
|
|
|
|
|
Total
|
|
|
737
|
|
Less: Imputed interest
|
|
|
68
|
|
Total lease liabilities
|
|
|
669
|
|
Less: Current lease liabilities
|
|
|
306
|
|
Long-term lease liabilities
|
|
$
|
363
|
Supplemental cash flow information regarding leases:
|
|
|
For the
three months ended
September 30, 2021
|
For the
nine months ended
September 30, 2021
|
|
In thousands
|
|
|
Operating cash flow information:
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
93
|
$
|
277
|
|
Non-cash activity:
|
|
|
|
|
|
|
ROU assets obtained in exchange for lease liabilities
|
|
|
|
|
|
15
Table of Contents
Total operating lease expense and short-term lease expense was $284,000 and $5,000, respectively, for the nine months ended September 30, 2021. Total operating lease expense and short-term lease expense was $94,000 and $2,000, respectively, for the three months ended September 30, 2021. Total operating lease expense and short-term lease expense was $289,000 and $56,000, respectively, for the nine months ended September 30, 2020. Total operating lease expense and short-term lease expense was $94,000 and $20,000, respectively, for the three months ended September 30, 2020.
Note 10 – Stockholders’ Deficit and Loss Per Share
The following table presents the calculation of loss per share for the three and nine months ended September 30, 2021 and 2020:
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
In thousands, except per share data
|
|
2021
|
2020
|
2021
|
2020
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
Net loss, as reported
|
|
$
|
(999)
|
$
|
(758)
|
$
|
(2,795)
|
$
|
(3,154)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
13,446
|
|
13,696
|
|
13,595
|
|
13,696
|
|
Basic and diluted loss per share
|
|
$
|
(0.07)
|
$
|
(0.06)
|
$
|
(0.21)
|
$
|
(0.23)
|
Basic loss per common share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted loss per common share is computed by dividing net loss attributable to common shares, by the weighted average number of common shares outstanding, adjusted for shares that would be assumed outstanding after warrants and stock options vested under the treasury stock method.
As of September 30, 2020, the Company had warrants to purchase 250,000 shares of Common Stock outstanding which were included in the calculation of basic loss per share because their exercise price was $0.01 and determined to be penny warrants. As of September 30, 2021 and 2020, the Company had other warrants to purchase 1.6 million and 500,000 shares, respectively, of Common Stock outstanding, which were excluded from the calculation of diluted loss per share because their exercise price was greater than the average stock price for the period and their inclusion would have been anti-dilutive.
Note 11 – Contingencies
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business and/or which are covered by insurance. The Company has accrued reserves individually and in the aggregate for such legal proceedings. Should actual litigation results differ from the Company’s estimates, revisions to increase or decrease the accrued reserves may be required. There are no open matters that the Company deems material.
16
Table of Contents
Note 12 – Related Party Transactions
The Company has the following related party transactions:
As of September 30, 2021, Unilumin owns 52.0% of the Company’s Common Stock and beneficially owns 53.7% of the Company’s Common Stock. Nicholas J. Fazio, Yang Liu and Yantao Yu, each directors and/or officers of the Company, are each directors and/or officers of Unilumin. The Company purchased $1.1 million and $366,000 of product from Unilumin in the nine months ended September 30, 2021 and 2020, respectively, and $461,000 and $177,000 in the three months ended September 30, 2021 and 2020, respectively. The amount payable by the Company to Unilumin was $2.0 million and $231,000 as of September 30, 2021 and December 31, 2020, respectively. As disclosed in Note 7, the Loan Agreement with MidCap, including all right and responsibilities, was assigned to Unilumin as of July 30, 2021.
Note 13 – Business Segment Data
Operating segments are based on the Company’s business components about which separate financial information is available and are evaluated regularly by the Company’s chief operating decision makers in deciding how to allocate resources and in assessing performance of the business.
