As filed with the Securities and Exchange Commission on August 7, 2015


                                                                                   AS FILED WITH THE

Registration No. 333-205273

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION ON JULY 26, 2012

 Registration

WASHINGTON, D.C. 20549
Amendment No. 333-_______________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form2 to

FORM S-1


REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933


TRANS-LUX CORPORATION

(Exact name of registrant as specified in its charter)charter

)

Delaware

3990

13-1394750

(State or other jurisdiction

of incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

26 Pearl Street

Norwalk, CT 06850

Telephone: (203) 853-4321

 (Address,


445 Park Avenue, Suite 2001
New York, NY 10022
(800) 243-5544
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Mr. Jean-Marc


J.M. Allain

President and Chief Executive Officer

26 Pearl Street

Norwalk, CT 06850

Telephone: (203) 853-4321

 (Name,

445 Park Avenue, Suite 2001
New York, NY 10022
(800) 243-5544
(Name, address including zip code, and telephone number, including area code, of agent for service)


With Copies to:

Richard

Robert H. Friedman, Esq.
Kenneth A. Friedman,Schlesinger, Esq.
Olshan Frome Wolosky LLP
Park Avenue Tower
65 East 55th

David B. Manno, Esq. Street

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone: NY 10022

(212) 930-9700

451-2300


Fax: (212) 930-9725

Approximate date of commencement of proposed sale to the public:public From time to time:  As soon as practicable after the effective date of this registration statement.Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ýx 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering.  ¨o 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨o 

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)one):

Large Accelerated Filer accelerated filer  ¨o 

Non-accelerated filer  ¨

Accelerated Filer  ¨
o 

Non-Accelerated Filer o (Do not check if a smallerSmaller reporting company)company  ý

Smaller Reporting Company þ 


 

CALCULATION OF REGISTRATION FEE

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered

Amount to be Registered(1) 

Proposed Maximum Offering Price per Share(2) 

Proposed Maximum Aggregate Offering Price

Amount of Registration Fee

Common stock, par value $0.001 per share

20,825,000 (3)

$0.32

$6,664,000

$763.69

Common stock, par value $0.001 per share

11,010,000 (4)

$0.32

$3,523,200

$403.76

 

 

 

 

 

Total

31,835,000

$10,187,200

$1,167.45

 

 

 

Title of Each Class of
Securities to be Registered
Amount to
be Registered
Proposed
Maximum
Offering Price
per Share
Proposed
Maximum
Aggregate
Offering Price
Amount of
Registration Fee
Non-transferable subscription rights to purchase Series B Convertible Preferred Stock, $0.001 par value per share[●] ––
– (1)
Shares of Series B Convertible Preferred Stock issuable upon exercise of the non- transferable subscription rights[●][●]
$10,400,000(2)
$1,208.48(3)
Shares of Common Stock, $0.001 par value per share, issuable upon conversion of, or as dividends on outstanding shares of, the Series B Convertible Preferred Stock(4)
[●] – ––

(1)

The subscription rights are being distributed without consideration. No separate registration fee is payable with respect to the subscription rights since they are being registered on the same registration statement as the Series B Convertible Preferred Stock offered hereby.

(2)Represents the aggregate gross proceeds from the assumed exercise of all subscription rights to be distributed.
(3)Calculated based on the maximum aggregate offering price of the Series B Convertible Preferred Stock underlying the subscription rights. $1,208.48 of the registration fee was previously paid.
(4)Pursuant to Rule 416, there are also deemed covered hereby such additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. In the event that the registrant is required, as a result of anti-dilution adjustments pursuant to the terms of the Series B Convertible Preferred Stock that are not contemplated by Rule 416, to issue more shares of Series B Convertible Preferred Stock or Common Stock than are registered hereunder and that may not be issued in an exempt transaction, the registrant will file a new registration under the Securities Act the shares of common stock offered hereby also include an indeterminate number1933 in respect of such additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.

(2)

With respect to the shares of common stock offered by the selling stockholders named herein, estimated at $0.35 per share, the average of the high and low prices of the common stock as reported on the OTC Bulletin Board on July 23, 2012, for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act.

(3)

Represents outstanding shares of common stock.

(4)

Represents shares issuable upon exercise of warrants.

shares.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

The information inregistrant hereby amends this prospectus is not complete andregistration statement on such date or dates as may be changed. We may not sell these securitiesnecessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement filed withshall become effective on such date as the Securities and Exchange Commission, is effective. This prospectus is not an offeracting pursuant to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JULY 26, 2012

AUGUST 7, 2015

PRELIMINARY PROSPECTUS

31,835,000 Shares

TRANS-LUX CORPORATION

This prospectus relates

[●] Subscription Rights to the sale by the selling stockholders identified in this prospectusPurchase Shares of Series B Convertible Preferred Stock
at $[●] per Share
[●] Shares of Series B Convertible Preferred Stock
[●] Shares of Common Stock
Trans-Lux Corporation is distributing, at no charge, to holders of our common stock non-transferable subscription rights to purchase up to 31,835,000[●] shares of our common stock. AllSeries B Convertible Preferred Stock, which we refer to as the Series B Preferred, at a subscription price of these$[●] per share. The Series B Preferred carries a 5.0% cumulative annual dividend on the Stated Value of $[●] per share and will be convertible into shares of our common stock are being offeredat an initial conversion price of $[●] per share, representing a conversion ratio of [approximately] [●] shares of common stock for resale byeach share of Series B Preferred held at the selling stockholders.

The pricestime of conversion, subject to adjustment.

You will receive one subscription right for each share of common stock owned at which5:00 p.m., Eastern Time, on [●], 2015, the selling stockholders may sell shares will be determined by the prevailing market pricerecord date for the rights offering. Each subscription right will entitle you to purchase [●] shares or in negotiated transactions.of our Series B Preferred at a subscription price of $[●] per whole share, which we refer to as the basic subscription right. If you fully exercise your basic subscription right and other stockholders do not fully exercise their basic subscription rights, you may also exercise an over-subscription right to purchase, at the same price, the additional shares of Series B Preferred that remain unsubscribed at the expiration of the rights offering, subject to the availability and pro rata allocation of Series B Preferred among persons exercising this over-subscription right. We will not receiveissue fractional shares of Series B Preferred. If the number of subscription rights you exercise would otherwise permit you to purchase a fraction of a share, the number of shares that you may purchase will be rounded down to the nearest whole share. If all of the basic subscription rights are exercised, the total purchase price of the shares offered in the rights offering would be approximately $[●] million. The subscription rights may not be sold, transferred or assigned.
The subscription rights will expire if they are not exercised before 5:00 p.m., Eastern Time, on [●], 2015, the expiration date for the rights offering, unless we extend the rights offering period. We reserve the option to extend the rights offering and the period for exercising your subscription rights for a period not to exceed 30 days, although we do not presently intend to do so. You should carefully consider whether to exercise your subscription rights before the expiration date. All exercises of subscription rights are irrevocable, even if the rights offering is extended by our Board of Directors. Our Board of Directors may cancel the rights offering at any proceeds fromtime before its expiration for any reason. If the sale of these sharesrights offering is cancelled, all subscription payments received by the selling stockholders.

WeSubscription Agent will bear all costs relatingbe returned, without interest, as soon as practicable.

Our Board of Directors is not making any recommendation regarding your exercise of the subscription rights. You should carefully consider whether to exercise your subscription rights prior to the registrationexpiration of these sharesthe rights offering.
The closing price of our common stock other than any selling stockholders’ legal or accounting costs or commissions.

on August 5, 2015 was $3.15.  Our common stock is quoted on the OTCQBOTC Pink under the symbol “TNLX.PK”.“TNLX.” The last reported sale pricesubscription rights issued in the rights offering will not be listed for trading on any stock exchange or market.

The purchase of our common stock as reported bysubscription rights and the OTCQB on July 25, 2012, was $0.32 per share.

Investing in our common stock is highly speculative and involves a high degreeexercise of risk. You should carefully consider the risks and uncertainties described under the headingsubscription rights for shares of Series B Preferred involve risks. See “Risk Factors” beginning on page 612 of this prospectus as well as the risk factors and other information contained in any documents we incorporate by reference into this prospectus before making a decision to purchase our common stock.

exercising your subscription rights. See “Incorporation by Reference” and “Available Information” on page 50 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracyadequacy or adequacyaccuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is        _____, 2012

1

, 2015.
 

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
i
PROSPECTUS SUMMARY

3

1

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTSQUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

6

RISK FACTORS

6

12

CAPITALIZATIONINFORMATION ABOUT TRANS-LUX

11

22

USE OF PROCEEDS

12

23

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERSTHE RIGHTS OFFERING

12

24

DIVIDEND POLICY

13

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

13

BUSINESS

20

PROPERTIES

23

EXECUTIVE COMPENSATION

28

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

31

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

32

SELLING STOCKHOLDERS

33

DESCRIPTION OF SECURITIES

38

PLAN OF DISTRIBUTION

39

34

CAPITALIZATION
35
DILUTION
36
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
37
DESCRIPTION OF CAPITAL STOCK
38
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
43
LEGAL MATTERS

41

50

EXPERTS

41

50

WHERE YOU CAN FIND ADDITIONALINCORPORATION BY REFERENCE
50
AVAILABLE INFORMATION

41

AUDITED FINANCIAL STATEMENTS

43

UNAUDITED FINANCIAL STATEMENTS

63

50


You should rely only on theTable of Contents
ABOUT THIS PROSPECTUS
We have not authorized anyone to provide you with additional or different information from that contained or incorporated by reference in this prospectus. We have not authorizedtake no responsibility for, and can provide no assurances as to the reliability of, any other person to provideinformation that you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted.may obtain from other sources. You should assume that the information appearingcontained in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, resultsprospectus and any information we have incorporated by reference is accurate only as of operations and prospects may have changed since that date.

2

the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any exercise of the subscription rights.
 

PROSPECTUS SUMMARY

The following summary highlights information contained elsewhereThis prospectus does not offer to sell, or ask for offers to buy, any shares of our Series B Preferred in any state or jurisdiction (within or outside the United States) where it would not be lawful or where the person making the offer is not qualified to do so.

As used in this prospectus. This summary may not contain all ofprospectus, “Trans-Lux,” the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms “the Company,“Company,” “we,” “us,” and “our” refer to Trans-Lux Corporation and its subsidiaries.

Overview

 We

As permitted under the rules of the Securities and Exchange Commission (the “SEC”), this prospectus incorporates important business information about the Company that is contained in documents that we file with the SEC, but that are a leading designer and manufacturer of digital signage display solutions.  The essential elementsnot included in or delivered with this prospectus. You may obtain copies of these systems aredocuments, without charge, from the real-time, programmable digital displayswebsite maintained by the Company designs, manufactures, distributesSEC at www.sec.gov, as well as other sources. See “Incorporation by Reference” and services.  These display systems utilize LED (light emitting diode) technologies.  Designed to meet the digital signage solutions for any size venue’s indoor and outdoor needs, these display products include full color text, graphic and video displays for stock and commodity exchanges, financial institutions, college and high school sports stadiums, schools, casinos, convention centers, corporate applications, government applications, theatres, retail sites, airports, billboard sites and numerous other applications.  In 2010, the Company started a new business opportunity“Available Information” in the LED lighting market with energy-saving lighting solutions that feature a comprehensive offering of the latest LED lighting technologies that provide facilities and public infrastructure with “green” lighting solutions that emit less heat, save energy and enable creative designs.  The Company also owns an income-producing real estate property which has been placed on the market for sale.

this prospectus.

About CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Offering

On June 17, 2011, the Company entered into a Subscription Agreement with Hackel Family Associates LLC (“HFA”) pursuant to which the Company sold to HFA a secured promissory note in the principal amount of $650,000.  In connection with the sale of the Note, the Company issued to HFA five-year warrants (the "HFA Warrants") to purchase 1,000,000 shares of common stock of the Company at an initial exercise price of $1.00. The exercise price of the HFA Warrants was reduced to $0.10 upon the Company’s filing of its Amended and Restated Certificate of Incorporation on July 2, 2012. The HFA Warrants are exercisable on a cashless basis if at any time there is no effective registration statement for the underlying shares of common stock.

On November 14, 2011, we completed the sale of an aggregate of $8.3 million of securities (the  “Offering”) consisting of (i) 416,500 shares of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) having a stated value of $20.00 per share and convertible into fifty (50) shares of the Company’s common stock (or an aggregate of 20,825,000 shares of common stock), and (ii) 4,165,000 one-year warrants (the “A Warrants”).  These securities were issued at a purchase price of $20,000 per unit (the “Unit”).  Each Unit consisted of 1,000 shares of Series A Preferred Stock (convertible into 50,000 shares of common stock) and 10,000 A Warrants.  Each A Warrant entitles the holder to purchase (a) one share of the Company’s common stock and (b) a three-year warrant (the “B Warrants”), at an  exercise price of $0.20 per share  Each B Warrant shall entitle the holder to purchase one share of the Company’s common stock at an exercise price of $0.50 per share (see “Recent Developments” below).

The net proceeds of the Offering were used to fund the restructuring of the Company’s outstanding debt, which included: (1) a cash settlement to holders of the 8 ¼ % Limited convertible senior subordinated notes due 2012 (the “Notes”) in the amount of $2,019,600; (2) a cash settlement to holders of the 9 ½ % Subordinated debentures due 2012 (the “Debentures”) in the amount of $71,800; (3) payment of the Company’s outstanding term loan with the senior lender in the amount of $320,833 and (4) payment of $1.0 million on the Company’s outstanding revolving loan with the senior lender under the Company’s amended and restated commercial loan and security agreement with People’s United Bank (as amended, the “Credit Agreement”).  Any net proceeds of the Offering remaining after payment to holders of the Notes, the Debenturesprospectus and the senior lender were used for working capital and other general corporate purposes.

3

R.F. Lafferty & Co., Inc. (the “Placement Agent”), a FINRA registered broker-dealer, was engaged as placement agentdocuments incorporated by reference in connection withthis prospectus include forward-looking statements within the private placement.  The placement agent was paid fees based upon a maximummeaning of an $8,000,000 raise (and no fees were paid upon the additional $330,000Section 27A of gross proceeds raised which brought the total offering to $8,330,000).  Such fees consisted of a cash fee in the amount of $400,000 and warrants (the “Placement Agent Warrants”) to purchase 24 units (the “Placement Agent Units”), each unit consisting of 50,000 shares of common stock and 10,000 A Warrants.  The A Warrants issuable upon exercise of the Placement Agent Warrants (and the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent’s Warrants) are substantially the same as the A Warrants(and B Warrants) sold to the investors in the Offering, except that they have the following exercise periods: (i) the A Warrants issuable upon exercise of the Placement Agent Warrants are exercisable for a period of two (2) years from the date of exercise of the Placement Agent Warrants; and (ii) the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants are exercisable for a period equal to the longer of (i) three (3) years from the Closing Date or (ii) one (1) year from the date or exercise of the A Warrants underlying the Placement Agent Warrants.  The Placement Agent Warrants are exercisable at a price of $25,000 per Placement Agent Unit (exercisable in partial Placement Agent Units), and the A Warrants and B Warrants issuable upon exercise of the Placement Agent Warrants have an exercise price of $0.20 per share in the case of the A Warrants and $0.50 per share in the case of the B Warrants.

The securities sold in the private placement were not registered under the Securities Act of 1933, as amended, (the “Securities Act”),and Section 21E of the Securities Exchange Act of 1934, as amended. Any statement that is not a statement of historical fact should be considered a forward-looking statement. We often use words or phrases of expectation or uncertainty like “believe,” “anticipate,” “plan,” “expect,” “intent,” “project,” “future,” “may,” “will,” “could,” “would” and similar words to help identify forward-looking statements. Examples of forward-looking statements include statements regarding our future financial results, operating results, business strategies, projected costs, product development or future sales, competitive positions and plans and objectives of management for future operations.

We have based these forward-looking statements on our current expectations and projections about future events. However, they are subject to various risks and uncertainties, many of which are outside our control, including the circumstances described in the section entitled “Risk Factors” in this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2014.  Accordingly, our actual results or financial condition could differ materially and adversely from those discussed in, or implied by, these forward-looking statements. We caution you not to place undue reliance on our forward-looking statements. Each forward-looking statement speaks only as of the date on which it is made, and, except to the extent required by federal securities laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
PROSPECTUS SUMMARY
This summary highlights specific information included elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider before investing in the subscription rights or Series B Preferred, and it is qualified in its entirety by the more detailed information included in this prospectus. To understand the rights offering fully, you should carefully read this entire prospectus, including the risks discussed under the “Risk Factors” section, our financial statements and related notes and the other information incorporated by reference herein as described under “Incorporation by Reference.”
The Company
Trans-Lux is a leading supplier of LED technology for high resolution video displays and lighting applications.  The essential elements of these systems are the real-time, programmable digital displays and lighting fixtures 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’s LED lighting fixtures offer energy-saving lighting solutions that feature a comprehensive offering of the latest LED lighting technologies that provide facilities and public infrastructure with “green” lighting solutions that emit less heat, save energy and enable creative designs.  Our principal executive offices are located at 445 Park Avenue, Suite 2001, New York, NY 10022, where our telephone number is (800) 243-5544.
Subscription Rights
We are distributing, at no charge, to holders of our common stock non-transferable subscription rights to purchase up to [●] shares of our Series B Preferred. You will receive one subscription right, exercisable for the purchase of [●] shares of Series B Preferred, for each share of common stock you owned on the record date.
Securities Offered
Each share of Series B Preferred carries a 5.0% cumulative annual dividend on the Stated Value of $[●] per share; will be convertible into shares of our common stock at an initial conversion price of $[●] per share, representing a conversion ratio of [approximately] [●] shares of common stock for each share of Series B Preferred held at the time of conversion, subject to adjustment; may be subject to mandatory conversion after three years; and will have a priority upon liquidation equal to the greater of $[●] per share and the amount payable on the number of shares of common stock into which a share of Series B Preferred would have been converted. See “Description of Capital Stock — Preferred Stock — Series B Convertible Preferred Stock” on page 39 for more information about the terms of the Series B Preferred. Shares of Series B Preferred will be issued only in book-entry form.
Subscription Price
$[●] per whole share of Series B Preferred, payable in cash. To be effective, any payment for the exercise of a right must clear before the expiration of the rights offering.
Basic Subscription Right
Each subscription right will entitle you to purchase [●] shares of our Series B Preferred at a subscription price of $[●] per share, which we refer to as the basic subscription right. See “The Rights Offering — The Subscription Rights — Basic Subscription Right” on page 24 for more information.
Over-Subscription Right
If you fully exercise your basic subscription right and other stockholders do not fully exercise their basic subscription rights, you may also exercise an over-subscription right to purchase additional shares of Series B Preferred that remain unsubscribed at the expiration of the rights offering, subject to availability. If the number of unsubscribed shares is not sufficient to satisfy all of the properly exercised over-subscription rights requests, the available shares will be prorated among those who properly exercised over-subscription rights in proportion to their respective basic subscription rights. See “The Rights Offering — The Subscription Rights — Over-Subscription Right” on page 24 for more information.
Record Date
5:00 p.m., Eastern Time, on [●], 2015.
Expiration Date
5:00 p.m., Eastern Time, on [●], 2015.  We reserve the option to extend the rights offering and the period for exercising your subscription rights for a period not to exceed 30 days, although we do not presently intend to do so.
Use of Proceeds
We intend to use the net proceeds from the rights offering for the repayment of certain debt and for payment of certain required contributions under our defined benefit pension plan. We intend to use the remainder of the net proceeds for general corporate purposes. See “Use of Proceeds” on page 23 for more information .
Non-Transferability of Subscription Rights
The subscription rights issued in the rights offering are non-transferable and may not be sold, transferred or assigned and will not be listed for trading on any stock exchange or market.
No Board Recommendation
Our Board of Directors is making no recommendation regarding your exercise of the subscription rights. You are urged to make your decision based on your own assessment of our business and the rights offering. Please see “Risk Factors” on page 12 for a discussion of some of the risks involved in investing in our common stock.
No Revocation
All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights offering is extended by our Board of Directors. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of our Series B Preferred at a subscription price of $[●] per share.
U.S. Federal Income Tax Considerations
For U.S. federal income tax purposes, you will not recognize income or loss in connection with the receipt or exercise of subscription rights unless the rights offering is part of a “disproportionate distribution” within the meaning of applicable tax law, in which case you may recognize taxable income upon receipt of the subscription rights. We believe that the rights offering will not be part of a disproportionate distribution. The disproportionate distribution rules are complicated, however, and their application is uncertain. This position is not binding on the Internal Revenue Service, or the courts and accordingly, it is possible that the Internal Revenue Service could challenge this position. You may be required to allocate a portion of your tax basis in your common stock to the subscription rights we distribute to you in the offering, depending on the value of the subscription rights. For further information, please see “Material U.S. Federal Income Tax Consequences” beginning on page 43. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and the disposition or exercise of subscription rights and the receipt, ownership and disposition of Series B Preferred.
Extension, Cancellation and Amendment
We reserve the option to extend the rights offering and the period for exercising your subscription rights for a period not to exceed 30 days, although we do not presently intend to do so. If we elect to extend the expiration of the rights offering, we will issue a press release announcing the extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration of the rights offering. We will extend the duration of the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in the rights offering. Our Board of Directors may cancel the rights offering at any time before its expiration for any reason. If the rights offering is cancelled, we will issue a press release notifying stockholders of the cancellation and all subscription payments received by the Subscription Agent will be returned, without interest or penalty, as soon as practicable.  Our Board of Directors also reserves the right to amend the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such amendments may include a change in the subscription price, although no such change is presently contemplated. If we should make any fundamental change to the terms set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included, offer potential purchasers who have subscribed for rights the opportunity to cancel such subscriptions and issue a refund of any money advanced by such stockholder and recirculate an updated prospectus after the post-effective amendment is declared effective with the SEC. In addition, upon such event, we may extend the expiration date of the rights offering to allow holders of rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes with respect to the rights offering and the new expiration date.  See “The Rights Offering — Expiration Date, Extension, and Amendments” on page 30 for more information.
Procedures for Exercising Rights
To exercise your subscription rights, you must complete the rights certificate and deliver it to the Subscription Agent, together with full payment for all the subscription rights you elect to exercise under the basic subscription right and over-subscription right. See “The Rights Offering” beginning on page 24 for detailed information on the procedure and requirements for exercising your subscription rights. You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you cannot deliver your rights certificate to the Subscription Agent before the expiration of the rights offering, you may follow the guaranteed delivery procedures described under “The Rights Offering — Guaranteed Delivery Procedures” on page 29.
No Minimum Subscription Requirement
There is no minimum subscription requirement. We will consummate the rights offering regardless of the amount raised from the exercise of basic and over-subscription rights by the expiration date.
Subscription Agent
Continental Stock Transfer & Trust Company
Information Agent
Morrow & Co., LLC
Shares Outstanding Before the Rights Offering
[●] shares of our common stock were issued and outstanding on the record date. There were no shares of Series B Preferred outstanding on the record date.
Shares Outstanding After Completion of the Rights Offering
Assuming that all shares of Series B Preferred offered hereby are issued, we expect [●] shares of our Series B Preferred will be outstanding immediately after completion of the rights offering, which shares would be convertible into a total of [●] shares of common stock.
Fees and Expenses
We will pay the fees and expenses we incur related to the rights offering.
OTC Pink Trading Symbol
of our Common Stock
Our common stock is quoted on OTC Pink under the symbol “TNLX.”
Questions
If you have any questions about the rights offering, including questions about subscription procedures and requests for additional copies of this prospectus or other documents, please contact the Information Agent, Morrow & Co., LLC, by email at tnlx.info@morrowco.com or by telephone at (800) 662-5200.  Banks and brokerage firms also may contact Morrow & Co., LLC at (203) 658-9400.
Risk FactorsBefore you purchase subscription rights or invest in the rights offering, you should be aware that there are risks associated with these transactions, including the risks described in the section entitled “Risk Factors” beginning on page 12 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2014. You should carefully read and consider these risk factors together with all of the other information included in or incorporated by reference into this prospectus before you decide to purchase subscription rights or to exercise your subscription rights to purchase shares of Series B Preferred.

QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
The following are examples of what we anticipate will be common questions about the rights offering. The answers are based on selected information included elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the rights offering. This prospectus and the documents incorporated by reference herein contain more detailed descriptions of the terms and conditions of the rights offering and provide additional information about us and our business, including potential risks related to the rights offering, the shares of our Series B Preferred offered hereby and our business. We urge you to read this entire prospectus, our financial statements and related notes and the other information incorporated by reference herein as described under “Incorporation by Reference.”
What is the rights offering?
We are distributing to holders of our common stock, at no charge, non-transferable subscription rights to purchase shares of our Series B Preferred. We have granted to you, as a stockholder on the record date, one subscription right for each share of our common stock you owned at that time. If you hold your shares in the name of a broker, bank or other nominee who uses the services of the Depository Trust Company (“DTC”), DTC will issue one subscription right to the nominee for each share of our common stock you own at the record date. The subscription rights will be evidenced by rights certificates. Each subscription right will entitle the holder to a basic subscription right and an over-subscription right.
Why are we conducting the rights offering?
We are conducting the rights offering to raise capital for repayment of certain debt, for payment of certain required contributions under our defined benefit pension plan, and for general corporate purposes. See “Use of Proceeds.”
How were the subscription price and conversion price determined?
In determining the subscription price for exercising the rights, as well as the conversion price at which shares of Series B Preferred may be converted to common stock, our Board of Directors (our “Board”) considered a number of factors, including the likely cost of capital from other sources, the price at which our stockholders might be willing to participate in the rights offering, historical and current trading prices of our common stock, the terms of the Series B Preferred and our need for liquidity and capital. The subscription price and the conversion price are not necessarily related to our book value, net worth or any other established criteria of value.
What is the basic subscription right?
The basic subscription right gives our stockholders the opportunity to purchase [●] shares of our Series B Preferred at a subscription price of $[●] per whole share. You may exercise all or a portion of your basic subscription rights, or you may choose not to exercise any subscription rights. We will not issue fractional shares of Series B Preferred. If the number of subscription rights you exercise would otherwise permit you to purchase a fraction of a share, the number of shares that you may purchase will be rounded down to the nearest whole share. See “The Rights Offering — The Subscription Rights — Basic Subscription Right.”
What is the over-subscription right?
If you fully exercise your basic subscription right and other stockholders do not fully exercise their basic subscription rights, you may also exercise an over-subscription right to purchase additional shares of Series B Preferred that remain unsubscribed at the expiration of the rights offering, subject to availability. To the extent the number of unsubscribed shares is not sufficient to satisfy all of the properly exercised over-subscription rights requests, the available shares will be prorated among those who properly exercised over-subscription rights in proportion to their respective basic subscription rights.
In order to properly exercise your over-subscription right, you must deliver the subscription payment for exercise of your over-subscription right before the expiration of the rights offering. Because we will not know the total number of unsubscribed shares before the expiration of the rights offering, if you wish to maximize the number of shares you purchase pursuant to your over-subscription right, you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of shares of Series B Preferred available, assuming that no stockholder other than you has purchased any shares of our Series B Preferred pursuant to their basic subscription right and over-subscription right. See “The Rights Offering — The Subscription Rights — Over-Subscription Right.”
Am I required to exercise all of the subscription rights I receive in the rights offering?
No. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. However, if you choose not to exercise your subscription rights in full, upon conversion of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisionsshares of state securities laws, which exempt transactions by an issuer not involving any public offering.  The investors all had prior investment experience, including experience investing in non-listed and non-registered common stock and that heSeries B Preferred or she understood the highly speculative naturepayment of any investmentdividend thereon in the stock offered as a prerequisite to the offerees’ participation in the Offering.  The securities shall not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.

Recent Developments

On July 2, 2012, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, containing provisions which, among other things (a) increased the authorized shares of common stock, your percentage ownership of our common stock may decrease and your voting and other rights may be diluted. In addition, if you do not exercise your basic subscription right in full, you will not be entitled to 60,000,000, (b) reducedparticipate in the par valueover-subscription right.

