UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2021

Commission file number 1-2257

TRANS-LUX CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		13-1394750
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

135 East 57^th Street, 14^th Floor, New York, New York		10022
(Address of principal executive offices)		(Zip code)

	(800) 243-5544
(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 X No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 file such files). Yes X No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

Large accelerated filer ___	Accelerated filer ___
Non-accelerated filer X	Emerging growth company ___	Smaller reporting company X

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 X

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Date		Class		Shares Outstanding
~~5/13/~~8/12/21		Common Stock - $0.001 Par Value		13,446,276

TRANS-LUX CORPORATIONAND SUBSIDIARIES

	Table of Contents
		Page No.
Part I - Financial Information (unaudited)

Item 1.	Condensed Consolidated Balance Sheets – ~~March 31,~~June 30, 2021 and December 31, 2020 (see Note 1)	1

	Condensed Consolidated Statements of Operations – Three and Six Months Ended ~~March 31,~~June 30, 2021 and 2020	2

	Condensed Consolidated Statements of Comprehensive Loss – Three and Six Months Ended ~~March 31,~~June 30, 2021 and 2020	2

	Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Three and Six Months Ended ~~March 31,~~June 30, 2021 and 2020	3

	Condensed Consolidated Statements of Cash Flows – ~~Three~~Six Months Ended ~~March 31,~~June 30, 2021 and 2020	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2224

Item 4.	Controls and Procedures	2225

Part II - Other Information

Item 1.	Legal Proceedings	2225

Item 1A.	Risk Factors	2325

�� Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2325

Item 3.	Defaults upon Senior Securities	2326

Item 4.	Mine Safety Disclosures	2326

Item 5.	Other Information	2326

Item 6.	Exhibits	2426

Signatures		2528

Exhibits

Table of Contents

Part I - Financial Information (unaudited)
Item 1.

TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

March 31
2021

December 31
2020
In thousands, except share data

ASSETS

Current assets:
Cash and cash equivalents
$
351

$
43
Receivables, net
1,778
1,382
Inventories

1,437

1,542
Prepaids and other assets

240

327
Total current assets

3,806

3,294
Long-term assets:
Rental equipment, net

594

656
Property, plant and equipment, net
2,135
2,200
Right of use assets

786

858
Other assets

47

47
Total long-term assets

3,562

3,761
TOTAL ASSETS
$
7,368

$
7,055
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable
$
2,699

$
1,640
Accrued liabilities
4,331
4,555
Current portion of long-term debt

2,618

2,546
Current lease liabilities
304
302
Customer deposits

169

524
Total current liabilities

10,121

9,567
Long-term liabilities:

Long-term debt, less current portion
269
269
Long-term lease liabilities

516

591
Deferred pension liability and other

4,098

3,677
Total long-term liabilities

4,883

4,537
Total liabilities

15,004

14,104
Stockholders' deficit:

Preferred Stock Series A - $20 stated value - 416,500 shares authorized;
   shares issued and outstanding: 0 in 2021 and 2020
-
-
Preferred Stock Series B - $200 stated value - 51,000 shares authorized;
   shares issued and outstanding: 0 in 2021 and 2020

-

-
Common Stock - $0.001 par value - 30,000,000 shares authorized;
   shares issued: 13,474,116 in 2021 and 2020;
   shares outstanding: 13,446,276 in 2021 and 2020
13
13
Additional paid-in-capital

41,330

41,330
Accumulated deficit
(38,628)
(38,007)
Accumulated other comprehensive loss

(7,288)

(7,322)
Treasury stock - at cost - 27,840 common shares in 2021 and 2020

(3,063)

(3,063)
Total stockholders' deficit

(7,636)

(7,049)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$
7,368

$
7,055
The accompanying notes are an integral part of these condensed consolidated financial statements.

Part I - Financial Information (unaudited)

Item 1.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	June 30 2021		December 31 2020
In thousands, except share data	June 30 2021		December 31 2020
ASSETS
Current assets:
Cash and cash equivalents	$	43	$	43
Receivables, net		1,823		1,382
Inventories		1,140		1,542
Prepaids and other assets		235		327
Total current assets		3,241		3,294
Long-term assets:
Rental equipment, net		533		656
Property, plant and equipment, net		2,069		2,200
Right of use assets		713		858
Other assets		47		47
Total long-term assets		3,362		3,761
TOTAL ASSETS	$	6,603	$	7,055
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	3,389	$	1,640
Accrued liabilities		4,216		4,555
Current portion of long-term debt		2,954		2,546
Current lease liabilities		305		302
Customer deposits		60		524
Total current liabilities		10,924		9,567
Long-term liabilities:
Long-term debt, less current portion		-		269
Long-term lease liabilities		441		591
Deferred pension liability and other		4,015		3,677
Total long-term liabilities		4,456		4,537
Total liabilities		15,380		14,104
Stockholders' deficit:
Preferred Stock Series A - $20 stated value - 416,500 shares authorized; shares issued and outstanding: 0 in 2021 and 2020		-		-
Preferred Stock Series B - $200 stated value - 51,000 shares authorized; shares issued and outstanding: 0 in 2021 and 2020		-		-
Common Stock - $0.001 par value - 30,000,000 shares authorized; shares issued: 13,474,116 in 2021 and 2020; shares outstanding: 13,446,276 in 2021 and 2020		13		13
Additional paid-in-capital		41,330		41,330
Accumulated deficit		(39,803)		(38,007)
Accumulated other comprehensive loss		(7,254)		(7,322)
Treasury stock - at cost - 27,840 common shares in 2021 and 2020		(3,063)		(3,063)
Total stockholders' deficit		(8,777)		(7,049)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	6,603	$	7,055

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

3 Months Ended
March 31
In thousands, except per share data
2021

2020
Revenues:

Digital product sales
$
2,093
$
1,334
Digital product lease and maintenance

493

579
Total revenues

2,586

1,913

Cost of revenues:
Cost of digital product sales

2,254

1,703
Cost of digital product lease and maintenance

153

186
Total cost of revenues

2,407

1,889
Gross profit

179

24
General and administrative expenses
(799)
(1,230)
Restructuring costs benefit

-

39
Operating loss
(620)

(1,167)
Interest expense, net

(103)