The Company evaluates segment performance and allocates resources based upon operating income (loss). The Company’s operations are managed in two reportable business segments: Digital product sales and Digital product lease and maintenance. Both design and produce large-scale, multi-color, real-time digital displays. Both operating segments are conducted on a global basis, primarily through operations in the United States. The Company also has operations in Canada. The Digital product sales segment sells equipment and the Digital product lease and maintenance segment leases and maintains equipment. Corporate general and administrative items relate to costs that are not directly identifiable with a segment. There are no intersegment sales.
Foreign revenues represent less than 10% of the Company’s revenues in the nine months ended September 30, 2021 and 2020. The Company’s foreign operation does not manufacture its own equipment; the domestic operation provides the equipment that the foreign operation leases or sells. The foreign operation operates similarly to the domestic operation and has similar profit margins. Foreign assets are immaterial.
17
Table of Contents
Information about the Company’s operations in its two business segments for the three and nine months ended September 30, 2021 and 2020 is as follows:
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
In thousands
|
|
2021
|
2020
|
2021
|
2020
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Digital product sales
|
|
$
|
2,393
|
$
|
2,405
|
$
|
6,882
|
$
|
5,257
|
|
Digital product lease and maintenance
|
|
|
472
|
|
491
|
|
1,456
|
|
1,601
|
|
Total revenues
|
|
$
|
2,865
|
$
|
2,896
|
$
|
8,338
|
$
|
6,858
|
|
Operating (loss) income:
|
|
|
|
|
|
|
|
|
|
|
Digital product sales
|
|
$
|
(1,093)
|
$
|
(1,008)
|
$
|
(2,814)
|
$
|
(2,902)
|
|
Digital product lease and maintenance
|
|
|
335
|
|
346
|
|
977
|
|
1,074
|
|
Corporate general and administrative expenses
|
|
|
(259)
|
|
(114)
|
|
(843)
|
|
(1,255)
|
|
Total operating loss
|
|
|
(1,017)
|
|
(776)
|
|
(2,680)
|
|
(3,083)
|
|
Interest expense, net
|
|
|
(103)
|
|
(100)
|
|
(363)
|
|
(363)
|
|
Gain (loss) on foreign currency remeasurement
|
|
|
62
|
|
(49)
|
|
(10)
|
|
64
|
|
Gain on debt extinguishment
|
|
|
|
|
137
|
|
77
|
|
137
|
|
Pension benefit
|
|
|
66
|
|
37
|
|
200
|
|
110
|
|
Loss before income taxes
|
|
|
(992)
|
|
(751)
|
|
(2,776)
|
|
(3,135)
|
|
Income tax expense
|
|
|
(7)
|
|
(7)
|
|
(19)
|
|
(19)
|
|
Net loss
|
|
$
|
(999)
|
$
|
(758)
|
$
|
(2,795)
|
$
|
(3,154)
|
|
|
September 30
2021
|
December 31
2020
|
|
|
|
Assets
|
|
|
|
|
|
Digital product sales
|
$
|
5,441
|
$
|
5,231
|
|
Digital product lease and maintenance
|
|
1,280
|
|
1,781
|
|
Total identifiable assets
|
|
6,721
|
|
7,012
|
|
General corporate
|
|
286
|
|
43
|
|
Total assets
|
$
|
7,007
|
$
|
7,055
|
Note 14 – Subsequent Events
The Company has evaluated events and transactions subsequent to September 30, 2021 and through the date these Condensed Consolidated Financial Statements were included in this Form 10-Q and filed with the SEC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Trans-Lux is a leading supplier of LED technology for display applications. The essential elements of these systems are the real-time, programmable digital products that we design, manufacture, distribute and service. Designed to meet the digital signage solutions for any size venue’s indoor and outdoor needs, these displays are used primarily in applications for the financial, banking, gaming, corporate, advertising, transportation, entertainment and sports markets. The Company operates in two reportable segments: Digital product sales and Digital product lease and maintenance.