May I transfer my subscription rights?
No. You may not sell, transfer or assign your subscription rights to anyone. Subscription rights will not be listed for trading on any stock exchange or market. Rights certificates may only be completed by the stockholder who receives them.
How soon must I act to exercise my subscription rights?
The subscription rights may be exercised at any time beginning on the date of this prospectus and before the expiration of the rights offering, which is on [●], 2015, at 5:00 p.m., Eastern Time. See “The Rights Offering” for detailed information on the procedure and requirements for exercising your subscription rights. If you elect to exercise any rights, the Subscription Agent must actually receive all required documents from you, and your payment must have cleared, before that time. Although we reserve the option of extending the expiration of the rights offering for a period not to exceed 30 days, we currently do not intend to do so.
How do I exercise my subscription rights? What forms and payment are required to purchase the shares of our Series B Preferred?
If you wish to participate in the rights offering, please deliver payment to the Subscription Agent using one of the methods outlined under “The Rights Offering — Method of Exercising Subscription Rights” and “— Form of Payment” in this prospectus, which payment must have cleared, before 5:00 p.m., Eastern Time, on [●], 2015; and deliver a properly completed rights certificate to the Subscription Agent before 5:00 p.m., Eastern Time, on [●], 2015.
After I send in my payment and rights certificate, may I cancel my exercise of subscription rights?
No. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights offering is extended by our Board. However, if we amend the rights offering to make a material change to the terms set forth in this prospectus, you may cancel your subscription and receive a refund of any money you have advanced. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of our Series B Preferred at a subscription price of $[●] per share.
What should I do if I want to participate in the rights offering but my shares are held in the name of my broker, bank or other nominee?
If you hold your shares of our common stock in the name of a broker, bank or other nominee, your broker, bank or other nominee is the “record holder” of the shares you own. The record holder must exercise the subscription rights on your behalf for the shares of our Series B Preferred you wish to purchase.
If you wish to participate in the rights offering and purchase shares of our Series B Preferred, contact the record holder of your shares promptly. You should complete and return to your record holder the form entitled “Beneficial Owner Election Form.” You should receive this form from your record holder with the other rights offering materials.
What will happen if I do not exercise my subscription rights?
If you do not exercise any subscription rights, the number of shares of our common stock you own will not change.  However, because each share of Series B Preferred will be convertible into [●] shares of our common stock, subject to anti-dilution adjustments, the conversion of some or all of the Series B Preferred will dilute the ownership interest of our other common stockholders. Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of the outstanding shares of our common stock.
Are there risks in exercising my subscription rights?
Yes. Exercising your subscription rights involves the purchase of shares of our Series B Preferred and should be considered as carefully as you would consider any other equity investment. Stockholders who exercise subscription rights risk investment loss on new money invested. We cannot assure you that anyone purchasing Series B Preferred at the subscription price will be able to sell those shares, or the shares of common stock into which the Series B Preferred is convertible, in the future at the same price or a higher price. Among other things, you should carefully consider the risks described under the headings “Risk Factors” in this prospectus and the documents incorporated by reference herein.
When and how will I receive my shares of Series B Preferred?
Shares of Series B Preferred purchased in the rights offering will be issued only in book-entry form (i.e., no physical stock certificates will be issued). If you are the holder of record of our common stock (whether you hold share certificates or your shares are maintained in book-entry form by our transfer agent), you will receive a statement of ownership reflecting the shares of Series B Preferred purchased in the offering in the Direct Registration System (“DRS”) as soon as practicable after the expiration of the rights offering. If your shares of common stock are registered in “street name,” that is, in the name of a broker, bank or other nominee, your shares of Series B Preferred will be issued to $0.001, (c) reduced the par valuesame account, and you may request a statement of preferredownership from the nominee following the expiration of the rights offering.
If the rights offering is not completed, will my subscription payment be refunded to me?
Yes. The Subscription Agent will hold all funds it receives in a segregated bank account until completion of the rights offering. If the rights offering is not completed, all subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable. If you own shares in “street name,” the Subscription Agent will return payments to the record holder of the shares.
How do I exercise my subscription rights if I live outside the United States?
We will not mail this prospectus or the rights certificates to stockholders whose addresses are outside the United States or who have an army post office or foreign post office address. The Subscription Agent will hold the rights certificates for their account. To exercise subscription rights, our foreign stockholders must notify the Subscription Agent and timely follow the procedures described in “The Rights Offering — Foreign Stockholders.”
What fees or charges apply to me if I exercise rights?
We are not charging any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise your subscription rights. If you exercise your subscription rights through the record holder of your shares, you are responsible for paying any fees your record holder may charge you.
What are the U.S. federal income tax consequences of exercising subscription rights?
For U.S. federal income tax purposes, you will not recognize income or loss in connection with the receipt or exercise of subscription rights unless the rights offering is part of a “disproportionate distribution” within the meaning of applicable tax rules (in which case you may recognize taxable income upon receipt of the subscription rights). We believe that the rights offering will not be part of a disproportionate distribution but certain aspects of that determination are unclear. This position is not binding on the Internal Revenue Service (the “IRS”) or the courts, however. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition of Series B Preferred. For further information, please see “Material United States Federal Income Tax Consequences.”
Are we requiring a minimum subscription to complete the rights offering?
No.
Are there any conditions to completing the rights offering?
No.
Will our directors and officers participate in the rights offering?
All holders of our common stock as of the record date for the rights offering will receive, at no charge, non-transferable subscription rights to $0.001, (d) removed Class A Stockpurchase shares of our Series B Preferred as described in this prospectus. To the extent that our directors and officers held shares of our common stock as of the record date, they will receive the subscription rights and, while they are under no obligation to do so, will be entitled to participate in the rights offering. Our directors and officers have not indicated to us whether they will purchase shares of Series B Preferred in the offering.
Has the Board made a recommendation to our stockholders regarding the rights offering?
No.  Our Board does not make any recommendation to stockholders regarding the exercise of rights under the rights offering. You should make an independent investment decision about whether or not to exercise your rights.
How much money will the Company receive from authorized capitalthe rights offering?
Assuming all the shares of Series B Preferred offered are sold, the gross proceeds from the rights offering will be approximately $[●] million.
Can the Board extend, cancel or amend the rights offering?
Yes. We reserve the option to extend the rights offering and the period for exercising your subscription rights for a period not to exceed 30 days, although we do not presently intend to do so. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration of the rights offering. We will extend the duration of the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in the rights offering. If we elect to extend the rights offering for a period of more than 30 days, then holders who have subscribed for rights may cancel their subscriptions and receive a refund of all money advanced.
Our Board may cancel the rights offering at any time before the expiration of the rights offering for any reason. In the event that the rights offering is cancelled, we will issue a press release notifying stockholders of the cancellation and all subscription payments received by the Subscription Agent will be returned, without interest or penalty, as soon as practicable.
Although we do not presently intend to do so, we reserve the right to amend or modify the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such amendments or modifications may include a change in the subscription price, although no such change is presently contemplated. If we should make any fundamental changes to the terms set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included, offer potential purchasers who have subscribed for rights the opportunity to cancel their subscriptions, issue a refund of any money advanced by such stockholder and recirculate an updated prospectus after the post-effective amendment is declared effective by the SEC. In addition, upon such event, we may extend the expiration date of the rights offering to allow holders of rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes and the new expiration date.
Will there be a trading market for my shares of Series B Preferred?
There is currently no market for the Series B Preferred. You may have difficulty selling your Series B Preferred should you decide to do so. Conversion into the underlying shares of our common stock and (e) removed Classsale of those shares may be the only way for you to liquidate your investment in any shares of Series B Stock from authorized capital stock.  PursuantPreferred.
When can I convert my shares of Series B Preferred into shares of common stock?
Holders of shares of Series B Preferred can elect to convert all or a portion of their shares of Series B Preferred into shares of our common stock at any time. Shares of Series B Preferred will be convertible into shares of our common stock by dividing the filingStated Value per share by a conversion price of $[●] per share, representing a conversion ratio of [approximately] [●] shares of common stock for each share of Series B Preferred held at the time of conversion, subject to adjustment.
Does the Company have an option to effect a mandatory conversion of my shares of Series B Preferred into shares of common stock?
Yes.  At any time after the third anniversary of the Amended and Restated Certificateinitial issue date of Incorporation, (i) the Company’s 416,500 issued andSeries B Preferred, we shall have the right to cause all (but not less than all) outstanding shares of Series AB Preferred Stock to be automatically converted into an aggregateshares of 20,825,000common stock.
Will I receive dividends on my shares of Series B Preferred and when will such payments be made?
The Series B Preferred carries a 5.0% cumulative non-compounding annual dividend on the Stated Value of $[●] per share. The dividends are payable semiannually in cash or in shares of common stock in accordanceour sole discretion.
How does the Series B Preferred vote?
Holders of shares of Series B Preferred will be entitled to vote, together with the termsholders of our common stock and not as a separate class, on all matters submitted to holders of our common stock.  Holders of shares of Series B Preferred will be entitled to [●] votes for each share of Series B Preferred owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited.
Whom should I contact if I have other questions?
If you have other questions or need assistance, please contact the Information Agent, Morrow & Co., LLC, by email at tnlx.info@morrowco.com or by telephone at (800) 662-5200.  Banks and brokerage firms also may contact Morrow & Co., LLC at (203) 658-9400.
RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider the risks described below, together with the other information contained or incorporated by reference into this prospectus, including the other risks and information contained in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 and any risks described in our other filings with the SEC before making a decision to invest in the Series A Preferred Stock, (ii) the exercise price of the A Warrants was reduced from $1.00 to $0.20, in accordance with the terms of the A Warrants, and (iii) the exercise price of the B Warrants was reduced from $1.00 to $0.50, in accordance with the terms of the B Warrants.

4

THE OFFERING

Common stock offered by selling stockholders

This prospectus relates to the sale by certain selling stockholders of 31,835,000 shares of our common stock consisting of:

20,825,000 shares of our common stock issued upon the conversion of our Series A Preferred Stock;

4,165,000 shares of our common stock underlying A Warrants issued to investors;

4,165,000 shares of our common stock underlying B Warrants issuable to investors upon exercise of the A Warrants issued to investors;

1,200,000 shares of our common stock underlying the Placement Agent Warrants;

240,000 shares of our common stock underlying A Warrants issuable upon exercise of the Placement Agent Warrants; and

240,000 shares of our common stock underlying B Warrants issuable upon exercise of the A Warrants issuable upon exercise of the Placement Agent Warrants.

1,000,000 shares of our common stock underlying the HFA Warrants.

Offering price

Market price or privately negotiated prices.

Common stock outstanding before the offering

25,511,923(1) 

Common stock outstanding after the offering

36,521,923 (assuming the exercise of all of warrants the underlying shares of which are included in this prospectus)

Use of proceeds

We will not receive any proceeds from the sale of the common stock by the selling stockholders.

OTCQB Symbol

TNLX.PK

Risk Factors

You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 6 of this prospectus before deciding whether or not to invest in our common stock.

Preferred.
 

(1)

Represents the number of shares of our common stock issued and outstanding as of July 13, 2012.

5

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements thatThe risks described below and in the documents referred to in the preceding sentence are subject to a number ofnot the only risks we face. Additional risks and uncertainties many of

which are beyondnot currently known to us or that we currently deem to be immaterial may also materially and adversely affect our control, which may include statements about our:

• business strategy;

• reserves;

• financial strategy;

• production;

• uncertainty regarding our future operating results; and

• plans, objectives, expectations and intentions contained in this prospectus that are not historical.

All statements, other than statements of historical fact included in this prospectus regarding our strategy, future

operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this prospectus, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this prospectus.  You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this prospectus re reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and elsewhere in this prospectus.

RISK FACTORS

 There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals.operations. If any of thesethe following risks actually occur,occurs, our business, results of operations and financial condition or results of operation may be materially adversely affected.could suffer. In suchthat case, the trading price of our common stock could decline, and investors couldyou may lose all or part of your investment.