(108)
(Loss) gain on foreign currency remeasurement
(36)
202
Gain on extinguishment of debt

77

-
Pension benefit

67

36
Loss before income taxes

(615)

(1,037)
Income tax expense

(6)

(6)
Net loss
$
(621)

$
(1,043)
Loss per share - basic and diluted
$
(0.05)

$
(0.08)
The accompanying notes are an integral part of these condensed consolidated financial statements.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	3 Months Ended June 30				6 Months Ended June 30
	3 Months Ended June 30				6 Months Ended June 30
In thousands, except per share data	2021		2020		2021		2020
Revenues:
Digital product sales	$	2,396	$	1,518	$	4,489	$	2,852
Digital product lease and maintenance		491		531		984		1,110
Total revenues		2,887		2,049		5,473		3,962

Cost of revenues:
Cost of digital product sales		3,022		2,003		5,276		3,706
Cost of digital product lease and maintenance		164		139		317		325
Total cost of revenues		3,186		2,142		5,593		4,031

Gross loss		(299)		(93)		(120)		(69)
General and administrative expenses		(744)		(1,037)		(1,543)		(2,267)
Restructuring costs benefit		-		(10)		-		29
Operating loss		(1,043)		(1,140)		(1,663)		(2,307)
Interest expense, net		(157)		(155)		(260)		(263)
(Loss) gain on foreign currency remeasurement		(36)		(89)		(72)		113
Gain on extinguishment of debt		-		-		77		-
Pension benefit		67		37		134		73
Loss before income taxes		(1,169)		(1,347)		(1,784)		(2,384)
Income tax expense		(6)		(6)		(12)		(12)
Net loss	$	(1,175)	$	(1,353)	$	(1,796)	$	(2,396)

Loss per share - basic and diluted	$	(0.09)	$	(0.10)	$	(0.13)	$	(0.17)

The accompanying notes are an integral part of these condensed consolidated financial statements.

TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
3 Months Ended
March 31
In thousands
2021

2020
Net loss
$
(621)

$
(1,043)
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss)

34

(191)
Total other comprehensive income (loss), net of tax

34

(191)
Comprehensive loss
$
(587)

$
(1,234)
The accompanying notes are an integral part of these condensed consolidated financial statements.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

	3 Months Ended June 30				6 Months Ended June 30
	3 Months Ended June 30				6 Months Ended June 30
In thousands	2021		2020		2021		2020
Net loss	$	(1,175)	$	(1,353)	$	(1,796)	$	(2,396)
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss)		34		84		68		(107)
Total other comprehensive income (loss), net of tax		34		84		68		(107)
Comprehensive loss	$	(1,141)	$	(1,269)	$	(1,728)	$	(2,503)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(unaudited)

Accumulated
Other
Comprehensive
Loss
Total
Stock-
holders'
Deficit
Preferred Stock
Add'l
Paid-in
Capital
Series A
Series B
Common Stock
Accumulated
Deficit
Treasury
Stock
In thousands, except share data
Shares

Amt

Shares

Amt

Shares

Amt

For the 3 months ended March 31, 2021
Balance January 1, 2021
-

$
-

-

$
-

13,474,116

$
13

$
41,330

$
(38,007)

$
(7,322)

$
(3,063)

(7,049)
Net loss
-
-
-
-
-
-
-
(621)
-
-
(621)
Other comprehensive income, net of tax:

   Unrealized foreign currency translation gain
-

-

-

-

-

-

-

-

34

-

34
Balance March 31, 2021
-

$
-

-

$
-

13,474,116

$
13

$
41,330

$
(38,628)

$
(7,288)

$
(3,063)

$
(7,636)

For the 3 months ended March 31, 2020
Balance January 1, 2020
            -

$
-

-

$
-

13,474,116

$
13

$
41,088

$
(33,164)

$
(6,618)

$
(3,063)

(1,744)
Net loss
            -
-
-
-
-
-
-
(1,043)
-
-
(1,043)
Other comprehensive loss, net of tax:



   Unrealized foreign currency translation loss
            -

-

-

-

-

-

-

-

(191)

-

(191)
Balance March 31, 2020
            -

$
-

-

$
-

13,474,116

$
13

$
41,088

$
(34,207)

$
(6,809)

$
(3,063)

$
(2,978)

The accompanying notes are an integral part of these condensed consolidated financial statements.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (unaudited)

														Accumulated Other Comprehensive Loss				Total Stock- holders' Deficit
	Preferred Stock									Add'l Paid-in Capital
	Series A			Series B			Common Stock					Accumulated Deficit				Treasury Stock
In thousands, except share data	Shares	Amt		Shares	Amt		Shares	Amt				Accumulated Deficit				Treasury Stock
For the 6 months ended June 30, 2021
Balance January 1, 2021	-	$	-	-	$	-	13,474,116	$	13	$	41,330	$	(38,007)	$	(7,322)	$	(3,063)	$	(7,049)
Net loss	-		-	-		-	-		-		-		(1,796)		-		-		(1,796)
Other comprehensive income, net of tax:
Unrealized foreign currency translation gain	-		-	-		-	-		-		-		-		68		-		68
Balance June 30, 2021	-	$	-	-	$	-	13,474,116	$	13	$	41,330	$	(39,803)	$	(7,254)	$	(3,063)	$	(8,777)

For the 3 months ended June 30, 2021
Balance April 1, 2021	-	$	-	-	$	-	13,474,116	$	13	$	41,330	$	(38,628)	$	(7,288)	$	(3,063)	$	(7,636)
Net loss	-		-	-		-	-		-		-		(1,175)		-		-		(1,175)
Other comprehensive income, net of tax:
Unrealized foreign currency translation gain	-		-	-		-	-		-		-		-		34		-		34
Balance June 30, 2021	-	$	-	-	$	-	13,474,116	$	13	$	41,330	$	(39,803)	$	(7,254)	$	(3,063)	$	(8,777)