18
Table of Contents
The Digital product sales segment includes worldwide revenues and related expenses from the sales of both indoor and outdoor digital product signage. This segment includes the financial, government/private, gaming, scoreboards and outdoor advertising markets. The Digital product lease and maintenance segment includes worldwide revenues and related expenses from the lease and maintenance of both indoor and outdoor digital product signage. This segment includes the lease and maintenance of digital product signage across all markets.
Results of Operations
Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
The following table presents our Statements of Operations data, expressed as a percentage of revenue for the nine months ended September 30, 2021 and 2020:
|
|
Nine months ended September 30
|
|
In thousands, except percentages
|
2021
|
|
2020
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital product sales
|
$
|
6,882
|
|
82.5
|
%
|
|
$
|
5,257
|
|
76.7
|
%
|
|
Digital product lease and maintenance
|
|
1,456
|
|
17.5
|
%
|
|
|
1,601
|
|
23.3
|
%
|
|
Total revenues
|
|
8,338
|
|
100.0
|
%
|
|
|
6,858
|
|
100.0
|
%
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of digital product sales
|
|
8,286
|
|
99.4
|
%
|
|
|
6,528
|
|
95.2
|
%
|
|
Cost of digital product lease and maintenance
|
|
462
|
|
5.5
|
%
|
|
|
471
|
|
6.9
|
%
|
|
Total cost of revenues
|
|
8,748
|
|
104.9
|
%
|
|
|
6,999
|
|
102.1
|
%
|
|
Gross loss
|
|
(410)
|
|
(4.9)
|
%
|
|
|
(141)
|
|
(2.1)
|
%
|
|
General and administrative and restructuring expenses
|
|
(2,270)
|
|
(27.2)
|
%
|
|
|
(2,942)
|
|
(42.9)
|
%
|
|
Operating loss
|
|
(2,680)
|
|
(32.1)
|
%
|
|
|
(3,083)
|
|
(45.0)
|
%
|
|
Interest expense, net
|
|
(363)
|
|
(4.4)
|
%
|
|
|
(363)
|
|
(5.3)
|
%
|
|
(Loss) gain on foreign currency remeasurement
|
|
(10)
|
|
(0.1)
|
%
|
|
|
64
|
|
1.0
|
%
|
|
Gain on extinguishment of debt
|
|
77
|
|
0.9
|
%
|
|
|
137
|
|
2.0
|
%
|
|
Pension benefit
|
|
200
|
|
2.4
|
%
|
|
|
110
|
|
1.6
|
%
|
|
Loss before income taxes
|
|
(2,776)
|
|
(33.3)
|
%
|
|
|
(3,135)
|
|
(45.7)
|
%
|
|
Income tax expense
|
|
(19)
|
|
(0.2)
|
%
|
|
|
(19)
|
|
(0.3)
|
%
|
|
Net loss
|
$
|
(2,795)
|
|
(33.5)
|
%
|
|
$
|
(3,154)
|
|
(46.0)
|
%
|
Total revenues for the nine months ended September 30, 2021 increased $1.5 million or 21.6% to $8.3 million from $6.9 million for the nine months ended September 30, 2020, primarily due to an increase in Digital product sales.
Digital product sales revenues increased $1.6 million or 30.9% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to an increase in the sports market, principally due to the reduced sales revenues in 2020 due to the onset and uncertainty of the coronavirus.
Digital product lease and maintenance revenues decreased $145,000 or 9.1% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to the continued expected revenue decline in the older outdoor display equipment rental bases acquired in the early 1990s. The financial services market continues to be negatively impacted by the current investment climate resulting in consolidation within that industry and the wider use of flat-panel screens for smaller applications.
19
Table of Contents
Total operating loss for the nine months ended September 30, 2021 decreased $403,000 or 13.1% to $2.7 million from $3.1 million for the nine months ended September 30, 2020, principally due to the increase in revenues.