Risks Relating to the Rights Offering
The subscription price determined for the rights offering is not necessarily an indication of the fair value of our common stock or the Series B Preferred.
In determining the subscription price, our Board considered a number of factors, including the likely cost of capital from other sources, the price at which our stockholders might be willing to participate in the rights offering, historical and current trading prices of our common stock, the terms of the Series B Preferred and our need for liquidity and capital. The subscription price is not necessarily related to our book value, net worth or any other established criteria of value.
The conversion price for the Series B Preferred is also not necessarily an indication of the fair value of our common stock.
Each share of Series B Preferred will be convertible into shares of our common stock at an initial conversion price of $[●] per share of common stock. That price, which is subject to adjustment, represents a conversion ratio of [approximately] [●] shares of common stock for each share of Series B Preferred held at the time of conversion. It was set by our Board based on a number of factors and is not necessarily related to our book value, net worth or any other established criteria of value.  We can give no assurance that the market price of our common stock will ever exceed the conversion price of the Series B Preferred.
We may cancel the rights offering at any time before its expiration, and neither we nor the Subscription Agent will have any obligation to you except to return your subscription payments.
We may, in our sole discretion, decide to cancel the rights offering before its expiration date. If the rights offering is cancelled, we will issue a press release notifying stockholders of the cancellation and all payments received by the Subscription Agent for the exercise of subscriptions will be returned, without interest, as soon as practicable.  Neither we nor the Subscription Agent will have any further obligation to you in that case, including but not limited to any obligation to reimburse you for any amount you have paid to purchase subscription rights that are no longer exercisable.
The subscription rights are non-transferable and thus there will be no market for them.
You may not sell, transfer or assign your subscription rights to anyone else. We do not intend to list the subscription rights on any securities exchange or any other trading market. Because the subscription rights are non-transferable, there is no market or other means for you to directly realize any value associated with them. As the number of shares that you may purchase in the rights offering will be rounded down to the nearest whole share and the subscription rights are non-transferable, if you own fewer than [●] shares, you will not be able to purchase any shares in the rights offering or otherwise realize any value associated with the subscription rights.
If you do not act promptly and follow the subscription instructions, your exercise of subscription rights will be rejected.
Stockholders that wish to purchase shares of Series B Preferred in the rights offering must act promptly to ensure that all required forms and payments are actually received by the Subscription Agent before the expiration of the rights offering. If you are a beneficial owner of shares, you must act promptly to ensure that your broker, bank or other nominee acts for you and that all required forms and payments are actually received by the Subscription Agent before the expiration of the rights offering. We are not responsible if your broker, bank or other nominee fails to ensure that all required forms and payments are actually received by the Subscription Agent before the expiration of the rights offering. If you fail to complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the subscription procedures that apply to your exercise in the rights offering before the expiration of the rights offering, the Subscription Agent will reject your subscription or accept it only to the extent of the payment received. Neither we nor our Subscription Agent undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly complies with the subscription procedures.
If the rights offering is consummated, your relative ownership interest may experience significant dilution.
To the extent that you do not exercise your subscription rights, or that you exercise your subscription rights but do not convert your shares of Series B Preferred into common stock, and the Series B Preferred held by other stockholders is converted into common stock, your proportionate voting interest will be reduced, and the percentage that your original shares represent of our expanded equity after exercise of the rights and conversion of the Series B Preferred will be diluted.  Similarly, to the extent that you do not exercise your subscription rights, or that you convert your shares of Series B Preferred into shares of common stock, your percentage ownership interest in our company will be diluted to the extent that we elect to pay dividends on the Series B Preferred in shares of common stock.
The tax treatment of the rights offering is somewhat uncertain and it may be treated as a taxable event to our stockholders.
If the rights offering is deemed to be part of a “disproportionate distribution” under section 305 of the Internal Revenue Code, our stockholders may recognize taxable income for U.S. federal income tax purposes in connection with the receipt of subscription rights in the rights offering depending on our current and accumulated earnings and profits and our stockholders’ tax basis in our common stock. A “disproportionate distribution” is a distribution or a series of distributions, including deemed distributions, that has the effect of the receipt of cash or other property by some stockholders or holders of debt instruments convertible into stock and an increase in the proportionate interest of other stockholders in a company’s assets or earnings and profits.  The disproportionate distribution rules are complicated and their investment.application is uncertain. Please see “Material U.S. Federal Income Tax Consequences” for further information.
If you exercise the subscription rights, your tax liability may exceed the cash you receive while you own Series B Preferred.
We may declare and pay all dividends on Series B Preferred in additional shares of our common stock rather than in cash. We expect any such distribution to be tax-free. However, this expectation is based in part on expected future circumstances that could change. Furthermore, the IRS may disagree with our position and take the position that distributions in the form of additional shares of common stock will be taxable in the same manner as cash distributions. If such position were successful, in years in which we have current or accumulated earnings and profits, holders generally would recognize dividend income in an amount equal to the fair market value of the additional shares of common stock received. In such case, a holder’s tax liability may exceed the cash such holder receives from the Series B Preferred. Accordingly, a holder of Series B Preferred would be required to use funds from other sources to satisfy its tax liability arising from its ownership of Series B Preferred.
The rights offering could impair or limit our net operating loss carryforwards.
As of December 31, 2014, we had net operating loss carryforwards (“NOLs”) of approximately $10.4 million for U.S. federal income tax purposes. Under the Internal Revenue Code of 1986, as amended (the “Code”), an “ownership change” with respect to a corporation could limit the amount of pre-ownership change NOLs and certain other tax assets that the corporation may utilize after the ownership change to offset future taxable income, possibly reducing the amount of cash available to the corporation to satisfy its obligations. An ownership change would occur if the aggregate stock ownership of beneficial owners of at least 5% of our stock increases by more than 50 percentage points over the preceding three-year period. Because not all stockholders may exercise their basic subscription rights in full, the purchase of shares of our Series B Preferred and the subsequent conversion of the Series B Preferred into shares of our common stock could result in a shift in this beneficial ownership that could trigger an ownership change with respect to our stock. Please see “Material United States Federal Income Tax Consequences” for further information.
We may amend or modify the terms of the rights offering at any time before the expiration of the rights offering in our sole discretion.
Our Board reserves the right to amend the terms of the rights offering in its sole discretion. Although we do not presently intend to do so, we may choose to amend the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Any such amendment that is not fundamental enough for us to have to return your subscription payment may nonetheless may affect your rights, including any anticipated return on your investment, adversely.
The market price of our common stock is volatile and may decline before or after the subscription rights expire.
Our common stock is not widely held and the volume of trading has been relatively low and sporadic.  Accordingly, our common stock is subject to increased price volatility and reduced liquidity.  There can be no assurance that a more active trading market for our common stock will develop or be sustained if it does develop.  The market price of our common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, some of which are beyond our control. These factors include, among other things, the factors described in “Cautionary Note Regarding Forward-Looking Statements” in this prospectus, those contained in the section entitled “Risk Factors” in this prospectus and our Annual Report on Form 10-K for the year ended December 31, 2014, the general state of the securities markets and the market for similar stocks, changes in capital markets that affect the perceived availability of capital to companies in our industry, and governmental legislation or regulation, as well as general economic and market conditions. We cannot assure you that the market price of our common stock will not decline after you elect to exercise your subscription rights.
There is currently no market for the Series B Preferred.
There is currently no market for the Series B Preferred. Conversion into the underlying shares of our common stock and sale of those shares may be the only way for you to liquidate your investment in any shares of Series B Preferred. Furthermore, since the Series B Preferred does not have a maturity date and is not redeemable at your option, unless you convert your Series B Preferred into share of our common stock, you may be required to hold your Series B Preferred indefinitely.
Our common stock is not widely held and the volume of trading has been relatively low and sporadic.  Accordingly, our common stock is subject to increased price volatility and reduced liquidity.  If you convert your Series B Preferred into shares of our common stock, you may be unable to sell the shares of common stock issuable upon such conversion at a price equal to or greater than the conversion price.
The Company has an option to effect a mandatory conversion of the Series B Preferred into shares of common stock after the third anniversary of the initial issue date.
At any time after the third anniversary of the initial issue date of the Series B Preferred, we have the right to cause all (but not less than all) outstanding shares of Series B Preferred to be automatically converted into shares of common stock.  We cannot assure you that, if we elect to exercise such option, the price of our common stock will exceed the conversion price of the Series B Preferred at that time.
Because our management will have broad discretion over the use of the proceeds from the rights offering, you may not agree with how we use the proceeds, and we may not invest the proceeds successfully.
We are conducting the rights offering to raise capital for repayment of certain debt, for certain required contributions under our defined benefit pension plan and for general corporate purposes. We will retain broad discretion of the use of such proceeds. You will be relying on the judgment of our management with regard to the use of such proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for the Company.
Sales, or the availability for sale, of substantial amounts of our common stock could adversely affect the value of our common stock.
No prediction can be made as to the effect, if any, that future sales of our common stock, or the availability of our common stock for future sales, will have on the market price of our common stock. Sales of substantial amounts of our common stock in the public market and the availability of shares for future sale could adversely affect the prevailing market price of our common stock. This in turn could impair our future ability to raise capital through an offering of our equity securities.
The rights offering may cause the price of our common stock to decrease.
The conversion price, together with the number of shares of common stock we propose to issue and ultimately will issue if the rights offering is completed and all shares of Series B Preferred are converted into shares of our common stock, together with any shares of common stock that we may elect to issue as dividends to holders of the Series B Preferred, may result in an immediate decrease in the market value of our common stock.  This decrease may continue after the completion of the rights offering. If that occurs, you may be unable to profitably convert your Series B Preferred.  Further, if a substantial number of subscription rights are exercised and shares of Series B Preferred are converted, and if the holders of the common stock received upon conversion of the Series B Preferred choose to sell some or all of those shares of common stock, the resulting sales could depress the market price of our common stock.  There is no assurance that, following the conversion of the Series B Preferred received in the rights offering, you will be able to sell your common stock at a price equal to or greater than the conversion price.
The conversion rate of the Series B Preferred may not be adjusted for all dilutive events that may adversely affect the common stock issuable upon conversion of the Series B Preferred.
The conversion rate of the Series B Preferred is subject to adjustment upon certain events, including the issuance of dividends or distributions in common stock and subdivisions and combinations of our common stock as described in “Description of Capital Stock — Preferred Stock — Series B Convertible Preferred Stock.”  We will not adjust the conversion rate for other events, including offerings of common stock for cash by us or in connection with acquisitions. There can be no assurance that an event that adversely affects the value of the Series B Preferred, but does not result in an adjustment to the conversion rate, will not occur.
We may not be permitted to make current payment of dividends on the Series B Preferred.
Under Delaware law, we may only pay dividends or make distributions to our stockholders from our surplus (as determined in accordance with Delaware General Corporation Law) or our net profits for the current fiscal year or the fiscal year before which the dividend or distribution is declared under certain circumstances. Therefore, our ability to pay dividends and make any other distributions in the future will depend upon our financial results, liquidity and financial condition.
Your rights as a Series B Preferred stockholder are primarily those set forth in the terms of the Series B Preferred, and the Board may prefer the interests of the common stockholders if they differ from those of the Series B Preferred stockholders.
The special contractual preferences of the Series B Preferred are primarily governed by the principles of contract law, rather than being fiduciary in nature.  While the Board has fiduciary duties to the holders of the Series B Preferred to the extent those holders share rights with the common stockholders, if there is a divergence of interests between the holders of the Series B Preferred stock and common stock, it will generally be the duty of the Board to prefer the interests of the common stockholders to those of the preferred stockholders.
Risks RelatedRelating to our Business and OperationsSecurities
There is substantial doubt about our ability to continue as a going concern.
Our independent registered public accounting firm issued an opinion on our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 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 the ability to make the required minimum funding contributions to the defined benefit pension plan, as well as the sinking fund payments on our outstanding debentures and the principal and interest payments on our outstanding notes and debentures (discussed in more detail below), raises substantial doubt about our ability to continue as a going concern.  As a result, if we are unable to (i) obtain liquidity for working capital, (ii) make the required minimum funding contributions to the defined benefit pension plan and/or (iii) make the required principal and interest payments on the outstanding notes and debentures, there would be a significant adverse impact on the financial position and the operating results of the Company.
We have experienced operating losses for the past several years, and there can be no assurance that we will be able to increase our revenue sufficiently to generate the cash required to fund our current operations.

The Company has

We have incurred operating losses for the past several years.  During the years 2011ended December 31, 2014 and 2010, the Company2013, we incurred losses from continuing operations of $1.2$4.6 million and $7.1$2.5 million, respectively. 2011 includes an $8.8 million gain on debt extinguishment, a $3.7 million charge for a warrant valuation adjustment and a $0.2 million additional restructuring charge.  2010The year ended December 31, 2013 includes a $1.1 million restructuring charge andgain on a $0.5 million charge to write-off engineering software.  For the three months ended March 31, 2012, we had a net loss of $1.7 million. The Company iswarrant valuation adjustment.  We are dependent upon future operating performance to generate sufficient cash flows in order to continue to run itsour businesses.  Future operating performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control.  As a result, weWe have experienced a decline in our sales and lease and maintenance bases.bases for the past several years.  There can be no assurance that we will be able to increase our revenue sufficiently to generate the cash required to fund our current operations.

The current global economic crisis has negatively impacted our business and has impaired our ability to access credit markets and finance our operations, which may continue to adversely affect our business.

The continuing global economic crisis has adversely affected our customers, suppliers and other businesses such as ours.  As a result, it has had a variety of negative effects on the Company such as reduction in revenues, increased costs, lower gross margin percentages, increased allowances for uncollectible accounts receivable and/or write-offs of accounts receivable.  This economic crisis has also impaired our ability to access credit markets and finance our operations and could otherwise have material adverse effects on our business, results of operations, financial condition and cash flows.

6

 

Non-payment of principal and interest on outstanding Notesnotes and Debenturesdebentures has resulted in events of default and may continue to negatively affect our balance sheet.