For the 6 months ended June 30, 2020
Balance January 1, 2020	-	$	-	-	$	-	13,474,116	$	13	$	41,088	$	(33,164)	$	(6,618)	$	(3,063)	$	(1,744)
Net loss	-		-	-		-	-		-		-		(2,396)		-		-		(2,396)
Issuance of warrants	-		-	-		-	-		-		94		-		-		-		94
Other comprehensive loss, net of tax:
Unrealized foreign currency translation loss	-		-	-		-	-		-		-		-		(107)		-		(107)
Balance June 30, 2020	-	$	-	-	$	-	13,474,116	$	13	$	41,182	$	(35,560)	$	(6,725)	$	(3,063)	$	(4,153)

For the 3 months ended June 30, 2020
Balance April 1, 2020	-	$	-	-	$	-	13,474,116	$	13	$	41,088	$	(34,207)	$	(6,809)	$	(3,063)	$	(2,978)
Net loss	-		-	-		-	-		-		-		(1,353)		-		-		(1,353)
Issuance of warrants	-		-	-		-	-		-		94		-		-		-		94
Other comprehensive income, net of tax:
Unrealized foreign currency translation gain	-		-	-		-	-		-		-		-		84		-		84
Balance June 30, 2020	-	$	-	-	$	-	13,474,116	$	13	$	41,182	$	(35,560)	$	(6,725)	$	(3,063)	$	(4,153)


The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

3 Months Ended
March 31
In thousands
2021

2020
Cash flows from operating activities

Net loss
$
(621)
$
(1,043)
Adjustment to reconcile net loss to net cash provided by (used in)
operating activities:

Depreciation and amortization
127
148
Amortization of right of use assets

72

79
Amortization of deferred financing fees and debt discount
32
22
Loss on disposal of assets

-

5
Gain on extinguishment of debt
(77)
-
Loss (gain) on foreign currency remeasurement

36

(202)
Bad debt expense
42
95
Changes in operating assets and liabilities:

Accounts receivable, net
(438)
366
Inventories

105

(78)
Prepaids and other assets
87
(43)
Accounts payable

1,059

375
Accrued liabilities
364
(280)
Operating lease liabilities

(73)

(78)
Customer deposits
(355)
1
Deferred pension liability and other

(122)

(121)
Net cash provided by (used in) operating activities

238

(754)
Cash flows from investing activities

Equipment manufactured for rental
-
(7)
Purchases of property, plant and equipment

-

(172)
Net cash used in investing activities

-

(179)
Cash flows from financing activities

Proceeds from long-term debt
90
977
Payments of long-term debt

(20)

-
Net cash provided by financing activities

70

977
Effect of exchange rate changes

-

1
Net increase in cash, cash equivalents and restricted cash
308
45
Cash, cash equivalents and restricted cash at beginning of year

43

1,385
Cash, cash equivalents and restricted cash at end of period
$
351

$
1,430
Supplemental disclosure of cash flow information:

Interest paid
$
38
$
53
Income taxes paid

9

15
Reconciliation of cash, cash equivalents and restricted cash to amounts
reported in the Consolidated Balance Sheets at end of period:
Current assets

Cash and cash equivalents
$
351
$
580
Long-term assets

Restricted cash

-

850
Cash, cash equivalents and restricted cash at end of period
$
351

$
1,430
The accompanying notes are an integral part of these condensed consolidated financial statements.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	6 Months Ended June 30
	6 Months Ended June 30
In thousands	2021		2020
Cash flows from operating activities
Net loss	$	(1,796)	$	(2,396)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		254		278
Amortization of right of use assets		145		145
Amortization of deferred financing fees and debt discount		63		42
Loss on disposal of assets		-		5
Gain on extinguishment of debt		(77)		-
Loss (gain) on foreign currency remeasurement		72		(113)
Issuance of warrants		-		94
Bad debt expense		45		46
Changes in operating assets and liabilities:
Accounts receivable, net		(487)		581
Inventories		402		29
Prepaids and other assets		92		(141)
Accounts payable		1,749		174
Accrued liabilities		131		(96)
Operating lease liabilities		(147)		(145)
Customer deposits		(464)		292
Deferred pension liability and other		(88)		(269)
Net cash used in operating activities		(106)		(1,474)
Cash flows from investing activities
Equipment manufactured for rental		-		(16)
Purchases of property, plant and equipment		-		(178)
Net cash used in investing activities		-		(194)
Cash flows from financing activities
Proceeds from long-term debt		125		1,184
Payments of long-term debt		(20)		-
Net cash provided by financing activities		105		1,184
Effect of exchange rate changes		1		(3)
Net decrease in cash, cash equivalents and restricted cash		0		(487)
Cash, cash equivalents and restricted cash at beginning of year		43		1,385
Cash, cash equivalents and restricted cash at end of period	$	43	$	898
Supplemental disclosure of cash flow information:
Interest paid	$	162	$	151
Income taxes paid		9		15
Reconciliation of cash, cash equivalents and restricted cash to amounts reported in the Consolidated Balance Sheets at end of period:
Current assets
Cash and cash equivalents	$	43	$	248
Long-term assets
Restricted cash		-		650
Cash, cash equivalents and restricted cash at end of period	$	43	$	898

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TRANS-LUX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 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 ~~$621,000~~$1.8 million in the ~~three~~six months ended ~~March 31,~~June 30, 2021 and had a working capital deficiency of ~~$6.3~~$7.7 million as of ~~March 31,~~June 30, 2021.

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 and extended shut down of businesses. 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.

Our independent registered public accounting firm has issued an opinion on our Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2020 that states that the Consolidated Financial Statements were prepared assuming we will continue as a going concern and further states that the continuing losses and uncertainty regarding our ability to make the required minimum funding contributions to the defined benefit pension plan and the 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”) raises substantial doubt about our ability to continue as a going concern. In addition, 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 MidCap Business Credit LLC (“MidCap”) which was subsequently assigned to Unilumin USA (“Unilumin”), 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.