Digital product sales operating loss decreased $88,000 or 3.0% to $2.8 million for the nine months ended September 30, 2021 compared to $2.9 million for the nine months ended September 30, 2020, primarily due to the increase in revenues and a decrease in the cost of revenue as a percentage of revenues. The cost of Digital product sales increased $1.8 million or 26.9%, primarily due to the increase in revenues. The cost of Digital product sales represented 120.4% of related revenues in 2021 compared to 124.2% in 2020. This decrease as a percentage of revenues is primarily due to the greater volume of revenues. General and administrative expenses for Digital product sales decreased $221,000 or 13.5%, primarily due to decreases in employees’ expenses, partially offset by an increase in consulting expenses.
Digital product lease and maintenance operating income decreased $97,000 or 9.0% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily as a result of the decrease in revenues, partially offset by a decrease in general and administrative expenses. The cost of Digital product lease and maintenance decreased $9,000 or 1.9%, primarily due to a decrease in depreciation expense, partially offset by an increase in employees’ expenses, primarily caused by the extraordinarily low expenses incurred in 2020 due to the onset and uncertainty of the coronavirus. The cost of Digital product lease and maintenance revenues represented 31.7% of related revenues in 2021 compared to 29.4% in 2020. The cost of Digital product lease and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. General and administrative expenses for Digital product lease and maintenance decreased $39,000 or 69.6%, primarily due to a reduction in employees’ expenses.
Corporate general and administrative expenses decreased $412,000 or 32.8% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to reductions in employees’ expenses and legal, rent and insurance expenses.
Net interest expense remained level for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to increases in the outstanding balances for most of the year, offset by decreases in the outstanding balances on the loans as of September 30, 2021 and decreases in interest rates.
The effective tax rate for the nine months ended September 30, 2021 and 2020 was 0.7% and 0.6%, respectively. Both the 2021 and 2020 tax rates are being affected by the valuation allowance on the Company’s deferred tax assets as a result of reporting pre-tax losses.
20
Table of Contents
Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020
The following table presents our Statements of Operations data, expressed as a percentage of revenue for the three months ended September 30, 2021 and 2020:
|
|
Three months ended September 30
|
|
In thousands, except percentages
|
2021
|
|
2020
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital product sales
|
$
|
2,393
|
|
83.5
|
%
|
|
$
|
2,405
|
|
83.0
|
%
|
|
Digital product lease and maintenance
|
|
472
|
|
16.5
|
%
|
|
|
491
|
|
17.0
|
%
|
|
Total revenues
|
|
2,865
|
|
100.0
|
%
|
|
|
2,896
|
|
100.0
|
%
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of digital product sales
|
|
3,010
|
|
105.0
|
%
|
|
|
2,822
|
|
97.4
|
%
|
|
Cost of digital product lease and maintenance
|
|
145
|
|
5.1
|
%
|
|
|
146
|
|
5.1
|
%
|
|
Total cost of revenues
|
|
3,155
|
|
110.1
|
%
|
|
|
2,968
|
|
102.5
|
%
|
|
Gross loss
|
|
(290)
|
|
(10.1)
|
%
|
|
|
(72)
|
|
(2.5)
|
%
|
|
General and administrative and restructuring expenses
|
|
(727)
|
|
(25.4)
|
%
|
|
|
(704)
|
|
(24.3)
|
%
|
|
Operating loss
|
|
(1,017)
|
|
(35.5)
|
%
|
|
|
(776)
|
|
(26.8)
|
%
|
|
Interest expense, net
|
|
(103)
|
|
(3.6)
|
%
|
|
|
(100)
|
|
(3.4)
|
%
|
|
Gain (loss) on foreign currency remeasurement
|
|
62
|
|
2.2
|
%
|
|
|
(49)
|
|
(1.7)
|
%
|
|
Gain on extinguishment of debt
|
|
-
|
|
-
|
%
|
|
|
137
|
|
4.7
|
%
|
|
Pension benefit
|
|
66
|
|
2.3
|
%
|
|
|
37
|
|
1.3
|
%
|
|
Loss before income taxes
|
|
(992)
|
|
(34.6)
|
%
|
|
|
(751)
|
|
(25.9)
|
%
|
|
Income tax expense
|
|
(7)
|
|
(0.3)
|
%
|
|
|
(7)
|
|
(0.3)
|
%
|
|
Net loss
|
$
|
(999)
|
|
(34.9)
|
%
|
|
$
|
(758)
|
|
(26.2)
|
%
|
Total revenues for the three months ended September 30, 2021 decreased $31,000 or 1.1% to $2.9 million compared to the three months ended September 30, 2020, primarily due to decreases in Digital product lease and maintenance revenues and sales revenues.