As of March 31, 2012, the Company has $1.22015, we had outstanding $1.1 million of 8¼% Limited convertible senior subordinated notesConvertible Senior Subordinated Notes due 2012 (the “Notes”) which are no longer convertible into common shares;shares and which matured as of March 1, 2012; interest iswas payable semi-annuallysemi-annually.  Such Notes were not exchanged into cash and our common stock as part of an exchange offer in 2011.  Based on the Notes may be redeemed, in whole or in part, at par.  The Companypayment schedule prior to the offer to exchange, we had not remitted the March 1, 2010 and 2011 and September 1, 2010 and 2011 semi-annual interest payments of $417,800$418,000 each and the March 1, 2012 semi-annual interest and principal payment of $1.4 million to the trustee.  The non-payments constituteconstituted an event of default under the Indentureindenture governing the Notes and theNotes.  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.  Upon receipt of such notice byThe Company currently does not have any senior indebtedness.  If the Company no payment shallsubsequently incurs any senior indebtedness, the Notes would be made by the Companysubordinate to the holders or trustee until the earlier of (i) the date such non-payment event of default is cured or waived or (ii) 179 days from receipt by the trustee of notice of such event, unless the holder of Senior Indebtedness has accelerated the due date thereof.  If the holder of Senior Indebtedness accelerates the due date at any time, then no payment may be made until the default is cured or waived.  As partsenior indebtedness of the Company’s restructuring plan,Company.  At March 31, 2015, the Company offered the holders oftotal amount outstanding under the Notes to receive $225, without accrued interest, plus 250 sharesis reflected under current portion of the Company’s common stock for each $1,000 Note exchanged.  The offer expired on October 31, 2011.  $9.0 million principal amount of the Notes were exchanged, leaving $1.2 million outstanding. 

long-term debt in our consolidated balance sheet.

As of March 31, 2012, the Company has $0.3 million2015, we had $334,000 of 9½% Subordinated debentures due 2012 (the “Debentures”) which are duematured on December 1, 2012; interest was payable semi-annually.  Such Debentures were not exchanged into cash as part of an exchange offer in annual2011.  Based on the payment schedule prior to the offer to exchange, we had not remitted the December 1, 2009, 2010 and 2011 sinking fund payments of $105,700 beginning in 2009, which payments have not been remitted by the Company, with the remainder due in 2012; interest is payable semi-annually and the Debentures may be redeemed, in whole or in part, at par.  The Company has not remitted$106,000 each, the June 1, 2010, and 2011 and 2012 and the December 1, 2010 and 2011 semi-annual interest payments of $50,200$50,000 each and the December 1, 2012 semi-annual interest and principal payment of $790,000 to the trustee.  The non-payments constituteconstituted an event of default under the Indentureindenture governing the Debentures and theDebentures.  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.  DuringThe Company currently does not have any senior indebtedness.  If the continuation ofCompany subsequently incurs any event which, with notice or lapse of time or both, would constitute a default under any agreement under which Senior Indebtedness is issued, if the effect of such default is to cause or permit the holder of Senior Indebtedness to become due prior to its stated maturity, no payment (including any required sinking fund payments) of principal, premium or interest shall be made onsenior indebtedness, the Debentures unlesswould be subordinate to any senior indebtedness of the Company.  At March 31, 2015, the total amount outstanding under the Debentures is reflected under Current portion of long-term debt in our consolidated balance sheet.
We have received waivers, subject to certain conditions, of the 2009, 2010 and until such default shall have been remedied,2012 minimum funding standards for our defined benefit pension plan, which, if written noticewe fail to fulfill the required conditions for, may result in the termination of such default has been given to the trustee by the Companyplan or the holder of Senior Indebtedness.  The failurerequire us to make the sinking fundunpaid contributions.
In March 2010, 2011 and interest payments are events2013, we submitted to the IRS requests for waivers of defaultthe 2009, 2010 and 2012 minimum funding standards for its defined benefit pension plan.  The waiver requests were submitted as a result of the economic climate and the business hardship we experienced.  The 2009, 2010 and 2012 plan year waivers have been approved and granted subject to certain conditions, and deferred payment of $285,000, $559,000 and $871,000 of the minimum funding standard for the 2009, 2010 and 2012 plan years, respectively.  If we do not fulfill the conditions of the waivers, the Pension Benefit Guaranty Corporation and the IRS have various enforcement remedies that can be implemented to protect the participant’s benefits, such as termination of the plan or a requirement that we make the unpaid contributions.  As of June 30, 2015, we had made $469,000 of our required contributions for 2015, with approximately $1.0 million of contributions remaining for 2015.  Historically, we have made certain required contributions after their respective due dates, and we have not yet made required contributions of $197,000 due in each of April and July 2015.  We expect to make all of our required contributions for 2015, however there is no assurance that we will be able to make any or all the remaining 2015 payments.  The Pension Benefit Guaranty Corporation has placed a lien on all of our assets in respect of amounts owed under the Credit Agreement and no payment can be madeplan.  If we are unable to fulfill our related obligations, the enforcement of such trustee or the holders at this time as such defaults have not been waived.  As part of the Company’s restructuring plan, the Company offered the holders of the Debentures to receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The offer expired on October 31, 2011.  $0.7 million principal amount of the Debentures were exchanged, leaving $0.3 million outstanding.  The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lender under the Credit Agreement, among other senior claims.

In the event that the holders of the Notes or the Debentures or either of the trustees thereunder declare a default and begin to exercise any of their rights or remedies in connection with the non-payment defaults, this shall constitute a separate and distinct event of default under the Credit Agreement and the senior lender may exercise any and all rights or remedies it may have.  The amounts outstanding under the Credit Agreement are collateralized by all of the Digital display division assets. This couldlien would have a material adverse effectimpact on our profits,financial condition, results of operations, financial condition and future prospects.

The Company hasliquidity.

We have significant long-term debt, which could impair our financial condition.

As of March 31, 2012, the Company’s total2015, we had debt of approximately $1.8 million, including $1.5 million reflected under current portion of long-term debt (including current portion) was $4.5 million.  We expect we may incur indebtedness in connection with new rental leases and working capital requirements.our consolidated balance sheet. Our ability to satisfy our obligations will be dependent upon our future performance, which is subject to prevailing economic conditions and financial, business and other factors, including factors beyond our control.  There can be no assurance that our operating cash flows will be sufficient to meet our long-term debt service requirements or that we will be able to refinance indebtedness at maturity.

Our substantial indebtedness could have adverse consequences, including:

•

making it more difficult for us to satisfy our obligations;

•

increasing our vulnerability to adverse economic, regulatory and industry conditions;

•

limiting our ability to obtain additional financing for future working capital, capital expenditures, mergers and other purposes;

•

requiring us to dedicate a substantial portion of our cash flow from operations to fund payments on our debt, thereby reducing funds available for operations and other purposes;

7

 

•

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

•

placing us at a competitive disadvantage compared to our competitors that have less debt.

We have requested waivers of 2009 and 2010 minimum funding standard s for our defined benefit plan, which if not granted may result in the termination of the plan or require us to make the unpaid contributions.

On March 12, 2010 and March 11, 2011, the Company submitted to the Internal Revenue Service requests for waivers of the 2009 and 2010 minimum funding standard for its defined benefit plan.  The waiver requests were submitted as a result of the economic climate and the business hardship that the Company was experiencing.  The waivers, if granted, will defer payment of $285,000 and $559,000 of the minimum funding standard for the 2009 and 2010 plan years, respectively.  If the waivers are not granted, the Pension Benefit Guaranty Corporation and the Internal Revenue Service have various enforcement remedies that can be implemented to protect the participant’s benefits, such as termination of the plan or a requirement that the Company remit the unpaid contributions.  At this time, the Company is expecting to make its required contributions for the 2012 plan year; however there is no assurance that the Company will be able to make all payments.  The senior lender has waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have under the Credit Agreement.  In the event that we request waivers to defer payments in an amount greater than or equal to $1.0 million, the Pension Benefit Guaranty Corporation may place a lien on the Company’s assets for the amount owed.  This could have a material adverse effect on our profits, results of operations, financial condition and future prospects.

Suppliers may be unable or unwilling to furnish us with required components, which may delay or reduce our product shipments and negatively affect our business.

We design certain of our materials to match components furnished by suppliers.  If such suppliers were unable or unwilling to provide us with those components, we would have to contract with other suppliers to obtain replacement sources.  In particular, we purchase most of the LEDs and LED module blocks used in our digital displays and lighting from three suppliers.  We do not have long-term supply contracts with these suppliers.  A change in suppliers of either LED module blocks or certain other components may result in engineering design changes, as well as delays in obtaining such replacement components.  We believe there are presently other qualified vendors of these components.  Our inability to obtain sufficient quantities of certain components as required, or to develop alternative sources at acceptable prices and within a reasonable time, could result in delays or reductions in product shipments that could have a materially adverse effect on our business and results of operations.

Competitors may possess superior resources and deliver more marketable products, which would adversely affect our operating margins.

Our digital displays compete with a number of competitors, both larger and smaller than us, and with products based on different forms of technology.  In addition, there are several competitors whose current products utilize similar technology and who possess the resources to develop competitive and more sophisticated products in the future.  Our success is, to some extent, dependent upon our ability to anticipate technological changes in the industry and to successfully identify, obtain, develop and market new products that satisfy evolving industry requirements.  There can be no assurance that competitors will not market new products which may have perceived advantages over our products or which, because of pricing strategies, render the products currently sold by usthe Company less marketable or would otherwise adversely affect our operating margins.

Our success is dependent upon our ability to obtain the renewal of existing leases or enteringenter into new leases as our current leases expire, which may not be feasible. The inability to renew or replace our leases would negatively affect our operations.

We derive a substantial percentage of our revenues from the leasing of our digital displays, generally pursuant to leases that have an average term of one to five years.  Consequently, our future success is, at a minimum, dependent on our ability to obtain the renewal of existing leases or to enter into new leases as existing leases expire.  We also derive a significant percentage of our revenues from maintenance agreements relating to our digital display products.  The average term of such agreements is generally one to threefive years.  A portion of the maintenance agreements are cancelable upon 30 days’days notice.  There can be no assurance that we will be successful in obtaining the renewal of existing leases or maintenance agreements, securing new orobtaining replacement leases or realizing the value of assets currently under leases that are not renewed.

8

 

Risks RelatedWe are dependent on our President and Chief Executive Officer and other key personnel.

We believe that our President and Chief Executive Officer, Jean-Marc Allain, plays a significant role in our success and the loss of his services could have an adverse effect on the Company.  There can be no assurance that we would be able to International Operations

find a suitable replacement for Mr. Allain.  We have an employment agreement with Mr. Allain that expires on February 16, 2018.  The Company believes that in addition to Mr. Allain, there is a core group of executives that also plays a significant role in the success of the Company.

Our international operations subject us to potential fluctuations in exchange rates between the U.S. Dollar and foreign currencies, as well as international legal obligations,requirements, which could impact our profitability.

Our financial condition, operating results and future growth could be significantly impacted by risks associated with our international activities, including specifically changes in the value of the U.S. dollar relative to foreign currencies and international tax rules.  Because a significant portion of the Company’s business is done in Canada, fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar could seriously impact our manufacturing and other costs, as well as overall profitability.  The risks to our business related to fluctuations in currency exchange rates is further magnified by the current volatility in the currency markets that are characteristic of financial markets, and currency markets in particular, today.

particular.