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 ~~March 31,~~June 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 six months ended ~~March 31,~~June 30, 2021 and 2020, along with the reportable segment for each category:

	For the Three Months Ended				Three months ended				Six months ended
In thousands	March 31, 2021		March 31, 2020		June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Digital product sales:
Catalog and small customized products	$	2,093	$	1,334	$	2,396	$	1,518	$	4,489	$	2,852
Large customized products		-		-		-		-		-		-
Subtotal		2,093		1,334		2,396		1,518		4,489		2,852
Digital product lease and maintenance:
Operating leases		209		279		210		236		419		515
Maintenance agreements		284		300		281		295		565		595
Subtotal		493		579		491		531		984		1,110
Total	$	2,586	$	1,913	$	2,887	$	2,049	$	5,473	$	3,962

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 ~~March 31,~~June 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 ~~$2,270,000~~$1,996,000 are as follows: ~~$649,000~~$375,000 – 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 ~~March 31,~~June 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	March 31, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Gross receivables	$	2,397	$	2,042	$	2,297	$	2,042
Allowance for bad debts		619		660		474		660
Net receivables		1,778		1,382		1,823		1,382
Contract liabilities		609		618		481		618

During the three and six months ended ~~March 31,~~June 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:

	For the Three Months Ended				Three months ended				Six months ended
In thousands	March 31, 2021		March 31, 2020		June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period	$	479	$	69	$	121	$	28	$	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 ~~March 31,~~June 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations for digital product sales was ~~$1.9~~$2.6 million and digital product lease and maintenance was ~~$2.3~~$2.0 million.

The Company expects to recognize revenue on approximately ~~67%~~73%, ~~18%~~15% and ~~15%~~12% 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:

	March 31 2021		December 31 2020		June 30		December 31
In thousands	March 31 2021		December 31 2020		2021		2020
Raw materials	$	1,246	$	1,124	$	864	$	1,124
Work-in-progress		178		324		263		324
Finished goods		13		94		13		94
	$	1,437	$	1,542	$	1,140	$	1,542

Note 5 – Rental Equipment, net

Rental equipment consists of the following:

	March 31 2021		December 31 2020		June 30		December 31
In thousands	March 31 2021		December 31 2020		2021		2020
Rental equipment	$	3,714	$	3,714	$	3,714	$	3,714
Less accumulated depreciation		3,120		3,058		3,181		3,058
Net rental equipment	$	594	$	656	$	533	$	656

Depreciation expense for rental equipment for the six months ended June 30, 2021 and 2020 was $123,000 and $143,000, respectively. Depreciation expense for rental equipment for the three months ended ~~March 31,~~June 30, 2021 and 2020 was ~~$61,000~~$62,000 and ~~$72,000,~~$71,000, respectively.

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Note 6 – Property, Plant and Equipment, net

Property, plant and equipment consists of the following:

	March 31 2021		December 31 2020
In thousands	March 31 2021		December 31 2020		June 30 2021		December 31 2020
Machinery, fixtures and equipment	$	2,923	$	2,923	$	2,923	$	2,923
Leaseholds and improvements		23		23		23		23
		2,946		2,946		2,946		2,946
Less accumulated depreciation		811		746		877		746
Net property, plant and equipment	$	2,135	$	2,200	$	2,069	$	2,200

Machinery, fixtures and equipment having a net book value of $2.1 million and $2.2 million at ~~March 31,~~June 30, 2021 and December 31, 2020, respectively, were pledged as collateral under various financing agreements.

Depreciation expense for property, plant and equipment for the six months ended June 30, 2021 and 2020 was $131,000 and $135,000, respectively. Depreciation expense for property, plant and equipment for the three months ended ~~March 31,~~June 30, 2021 and 2020 was ~~$65,000~~$66,000 and ~~$76,000,~~$59,000, respectively.

Note 7 –Long-Term Debt

Long-term debt consists of the following:

	March 31 2021		December 31 2020
In thousands	March 31 2021		December 31 2020		June 30 2021			December 31 2020
In thousands	March 31 2021		December 31 2020		June 30 2021			December 31 2020
8¼% Limited convertible senior subordinated notes due 2012	March 31 2021		December 31 2020			$	302	$	352
9½% Subordinated debentures due 2012		220		220			220		220
Revolving credit line		702		612			737		612
Term loans - related party		1,000		1,000
Term loans – related party							1,000		1,000
Term loan		811		811			811		811
Total debt		3,035		2,995			3,070		2,995
Less deferred financing costs and debt discount		148		180			116		180
Net debt		2,887		2,815			2,954		2,815
Less portion due within one year		2,618		2,546			2,954		2,546
Net long-term debt	$	269	$	269		$	-	$	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 a modification ~~agreement~~agreements to the Loan Agreement. Subsequent to the June 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% ~~(5.00%~~(7.93% at ~~March 31,~~June 30, 2021) on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. As of ~~March 31,~~June 30, 2021, the balance outstanding under the Loan Agreement was ~~$702,000.~~$737,000. 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 ~~Borrowers~~Company to attain certain EBITDA amounts for certain periods, including the ~~first of which is for the three~~six months ended ~~March 31,~~June 30, 2021. The Company was not in compliance with this covenant. The Loan Agreement is secured by substantially all of the ~~Borrowers’~~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, all of which is outstanding as of June 30, 2021. As of June 30, 2021, the Company had accrued $10,000 of interest related to the Loan Note, which is included in Accrued liabilities in the Consolidated Balance Sheets. 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 ~~March 31,~~June 30, 2021, the entire amount was outstanding and is included in current portion of long-term debt in the Consolidated Balance Sheets. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accrued ~~$195,000~~$210,000 and $180,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Marco Elser, a former director of the Company, exercises voting and dispositive power as investment manager of Carlisle.

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 ~~has~~had agreed to not demand payment on the loan through at least December 31, ~~2020.~~2020, and has not made any such demands as of the date of this filing. As of ~~March 31,~~June 30, 2021, the entire amount was outstanding and is included in current portion of long-term debt Consolidated Balance Sheets. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accrued ~~$195,000~~$210,000 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.