Digital product sales revenues decreased $12,000 or 0.5% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to a decrease in the sports market.
Digital product lease and maintenance revenues decreased $19,000 or 3.9% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to the continued expected revenue decline in the older outdoor display equipment rental bases acquired in the early 1990s. The financial services market continues to be negatively impacted by the current investment climate resulting in consolidation within that industry and the wider use of flat-panel screens for smaller applications.
Total operating loss for the three months ended September 30, 2021 increased $241,000 to $1.0 million from $776,000 for the three months ended September 30, 2020, principally due to an increase in corporate general and administrative expenses.
21
Table of Contents
Digital product sales operating loss increased $85,000 to $1.1 million for the three months ended September 30, 2021 compared to $1.0 million for the three months ended September 30, 2020, primarily due to an increase in the cost of revenue as a percentage of revenues, partially offset by a decrease in general and administrative expenses. The cost of Digital product sales increased $188,000 or 6.7%, primarily due to increased manufacturing costs. The cost of Digital product sales represented 125.8% of related revenues in 2021 compared to 117.3% in 2020. This increase as a percentage of revenues is primarily due to increases in the manufacturing supply chain costs and consulting costs. General and administrative expenses for Digital product sales decreased $115,000 or 19.5%, primarily due to a decrease in employees’ expenses, partially offset by increases in consulting expenses and bad debt expenses.
Digital product lease and maintenance operating income decreased $11,000 or 3.2% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily as a result of the decrease in revenues, partially offset by a decrease in general and administrative expenses. The cost of Digital product lease and maintenance decreased $1,000 or 0.7%, primarily due to a decrease in depreciation expense, partially offset by an increase in service agents and employees’ expenses, primarily caused by the extraordinarily low expenses incurred in 2020 due to the onset and uncertainty of the coronavirus. The cost of Digital product lease and maintenance revenues represented 30.7% of related revenues in 2021 compared to 29.7% in 2020. The cost of Digital product lease and maintenance includes field service expenses, plant repair costs, maintenance and depreciation. General and administrative expenses for Digital product lease and maintenance decreased $7,000, primarily due to a decrease in bad debt expenses.
Corporate general and administrative expenses increased $145,000 or 127.2% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to the non-recurrence of certain credits recorded in 2020, partially offset by reductions in employees’ expenses and legal, rent and insurance expenses.
Net interest expense increased $3,000 or 3.0% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to an increase in the outstanding balances on the loans, partially offset by decreases in interest rates.
The effective tax rate for the three months ended September 30, 2021 and 2020 was 0.7% and 0.9%, respectively. Both the 2021 and 2020 tax rates are being affected by the valuation allowance on the Company’s deferred tax assets as a result of reporting pre-tax losses.
Liquidity and Capital Resources
Current Liquidity
The Company has incurred significant recurring losses and continues to have a significant working capital deficiency. The Company incurred a net loss of $2.8 million in the nine months ended September 30, 2021 and had a working capital deficiency of $8.6 million as of September 30, 2021. As of December 31, 2020, the Company had a working capital deficiency of $6.3 million. The working capital deficiency increased primarily due to an increase in accounts payable and a decrease in inventories, partially offset by increases in cash, receivables and prepaids, as well as decreases in accrued liabilities and customer deposits.