Compliance with U.S. and foreign laws and regulations that apply to our international operations, including import and export requirements, anti-corruption laws, including the Foreign Corrupt Practices Act, tax laws (including U.S. taxes on foreign subsidiaries), foreign exchange controls, anti-money laundering and cash repatriation restrictions, data privacy requirements, labor laws and anti-competition regulations, increases the costs of doing business in foreign jurisdictions, and any suchmay subject us to additional costs which may risearise in the future as a result of changes in these laws and regulations or in their interpretation.  We have not implemented formal policies and procedures designed to ensure compliance with all of these laws and regulations.  Any such violations could individually or in the aggregate materially adversely affect our reputation, financial condition or operating results.

Our reliance upon third party manufacturers located in China could subject us to economic, political and legal risks beyond our control.

Many components of our products are produced in China by third-party manufacturers. Our reliance on third-party Chinese manufacturers exposes us to risks that are not in our control, such as unanticipated cost increases or negative fluctuations in currency, which could negatively impact our results of operations and working capital. Any termination of or significant disruption in our relationship with our Chinese suppliers may prevent us from filling customer orders in a timely manner. Given the state of the Chinese political system, we cannot guaranty that our agreements with our Chinese suppliers will remain enforceable pursuant to Chinese law. Furthermore, we cannot guaranty that all rights to payment or performance under our agreements with our Chinese manufacturing partners will be enforceable, and that all debts owing to us, whether in the form of cash or product, will be collectable. While we do not envision any adverse change to our international operations or suppliers, especially given the gradual move towards global integration by the Chinese government and financial markets, adverse changes to these operations as a result of political, governmental, regulatory, economic, exchange rate, labor, logistical or other factors could have a material adverse effect on our future operating results if China experiences financialresults.
Suppliers may be unable or political volatility.

Risks Relatingunwilling to furnish us with required components, which may delay or reduce our Organizationproduct shipments and negatively affect our Common Stock

business.

We design certain of our products to match components furnished by suppliers.  If such suppliers were unable or unwilling to provide us with those components, we would have not paid dividends sinceto contract with other suppliers to obtain replacement sources.  In particular, we purchase most of the first quarter of 2006LEDs and LED module blocks used in our digital displays and lighting from three main suppliers.  We do not expecthave long-term supply contracts with these suppliers.  A change in suppliers of either LED module blocks or certain other components may result in engineering design changes, as well as delays in obtaining such replacement components.  We believe that there are presently other qualified vendors of these components.  Our inability to pay dividendsobtain sufficient quantities of certain components as required, or to develop alternative sources at acceptable prices and within a reasonable time, could result in the future.  Any returndelays or reductions in product shipments that could have a materially adverse effect on investment may be limited to the valueour business and results of operations.
Provisions in our Amended and Restated Certificate of Incorporation and control by certain of our common stock.

We have not paid cash dividends on our common stock since the first quarter of 2006 and do not anticipate doing so in the foreseeable future.  The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.  If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

There is a limited trading market for our common stock, which mayexisting stockholders could make it more difficult for shareholdersa third party to sell their shares.

To date there has beenacquire us, discourage a limited trading market for our common stock.  We cannot predict how liquid the market for our common stock might become.  Our common stock is quoted for trading on the OTCQB. Quotation of our securities on the OTCQB may limit the liquiditytakeover, and price of our securities more than if our securities were quoted or listed on a national securities exchange.  Some investors may perceive our securities to be less attractive because they are traded in the over-the-counter market.  In addition, as an OTCQB quoted company, we do not attract the extensive analyst coverage that accompanies companies listed on other exchanges.  Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded on the OTCQB.  These factors may have an adverse impact on the trading and price of our common stock.

Our common stock is not widely held and the stock price may be volatile.

Our common stock is not widely held and the volume of trading has been relatively low and sporadic.  Accordingly, the common stock is subject to increased price volatility and reduced liquidity.  There can be no assurance that a more active trading market for the common stock will develop or be sustained if it does develop.  The limited public float of our common stock could cause the market price for the common stock to fluctuate substantially.  In addition, stock markets have experienced wide price and volume fluctuations in recent periods and these fluctuations often have been unrelated to the operating performance of the specific companies affected.  Any of these factors could adversely affect the market price of our common stock.

9

existing stockholders.
 

Share eligible for future sale could affect our stock price.

Future sales of common stock in the public market by our current stockholders could adversely affect the market price for the common stock. 1,380,420 shares of common stock may be sold in the public market by executive officers and directors, subject to the limitations contained in Rule 144 under the Securities Act of 1933, as amended.  Sales of substantial amounts of the shares of common stock in the public market, or even the potential for such sales, could adversely affect the prevailing market price of our common stock.

Our common stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.

Our common stock is subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act.  The penny stock rules generally apply to companies whose common stock is not listed on The Nasdaq Stock Market or other national securities exchange and trades at less than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years).  These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances.  Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited.  If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities.  If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

Our certificate of incorporation allows for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

Our certificate of incorporation contains certain anti-takeover provisions.

Our Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”) contains certain provisions that could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us. Such provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock, thus making it less likely that a stockholder will receive a premium on any sale of shares. Our Board of Directors is divided into three classes, each of which serves for a staggered three-year term, making it more difficult for a third party to gain control of our Board. Our Amended and Restated Certificate of Incorporation also contains a provision that requires a four-fifths vote on any merger, consolidation or sale of assets with or to an “Interested Person” or “Acquiring Person.”

Additionally, we are authorized to issue 500,000 shares of Preferred Stock.Stock, of which 416,500 are designated as “Series A Convertible Preferred Stock” and [●] shares are designated as “Series B Convertible Preferred Stock,” and none of which shares are issued and outstanding as of August 5, 2015. The Preferred Stock may contain such rights, preferences, privileges and restrictions as may be fixed by our Board, of Directors, which may adversely affect the voting power or other rights of the holders of common stock or delay, defer or prevent a change in control of the Company, or discourage bids for the common stock at a premium over its market price or otherwise adversely affect the market price of the common stock.

10

Following the rights offering, we expect that substantially all of our authorized shares of Preferred Stock will be designated.
 

Capitalization

These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.

TRANS-LUX CORPORATION & SUBSIDIARIES

 

 

 

CAPITALIZATION

 

 

 

 

 

 

 

You should read this capitalization table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

 

 

 

 

The following table sets forth our capitalization as of March 31, 2012 on an actual basis and on a pro forma basis to give effect to the conversion of the Series A convertible preferred stock into 20,825,000 shares of common stock, which took place automatically upon the filing of the Company's Amended and Restated Certificate of Incorporation on July 2, 1012. The information in the table below excludes conversion of any warrants issued.

 

MARCH 31, 2012

 

 

EFFECT

 

 

ACTUAL

OF

PRO FORMA

 

(as reported)

CONVERSION

(1) (2)

 

(unaudited)

 

(unaudited)

 

 

 

 

Cash and cash equivalents

690

 

690

Long-term debt (including current portion) (3):

 

 

 

  Subordinated debt

1,487

 

1,487

  Notes payable

3,056

 

3,056

Total debt

4,543

 

4,543

 

 

 

 

Redeemable convertible preferred stock:

 

 

 

  Preferred - $0.001 par value – 500,000 shares authorized

 

 

 

  416,500 Series A convertible preferred shares issued in 2012 and 2011 (1)

6,138

(6,138)

-

 

 

 

 

Stockholders' equity (deficit):

 

 

 

Common Stock - $0.001 par value - 60,000,000 shares authorized,

 

 

  5,070,519 shares issued in actual and 25,895,424 issued in as adjusted (1) (2)

5,071

(5,045)

26

Additional paid-in-capital (2)

12,624

11,183

23,807

Accumulated deficit

(15,113)

 

(15,113)

Accumulated other comprehensive loss

(3,387)

-

(3,387)

Less treasury stock - at cost - 383,596 common shares in 2012 and 2011

(3,063)

-

(3,063)

 

 

 

 

  Total stockholders' equity (deficit)

(3,868)

6,138

2,270

 

 

 

 

  Total Capitalization

7,503

-

7,503

 

 

 

 

 

 

 

 

(1) Pro forma to reflect the automatic conversion of the Series A convertible preferred shares.

 

(2) Pro forma to reflect the reduction in the par value of common stock to $0.001.

 

(3) For information as of December 31, 2011 regarding the Company's long-term debt, commitments and contingincies, see Notes 9 and

          15 of the Notes to Consolidated Financial Statements which are included in this prospectus.

 

As of August 5, 2015, 10 stockholders who are executive officers and/or directors of the Company beneficially own approximately 36.5% of our common stock and two stockholders who are neither officers nor directors of the Company beneficially own approximately 31.5% of our common stock.  Accordingly, such stockholders could exert significant control over any potential stockholder actions.
 

USE OF PROCEEDS

The selling stockholders will receive all of the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale of the shares by the selling stockholders covered by this prospectus. However, we will generate proceeds from the cash exercise of the warrants by the selling stockholders, if any. We intendOur common stock is quoted on OTC Pink and may be subject to use those proceeds for general corporate purposes.

 MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

limited trading volume and price volatility.

Our common stock is quoted on the OTCQB under the symbol “TNLX.PK.”  There has been minimalOTC Pink, an inter-dealer electronic quotation and trading to date in our common stock. As of July 13, 2012, there were approximately 972 holders of record of our common stock.

The following table sets forth the rangesystem for equity securities. Quotation of our common stock priceson OTC Pink may limit the liquidity and price of our common stock more than if our common stock were quoted or listed on the OTCQBNASDAQ Stock Market or NYSE Amex duringanother national exchange. Some investors may perceive our common stock to be less attractive because they are traded in the last two fiscal years.

 

 

High

 

 

Low

 

Fiscal Year 2010

 

Bid

 

 

Bid

 

First Quarter

 

$

1.90

 

 

$

0.57

 

Second Quarter

 

$

0.88

 

 

$

0.40

 

Third Quarter

 

$

0.86

 

 

$

0.31

Fourth Quarter

 

$

0.84

 

 

$

0.10

 

 

 

High

 

 

Low

 

Fiscal Year 2011

 

Bid

 

 

Bid

 

First Quarter

 

$

0.31

 

 

$

0.11

 

Second Quarter

 

$

0.20

 

 

$

0.05

 

Third Quarter

 

$

0.15

 

 

$

0.05

 

Fourth Quarter

 

$

0.78

 

 

$

0.15

 

 

 

High

 

 

Low

 

Fiscal Year 2012

 

Bid

 

 

Bid

 

First Quarter

 

$

0.85

 

 

$

0.45

 

Second Quarter

 

$

0.70

 

 

$

0.35

 

The above prices are believed to reflect representative inter-dealer quotations, without retail markup, markdownover-the-counter market. In addition, as an OTC Pink company, we do not attract the extensive analyst coverage that accompanies companies listed on national exchanges. Further, institutional and other investors may have investment guidelines that restrict or other fees or commissions,prohibit investing in securities traded on OTC Pink. These factors may have an adverse impact on the trading and may not represent actual transactions.