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As of ~~March 31,~~June 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 ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accrued ~~$289,000~~$295,000 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 ~~three~~six months ended ~~March 31,~~June 30, 2021.

As of ~~March 31,~~June 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 ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accrued ~~$237,000~~$242,000 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.

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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:~~cost for the three and six months ended June 30, 2021 and 2020:

	Three months ended March 31				Three months ended June 30				Six months ended June 30
In thousands	2021		2020		2021		2020		2021		2020
Interest cost	$	63	$	97	$	64	$	96	$	127	$	193
Expected return on plan assets		(210)		(203)		(210)		(204)		(420)		(407)
Amortization of net actuarial loss		80		70		80		71		160		141
Net periodic pension benefit	$	(67)	$	(36)
Net periodic pension (benefit) expense					$	(66)	$	(37)	$	(133)	$	(73)

As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had recorded a current pension liability of ~~$465,000~~$481,000 and $1.0 million, respectively, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets, and a long-term pension liability of ~~$4.1~~$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 ~~$465,000,~~$537,000, of which the Company has ~~already~~ contributed $56,000 as of ~~March 31,~~June 30, 2021.

~~Note 9~~ – ~~Leases~~14

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Note 9 – Leases

The Company leases administrative and manufacturing facilities through operating lease agreements. The Company has no finance leases as of ~~March 31,~~June 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.

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.

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Supplemental information regarding leases:

		March, 31	June 30 2021
In thousands, unless otherwise noted		2021	June 30 2021
Balance Sheet:
ROU assets	$	786	$	713
Current lease liabilities – operating		304		305
Non-current lease liabilities - operating		516		441
Total lease liabilities		820		746
Weighted average remaining lease term (years)		2.4		2.2
Weighted average discount rate		8.9%		8.9%
Future minimum lease payments:
Remainder of 2021	$	278	$	186
2022		348		348
2023		295		295
Thereafter		-		-
Total		921		829
Less: Imputed interest		101		83
Total lease liabilities		820		746
Less: Current lease liabilities		304		305
Long-term lease liabilities	$	516	$	441

Supplemental cash flow information regarding leases:

	For the three months ended		For the three months ended June 30, 2021		For the six months ended June 30, 2021
In thousands	March 31, 2021
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	92	$	92	$	184
Non-cash activity:
ROU assets obtained in exchange for lease liabilities		-		-		-

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Total operating lease expense and short-term lease expense was $190,000 and $3,000, respectively, for the six months ended June 30, 2021. Total operating lease expense and short-term lease expense was $96,000 and $1,000, respectively, for the three months ended June 30, 2021. Total operating lease expense and short-term lease expense was $195,000 and $36,000, respectively, for the six months ended June 30, 2020. Total operating lease expense and short-term lease expense was $94,000 and ~~$2,000, respectively, for the three months ended March 31, 2021. Total operating lease expense and short-term lease expense was $101,000 and~~ $18,000, respectively, for the three months ended ~~March 31,~~June 30, 2020.

Note 10 – Stockholders’ Deficit and Loss Per Share

The following table presents the calculation of loss per share for the three and six months ended ~~March 31,~~June 30, 2021 and 2020:


	Three months ended March 31				Three months ended June 30				Six months ended June 30
In thousands, except per share data	2021		2020		2021		2020		2021		2020
Numerator:
Net loss, as reported	$	(621)	$	(1,043)	$	(1,175)	$	(1,353)	$	(1,796)	$	(2,396)
Denominator:
Weighted average shares outstanding		13,696		13,696		13,643		13,696		13,670		13,696
Basic and diluted loss per share	$	(0.05)	$	(0.08)	$	(0.09)	$	(0.10)	$	(0.13)	$	(0.17)

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.

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As of ~~March 31,~~June 30, 2021, ~~and~~the Company did not have any warrants to purchase shares of Common Stock outstanding which were included in the calculation of basic loss per share because their exercise price was less than the average stock price for the period. As of June 30, 2020, the Company had warrants to purchase 250,000 shares of Common Stock outstanding which were included in the calculation of ~~diluted~~basic loss per share because their exercise price was less than the average stock price for the period so their inclusion was dilutive. As of ~~March 31,~~June 30, 2021 and 2020, the Company had other warrants to purchase 1.6 million and ~~10,000~~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.

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Note 12 – Related Party Transactions

The Company has the following related party transactions:

As of ~~March 31,~~June 30, 2021, Unilumin ~~USA (“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 ~~$419,000~~$596,000 and ~~$32,000~~$189,000 of product from Unilumin in the six months ended June 30, 2021 and 2020, respectively, and $480,000 and $156,000 in the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively. The amount payable by the Company to Unilumin was ~~$1.1~~$1.4 million and $231,000 as of ~~March 31,~~June 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 subsequent to June 30, 2021.

Note 14 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~~2 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.

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Foreign revenues represent less than 10% of the Company’s revenues in the ~~three~~six months ended ~~March 31,~~June 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.

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Information about the Company’s operations in its two business segments for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 is as follows:

Three Months Ended March 31
In thousands

2021

2020
Revenues:

Digital product sales
$
2,093
$
1,334
Digital product lease and maintenance

493

579
Total revenues
$
2,586

$
1,913
Operating (loss) income:

Digital product sales
$
(626)
$
(982)
Digital product lease and maintenance

319

362
Corporate general and administrative expenses

(313)

(547)
Total operating loss

(620)

(1,167)
Interest expense, net
(103)
(108)
(Loss) gain on foreign currency remeasurement

(36)

202
Gain on extinguishment of debt
77
-
Pension benefit

67

36
Loss before income taxes
(615)
(1,037)
Income tax expense

(6)

(6)
Net loss
$
(621)

$
(1,043)