22
Table of Contents
The Company is dependent on future operating performance in order to generate sufficient cash flows in order to continue to run its businesses. Future operating performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control, including the impact of the current economic environment, the spread of major epidemics (including coronavirus) and other related uncertainties such as government imposed travel restrictions, interruptions to supply chains, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn delayed certain deliveries to our customers.
There is substantial doubt as to whether we will have adequate liquidity, including access to the debt and equity capital markets, to operate our business over the next 12 months from the date of issuance of this Form 10-Q. The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements and fund potential new opportunities.
The Company generated cash of $605,000 and used cash of $2.0 million from operating activities for the nine months ended September 30, 2021 and 2020, respectively. The Company has implemented several initiatives to improve operational results and cash flows over future periods, including reducing head count, reorganizing its sales department and outsourcing certain administrative functions. The Company continues to explore ways to reduce operational and overhead costs. The Company periodically takes steps to reduce the cost to maintain the digital products on lease and maintenance agreements.
Cash, cash equivalents and restricted cash increased $243,000 in the nine months ended September 30, 2021. The increase is primarily attributable to cash generated by operating activities of $605,000, partially offset by payments of long-term debt of $362,000. The current economic environment has increased the Company’s trade receivables collection cycle, and its allowances for uncollectible accounts receivable, but collections continue to be favorable.
Under various agreements, the Company is obligated to make future cash payments in fixed amounts. These include payments under the Company’s current and long-term debt agreements, pension plan minimum required contributions, employment agreement payments and rent payments required under operating lease agreements. The Company has both variable and fixed interest rate debt. Interest payments are projected based on actual interest payments incurred in 2021 until the underlying debts mature.
The following table summarizes the Company’s fixed cash obligations as of September 30, 2021 for the remainder of 2021 and over the next four fiscal years:
|
In thousands
|
Remainder of
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
Long-term debt, including interest
|
$
|
3,216
|
|
$
|
372
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Pension plan payments
|
|
82
|
|
|
47
|
|
|
354
|
|
|
247
|
|
|
115
|
|
Estimated warranty liability
|
|
44
|
|
|
140
|
|
|
93
|
|
|
67
|
|
|
33
|
|
Operating lease payments
|
|
97
|
|
|
348
|
|
|
309
|
|
|
-
|
|
|
-
|
|
Total
|
$
|
3,439
|
|
$
|
907
|
|
$
|
756
|
|
$
|
314
|
|
$
|
148
|
23
Table of Contents
As of September 30, 2021, the Company had outstanding $302,000 of Notes which matured as of March 1, 2012. The Company also had outstanding $220,000 of Debentures which matured on December 1, 2012. The Company continues to consider future exchanges of the Notes and Debentures, but has no agreements, commitments or understandings with respect to any further such exchanges.
The Company may still seek additional financing in order to provide enough cash to cover our remaining current fixed cash obligations as well as providing working capital. However, there can be no assurance as to the amounts, if any, the Company will receive in any such financing or the terms thereof. The Company has no agreements, commitments or understandings with respect to any such financings. To the extent the Company issues additional equity securities, it could be dilutive to existing shareholders.
For a further description of the Company’s long-term debt, see Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt.
Pension Plan Contributions
The minimum required pension plan contribution for 2021 is expected to be $388,000, of which the Company has already contributed $306,000 as of September 30, 2021. See Note 8 to the Condensed Consolidated Financial Statements – Pension Plan for further details.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The Company may, from time to time, provide estimates as to future performance. These forward-looking statements will be estimates and may or may not be realized by the Company. The Company undertakes no duty to update such forward-looking statements. Many factors could cause actual results to differ from these forward-looking statements, including loss of market share through competition, introduction of competing products by others, pressure on prices from competition or purchasers of the Company’s products, interest rate and foreign exchange fluctuations, the impact of inflation, terrorist acts and war.