March 31

December 31

2021

2020
Assets

Digital product sales
$
5,397
$
5,231
Digital product lease and maintenance

1,620

1,781
Total identifiable assets
7,017
7,012
General corporate

351

43
Total assets

$
7,368

$
7,055

	Three months ended June 30				Six months ended June 30
In thousands	2021		2020		2021		2020
Revenues:
Digital product sales	$	2,396	$	1,518	$	4,489	$	2,852
Digital product lease and maintenance		491		531		984		1,110
Total revenues	$	2,887	$	2,049	$	5,473	$	3,962
Operating (loss) income:
Digital product sales	$	(1,095)	$	(912)	$	(1,721)	$	(1,894)
Digital product lease and maintenance		323		366		642		728
Corporate general and administrative expenses		(271)		(594)		(584)		(1,141)
Total operating loss		(1,043)		(1,140)		(1,663)		(2,307)
Interest expense, net		(157)		(155)		(260)		(263)
(Loss) gain on foreign currency remeasurement		(36)		(89)		(72)		113
Gain on debt extinguishment		-		-		77		-
Pension benefit		67		37		134		73
Loss before income taxes		(1,169)		(1,347)		(1,784)		(2,384)
Income tax expense		(6)		(6)		(12)		(12)
Net loss	$	(1,175)	$	(1,353)	$	(1,796)	$	(2,396)

	June 30 2021		December 31 2020
	June 30 2021		December 31 2020
Assets
Digital product sales	$	5,099	$	5,231
Digital product lease and maintenance		1,461		1,781
Total identifiable assets		6,560		7,012
General corporate		43		43
Total assets	$	6,603	$	7,055

Note 15 14 –Subsequent Events

The Company has evaluated events and transactions subsequent to ~~March 31,~~June 30, 2021 and through the date these Condensed Consolidated Financial Statements were included in this Form 10-Q and filed with the SEC.

17As disclosed in Note 7, the Loan Agreement with MidCap, including all right and responsibilities, was assigned to Unilumin subsequent to June 30, 2021.

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Item 2.2. 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.

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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

~~Three~~Six Months Ended ~~March 31,~~June 30, 2021 Compared to ~~Three~~Six Months Ended ~~March 31,~~June 30, 2020

The following table presents our Statements of Operations data, expressed as a percentage of revenue for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020:

	Three months ended March 31								Six months ended June 30
In thousands, except percentages	2021				2020				2021				2020
Revenues:
Digital product sales	$	2,093	80.9	%	$	1,334	69.7	%	$	4,489	82.0	%	$	2,852	72.0	%
Digital product lease and maintenance		493	19.1	%		579	30.3	%		984	18.0	%		1,110	28.0	%
Total revenues		2,586	100.0	%		1,913	100.0	%		5,473	100.0	%		3,962	100.0	%
Cost of revenues:
Cost of digital product sales		2,254	87.2	%		1,703	89.0	%		5,276	96.4	%		3,706	93.5	%
Cost of digital product lease and maintenance		153	5.9	%		186	9.7	%		317	5.8	%		325	8.2	%
Total cost of revenues		2,407	93.1	%		1,889	98.7	%		5,593	102.2	%		4,031	101.7	%
Gross profit		179	6.9	%		24	1.3	%
Gross loss										(120)	(2.2)	%		(69)	(1.7)	%
General and administrative and restructuring expenses		(799)	(30.9)	%		(1,191)	(62.3)	%		(1,543)	(28.2)	%		(2,238)	(56.5)	%
Operating loss		(620)	(24.0)	%		(1,167)	(61.0)	%		(1,663)	(30.4)	%		(2,307)	(58.2)	%
Interest expense, net		(103)	(4.0)	%		(108)	(5.6)	%		(260)	(4.7)	%		(263)	(6.6)	%
(Loss) gain on foreign currency remeasurement		(36)	(1.4)	%		202	10.6	%		(72)	(1.3)	%		113	2.8	%
Gain on extinguishment of debt		77	3.0	%		-	-	%		77	1.4	%		-	-	%
Pension benefit		67	2.6	%		36	1.9	%		134	2.4	%		73	1.8	%
Loss before income taxes		(615)	(23.8)	%		(1,037)	(54.2)	%		(1,784)	(32.6)	%		(2,384)	(60.2)	%
Income tax expense		(6)	(0.2)	%		(6)	(0.3)	%		(12)	(0.2)	%		(12)	(0.3)	%
Net loss	$	(621)	(24.0)	%	$	(1,043)	(54.5)	%	$	(1,796)	(32.8)	%	$	(2,396)	(60.5)	%

Total revenues for the ~~three~~six months ended ~~March 31,~~June 30, 2021 increased ~~$673,000~~$1.5 million or ~~35.2%~~38.1% to ~~$2.6~~$5.5 million from ~~$1.9~~$4.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020, primarily due to ~~increases~~an increase in Digital product sales.

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Digital product sales revenues increased ~~$759,000~~$1.6 million or ~~56.9%,~~57.4% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to an increase in the ~~elimination~~sports market, principally due to the reduced sales revenues in 2020 due to the onset and uncertainty of the ~~delays and manufacturing facility shutdowns that occurred in the three months ended March 31, 2020.~~coronavirus.

Digital product lease and maintenance revenues decreased ~~$86,000~~$126,000 or ~~14.9%,~~11.4% for the six months ended June 30, 2021 compared to the six months ended June 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.

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Total operating loss for the ~~three~~six months ended ~~March 31,~~June 30, 2021 decreased ~~$547,000~~$644,000 or 27.9% to ~~$620,000~~$1.7 million from ~~$1.2~~$2.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020, principally due to the increase in revenues.

Digital product sales operating loss decreased $173,000 to $1.7 million for the six months ended June 30, 2021 compared to $1.9 million for the six months ended June 30, 2020, primarily due to the increase in revenues and a decrease in the cost of ~~revenues~~revenue as a percentage of revenues.

Digital product sales operating loss decreased $356,000 to $626,000 for the three months ended March 31, 2021 compared to $982,000 for the three months ended March 31, 2020, primarily due to the increase in revenues and a decrease in general and administrative expenses. The cost of Digital product sales increased ~~$551,000~~$1.6 million or ~~32.4%~~42.4%, primarily due to the increase in revenues. The cost of Digital product sales represented ~~107.7%~~117.5% of related revenues in 2021 compared to ~~127.7%~~129.9% in 2020. This decrease as a percentage of revenues is primarily due to ~~manufacturing efficiencies due to the increase in~~greater volume of revenues.General and administrative expenses for Digital product sales decreased ~~$148,000~~$106,000 or ~~24.1%~~10.2%, primarily due to decreases in ~~bad debt expenses and~~ employees’ expenses, partially offset by an increase in consulting expenses.

Digital product lease and maintenance operating income decreased ~~$43,000~~$86,000 or ~~11.9%,~~11.8% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily as a result of the decrease in revenues, partially offset by a decrease in ~~the cost of Digital product lease~~general and ~~maintenance.~~administrative expenses. The cost of Digital product lease and maintenance decreased ~~$33,000~~$8,000 or ~~17.7%~~2.5%, primarily due to a decrease in depreciation ~~expense.~~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 ~~31.0%~~32.2% of related revenues in 2021 compared to ~~32.1%~~29.3% 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 ~~$10,000~~$32,000 or ~~32.3%~~56.1%, primarily due to a reduction in employees’ ~~expenses, partially offset by an increase in bad debt~~ expenses.

Corporate general and administrative expenses decreased ~~$234,000~~$557,000 or ~~42.8%,~~48.8% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to reductions in employees’ expenses and legal, rent and insurance expenses.

Net interest expense decreased ~~$5,000~~$3,000 or ~~4.6%,~~1.1% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to a decrease in interest rates.

The effective tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 was ~~0.8%~~0.7% and ~~0.6%~~0.5%, 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.

1920

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Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

The following table presents our Statements of Operations data, expressed as a percentage of revenue for the three months ended June 30, 2021 and 2020:

	Three months ended June 30
In thousands, except percentages	2021				2020
Revenues:
Digital product sales	$	2,396	83.0	%	$	1,518	74.1	%
Digital product lease and maintenance		491	17.0	%		531	25.9	%
Total revenues		2,887	100.0	%		2,049	100.0	%
Cost of revenues:
Cost of digital product sales		3,022	104.7	%		2,003	97.7	%
Cost of digital product lease and maintenance		164	5.7	%		139	6.8	%
Total cost of revenues		3,186	110.4	%		2,142	104.5	%
Gross loss		(299)	(10.4)	%		(93)	(4.5)	%
General and administrative and restructuring expenses		(744)	(25.7)	%		(1,047)	(51.1)	%
Operating loss		(1,043)	(36.1)	%		(1,140)	(55.6)	%
Interest expense, net		(157)	(5.5)	%		(155)	(7.6)	%
Loss on foreign currency remeasurement		(36)	(1.2)	%		(89)	(4.3)	%
Pension benefit		67	2.3	%		37	1.8	%
Loss before income taxes		(1,169)	(40.5)	%		(1,347)	(65.7)	%
Income tax expense		(6)	(0.2)	%		(6)	(0.3)	%
Net loss	$	(1,175)	(40.7)	%	$	(1,353)	(66.0)	%

Total revenues for the three months ended June 30, 2021 increased $838,000 or 40.9% to $2.9 million from $2.0 million for the three months ended June 30, 2020, primarily due to an increase in Digital product sales.

Digital product sales revenues increased $878,000 or 57.8% for the three months ended June 30, 2021 compared to the three months ended June 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 $40,000 or 7.5% for the three months ended June 30, 2021 compared to the three months ended June 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 June 30, 2021 decreased $97,000 to $1.0 million from $1.1 million for the three months ended June 30, 2020, principally due to a decrease in corporate general and administrative expenses.

Digital product sales operating loss increased $183,000 to $1.1 million for the three months ended June 30, 2021 compared to $912,000 for the three months ended June 30, 2020, primarily due to an increase in the cost of revenue as a percentage of revenues. The cost of Digital product sales increased $1.0 million or 50.9%, primarily due to the increase in revenues. The cost of Digital product sales represented 126.1% of related revenues in 2021 compared to 131.9% 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 $42,000 or 9.8%, primarily due to a decrease in employees’ expenses, partially offset by increases in consulting expenses and bad debt expenses.

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Digital product lease and maintenance operating income decreased $43,000 or 11.7% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily as a result of an increase in the cost of Digital product lease and maintenance and the decrease in revenues, partially offset by a decrease in general and administrative expenses. The cost of Digital product lease and maintenance increased $25,000 or 18.0%, primarily due to 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, partially offset by a decrease in depreciation expense. The cost of Digital product lease and maintenance revenues represented 33.4% of related revenues in 2021 compared to 26.2% 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 $22,000 or 84.6%, primarily due to decreases in bad debt expenses and employees’ expenses.

Corporate general and administrative expenses decreased $323,000 or 54.4% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to reductions in employees’ expenses and legal, rent and insurance expenses.

Net interest expense increased $2,000 or 1.3% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to a decrease in interest rates.

The effective tax rate for the three months ended June 30, 2021 and 2020 was 0.5% and 0.4%, 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 ~~$621,000~~$1.8 million in the ~~three~~six months ended ~~March 31,~~June 30, 2021 and had a working capital deficiency of ~~$6.3~~$7.7 million as of ~~March 31,~~June 30, 2021. As of December 31, 2020, the Company ~~also~~ had a working capital deficiency of $6.3 million. The working capital deficiency ~~was~~increased primarily ~~affected by an increase in the accounts receivable as well as decreases in accrued liabilities and customer deposits, offset by~~due to decreases in inventories and prepaids and other assets, as well as increases in accounts payable and current portion of long-term debt, offset by an increase in ~~accounts payable.~~receivables, as well as decreases in accrued liabilities and customer deposits.

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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 $238,000 and~~ used cash of ~~$754,000~~$106,000 and $1.5 million from operating activities for the ~~three~~six months ended ~~March 31,~~June 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 $308,000~~remained level in the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to ~~$351,000 at March 31, 2021 from~~the balance of $43,000 at December 31, 2020. The ~~increase is~~fluctuations are primarily attributable to ~~cash generated by operating activities of $238,000 and~~net borrowings on the revolving loan of ~~$90,000.~~$125,000, partially offset by cash used in operating activities of $106,000. 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.

~~Table of Contents~~

The following table summarizes the Company’s fixed cash obligations as of ~~March 31,~~June 30, 2021 for the remainder of 2021 and over the next four fiscal years:

In thousands	Remainder of 2021		2022		2023		2024		2025		Remainder of 2021		2022		2023		2024		2025
Long-term debt, including interest	$	3,558	$	406	$	-	$	-	$	-	$	3,499	$	542	$	-	$	-	$	-
Pension plan payments		409		407		355		248		115		326		406		355		248		114
Estimated warranty liability		110		114		73		48		20		79		124		81		56		27
Operating lease payments		281		348		309		-		-		195		348		309		-		-
Total	$	4,358	$	1,275	$	737	$	296	$	135	$	4,099	$	1,420	$	745	$	304	$	141

As of ~~March 31,~~June 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.

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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 ~~$465,000,~~$537,000, of which the Company has already contributed $56,000 as of ~~March 31,~~June 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.

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Item 3.3. Quantitative and Qualitative Disclosures about Market Risk

The Company is subject to interest rate risk on its long-term debt. The Company manages its exposure to changes in interest rates by the use of variable and fixed interest rate debt. The fair value of the Company’s fixed rate long-term debt is disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt. Every 1-percentage-point change in interest rates would result in an annual interest expense fluctuation of approximately $7,000. In addition, the Company is exposed to foreign currency exchange rate risk mainly as a result of its investment in its Canadian subsidiary. A 10% change in the Canadian dollar relative to the U.S. dollar would result in a currency remeasurement expense fluctuation of approximately ~~$272,000,~~$275,000, based on dealer quotes, considering current exchange rates. The Company does not enter into derivatives for trading or speculative purposes and did not hold any derivative financial instruments at ~~March 31,~~June 30, 2021.

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Item 4.4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and our Chief Accounting Officer (our principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Our Chief Executive Officer and Chief Accounting Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the 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 that such information is accumulated and communicated to our management (including our Chief Executive Officer and our Chief Accounting Officer) to allow timely decisions regarding required disclosures. Based on such evaluation, our Chief Executive Officer and Chief Accounting Officer have concluded that these disclosure controls are effective as of ~~March 31,~~June 30, 2021.

Changes in Internal Control over Financial Reporting. There has been no change in the Company’s internal control over financial reporting that occurred in the quarter ended ~~March 31,~~June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II – Other Information

Item 1.1. Legal Proceedings

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.

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Item 1A.1A. Risk Factors

The Company is subject to a number of risks including general business and financial risk factors. Any or all of such factors could have a material adverse effect on the business, financial condition or results of operations of the Company. You should carefully consider the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2.2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

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Item 3.3. Defaults upon Senior Securities

As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company had outstanding $302,000 of Notes which are no longer convertible into common shares. The Notes matured as of March 1, 2012 and are currently in default. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accrued ~~$289,000~~$295,000 and $329,000, respectively, of interest related to the Notes, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets.

As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company has outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accrued ~~$237,000~~$242,000 and $232,000, respectively, of interest related to the Debentures, which is included in accrued liabilities in the Condensed 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.

Item 4.4. Mine Safety Disclosures

Not applicable.

Item 5.5. Other Information

~~None.~~

~~Table~~On August 2, 2021, the Company appointed Yantao Yu to be the Company’s Chief Operating Officer. Mr. Yu, 45, has served as an independent director of ~~Contents~~the Company since July 30, 2019. Mr. Yu has been the Chief Financial Officer of subsidiaries of the Unilumin Group Co. Ltd. in the United States, since September 2018. During the last two years, other than the Company’s transactions with Unilumin, there have been no transactions or proposed transactions by the Company in which Mr. Yu has had or is to have a direct or indirect material interest, and there are no family relationships between Mr. Yu and any of the Company’s other executive officers or directors.

Item 6.6. Exhibits

10.1 Modification Agreement to the Loan Agreement with MidCap Business Credit LLC dated as of May 31, 2021, filed herewith.

10.2 Assignment Without Recourse of Loan Agreement with MidCap Business Credit LLC to Unilumin USA dated as of July 30, 2021, filed herewith.

31.1 Certification of Nicholas J. Fazio, Interim Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

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31.2 Certification of Todd Dupee, Senior Vice President and Chief Accounting Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1 Certification of Nicholas J. Fazio, Interim Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.2 Certification of Todd Dupee, Senior Vice President and Chief Accounting Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TRANS-LUX CORPORATION
	(Registrant)

	by	/s/ Nicholas J. Fazio
		Nicholas J. Fazio
		Chief Executive Officer

	by	/s/ Todd Dupee
		Todd Dupee
		Senior Vice President and Chief Accounting Officer

Date: ~~May 14,~~August 13, 2021

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TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	3 Months Ended March 31
	3 Months Ended March 31
In thousands, except per share data	2021		2020
Revenues:
Digital product sales	$	2,093	$	1,334
Digital product lease and maintenance		493		579
Total revenues		2,586		1,913

Cost of revenues:
Cost of digital product sales		2,254		1,703
Cost of digital product lease and maintenance		153		186
Total cost of revenues		2,407		1,889

Gross profit		179		24
General and administrative expenses		(799)		(1,230)
Restructuring costs benefit		-		39
Operating loss		(620)		(1,167)
Interest expense, net		(103)		(108)
(Loss) gain on foreign currency remeasurement		(36)		202
Gain on extinguishment of debt		77		-
Pension benefit		67		36
Loss before income taxes		(615)		(1,037)
Income tax expense		(6)		(6)
Net loss	$	(621)	$	(1,043)

Loss per share - basic and diluted	$	(0.05)	$	(0.08)

The accompanying notes are an integral part of these condensed consolidated financial statements.