Equity Compensation Plan Information

The following table shows information with respect to each equity compensation plan under which the Company'sprice of our common stock.

Our common stock is authorizednot widely held and the volume of trading has been relatively low and sporadic.  Accordingly, our common stock is subject to increased price volatility and reduced liquidity.  There can be no assurance that a more active trading market for issuance asour common stock will develop or be sustained if it does develop.  The market price of our common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, some of which are beyond our control. These factors include, among other things, the fiscalfactors described in “Cautionary Note Regarding Forward-Looking Statements” in this prospectus, those contained in the section entitled “Risk Factors” in this prospectus and our Annual Report on Form 10-K for the year ended December 31, 2011.

2014, the general state of the securities markets and the market for similar stocks, changes in capital markets that affect the perceived availability of capital to companies in our industry, and governmental legislation or regulation, as well as general economic and market conditions.

Equity Compensation Plan Information

 

 

December 31, 2011

Securities

to be issued

upon exercise

Weighted

average

exercise price

Securities

available for

future issuance

Equity compensation plans approved by stockholders

12,000

$4.99

17,000

 
INFORMATION ABOUT TRANS-LUX

 DIVIDEND POLICY

We have not paid any cash dividends on our common stock since the first quarter of 2006 and do not anticipate or contemplate paying dividends on our common stock in the foreseeable future.  We currently intend to use all our available funds to develop our business.  We can give no assurances that we will ever have excess funds available to pay dividends.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Trans-Lux is a leading supplier of LED technology for high resolution video displays and lighting applications.  The essential elements of these systems are the real-time, programmable digital displays and lighting fixtures 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.  In 2010 the Company started a new business opportunity in theThe Company’s LED lighting market withfixtures offer energy-saving lighting solutions that will feature a comprehensive offering of the latest LED lighting technologies that provide facilities and public infrastructure with “green” lighting solutions that emit less heat, save energy and enable creative designs.  The Company also owns and operates an income-producing rental property.  The Company operates in threetwo reportable segments: Digital display sales,sales; and Digital display lease and maintenance and Real estate rentals.

maintenance.

The Digital display sales segment includes worldwide revenues and related expenses from the sales of both indoor and outdoor digital display signage and LED lighting solutions.  This segment includes the financial, government/private, gaming, scoreboards and outdoor advertising markets.  The Digital display lease and maintenance segment includes worldwide revenues and related expenses from the lease and maintenance of both indoor and outdoor digital display signage.  This segment includes the lease and maintenance of digital display signage across all markets.
Detailed information about our results of operations and financial condition is included in our periodic reports filed with the SEC. See “Incorporation by Reference” and “Available Information” on pages 50 and 51 for additional information.
Trans-Lux is a Delaware corporation incorporated on February 5, 1920. Our common stock is quoted on OTC Pink under the symbol “TNLX.” Our principal executive offices are located at 445 Park Avenue, Suite 2001, New York, NY 10022, where our telephone number is (800) 243-5544. Our internet address is www.Trans-Lux.com. The Real estate rentals segment includes the operations of an income-producing real estate property.

Asinformation contained on our website is not part of, and is not incorporated into or included in, this prospectus.

USE OF PROCEEDS
We expect the Company’s restructuring plan, on November 14, 2011gross proceeds from the Company completed the sale of an aggregate of $8.3rights offering (before expenses) to be (i) approximately $[●] million of securities.  See Liquidity and Capital Resources for further details.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dateif 25% of the financial statements and the reported amounts of revenues and expenses during the reporting period.  On an ongoing basis, management evaluates its estimates and judgments, including those related to percentage of completion, uncollectible accounts receivable, slow-moving and obsolete inventories, goodwill and intangible assets, income taxes, warranty obligations, pension plan obligations, contingencies and litigation.  Management bases its estimates and judgments on historical experience and on various other factors thatsubscription rights are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.  Management has discussed the development and selection of these accounting estimates and the related disclosures with the audit committeeexercised, (ii) approximately $[●] million if 50% of the Boardsubscription rights are exercised and (iii) approximately $[●] million if 100% of Directors.

Management believes the following critical accounting policies, among others, involve its more significant judgments and estimates used insubscription rights are exercised. We estimate that the preparationexpenses of its consolidated financial statements:

Percentage of Completion: The Company recognizes revenue on long-term equipment sales contracts using the percentage of completion method based on estimated incurred costsrights offering will be approximately $[●].

We intend to use the estimated total cost for each contract.  Should actual total cost be different from estimated total cost, an addition or a reduction to cost of sales may be required.

Uncollectible Accounts Receivable: The Company maintains allowances for uncollectible accounts receivable for estimated losses resultingnet proceeds we receive from the inabilityrights offering for (i) repayment of its customersdebt, including (a) up to make required payments.  Should non-payment by customers differ from the Company’s estimates,approximately $1.0 million outstanding under our credit agreement with BFI Capital Fund II, LLC (“BFI Capital Fund”), dated as of April 23, 2015 (the “Credit Agreement”), which bears interest at a revision to increase or decrease the allowance for uncollectible accounts receivable may be required.

Slow-Moving and Obsolete Inventories: The Company writes down its inventory for estimated obsolescence equal to the difference between the carrying value of the inventory and the estimated market value based upon assumptions about future demand and market conditions.  If actual future demand or market conditions are less favorable than those projected by management, additional inventory write downs may be required.

13

Goodwill and Intangible Assets: The Company evaluates goodwill and intangible assets for possible impairment annually for goodwill and when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable for other intangible assets.  The Company uses the income and the market approach to test for impairment of its goodwill, and considers other factors including economic trends and our market capitalization relative to net book value.  The Company weighs these approaches by using a 67% factor for the income approach and a 33% factor for the market approach.  Together these two factors estimate the fair value of the reporting unit.  The Company’s $744,000 goodwill relates to its catalog sports reporting unit.  The Company uses a discounted cash flow model to determine the fair value under the income approach which contemplates an overall weighted average revenue growth rate of 3.0%.  If the Company were to reduce its revenue projections12.00% per annum and matures on the reporting unit by 1.3% within the income approach, the fair value of the reporting unit would be below carrying value.  The gross profit margins used were consistent with historical margins achieved by the Company during previous years.  If there is a margin decline of 0.5% or more the model would yield results of a fair value less than carrying amount.  The Company uses a market multiple approach based on revenue to determine the fair value under the market approach which includes a selection of and market price of a group of comparable companies and the performance of the guidelines of the comparable companies and of the reporting unit.

The OctoberMay 1, 2011 annual review indicated that the fair value of the reporting unit exceeded its carrying value by 5.7%; therefore there was no impairment of goodwill related to our catalog sports reporting unit. Changes in the assumptions used could materially impact our fair value estimates.  Assumptions critical to our fair value estimates are: (i) discount rate used to derive the present value factors used in determining the fair value of the reporting unit, (ii) projected average revenue growth rates used in the reporting unit models and (iii) projected long-term growth rates used in the derivation of terminal year values.  These and other assumptions are impacted by economic conditions and expectations of management and will change in the future based on period-specific facts and circumstances, thereby possibly requiring an impairment charge in the future. During 2011, the Company wrote off the goodwill associated with the older LED technology and recorded a goodwill impairment charge of $66,000.

Income Taxes: The Company records a valuation allowance to reduce its deferred tax assets to the amount that it believes is more likely than not to be realized.  While the Company has considered future taxable income and ongoing feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.  Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.

Warranty Obligations: The Company provides for the estimated cost of product warranties at the time revenue is recognized.  While the Company engages in product quality programs and processes, including evaluating the quality of the component suppliers, the warranty obligation is affected by product failure rates.  Should actual product failure rates differ from the Company’s estimates, revisions to increase or decrease the estimated warranty liability may be required.

Pension Plan Obligations: The Company is required to make estimates and assumptions to determine the obligation of our pension benefit plan, which include investment returns and discount rates.  The Company recorded an after tax charge in unrecognized pension liability in other comprehensive loss of $1.4 million and $0.4 million during 2011 and 2010, respectively.  Estimates and assumptions are reviewed annually with the assistance of external actuarial professionals and adjusted as circumstances change.  At December 31, 2011, plan assets were invested 38.3% in guaranteed investment contracts, 60.9% in equity and index funds and 0.8% in money market funds.  The investment return assumption takes the asset mix into consideration.

The assumed discount rate reflects the rate at which the pension benefits could be settled.  At December 31, 2011, the weighted average rates used for the computation of benefit plan liabilities were: investment returns, 8.00% and discount rate, 4.80%.  Net periodic cost for 2012 will be based on the December 31, 2011 valuation.  The defined benefit plan periodic cost was $499,000 and $429,000 in 2011 and 2010, respectively.  At December 31, 2011, assuming no change in the other assumptions, a one-percentage point change in investment returns would affect the net periodic cost by $50,000 and a one-percentage point change in the discount rate would affect the net periodic cost by $136,000.  As of December 31, 2003, the benefit service under the defined benefit plan had been frozen and, accordingly, there is no service cost for each of the two years ended December 31, 2011 and 2010.  In March 2010 and 2011, the Company submitted to the Internal Revenue Service requests for waivers of the 2009 and 2010 minimum funding standard for its defined benefit plan.  The waiver requests were submitted as a result of the economic climate and the business hardship that the Company experienced.  The waivers, if granted, will defer payment of the minimum funding standard for the 2009 and 2010 plan years.  The Company has not remitted $242,000 and $358,000 of payment contributions for 2009 and 2010, respectively.  At this time, the Company is expecting to make its required contributions for the 2012 plan year; however there is no assurance that we will be able to make all payments.  In the event the Company requests waivers to defer payments in an amount greater than or equal to $1.0 million, the Pension Benefit Guaranty Corporation may place a lien on the Company’s assets for the amount owed.

14

Results of Operations

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

Total revenues for the three months ended March 31, 2012 increased $706,000 or 14.4% to $5.6 million from $4.9 million for the three months ended March 31, 2011, primarily due2016 (subject to an increase in Digital display sales offset by a decrease in Digital display leaseextension right), and maintenance revenues.

Digital display sales revenues increased $989,000 or 34.7%, primarily in the LED lighting and catalog scoreboard markets, offset by a decrease in the custom commercial sales market.

Digital display lease and maintenance revenues decreased $278,000 or 13.6%, primarily due(b) up to the continued expected revenue decline in the older outdoor display equipment rental and maintenance bases acquired in the early 1990s.  The global recession has negatively impacted the lease and maintenance revenues as well.

Real estate rentals revenues decreased $5,000 or 21.7%, due to the termination of a tenant lease in the first quarter of 2012 in our Santa Fe, New Mexico rental property.

Total operating loss for the three months ended March 31, 2012 increased $353,000 to $1.7 million from $1.3 million for the three months ended March 31, 2011, principally due to an increase in general and administrative expenses, offset by the increase in revenues.

Digital display sales operating loss increased $397,000 or 53.4%, primarily as a result of a decrease in the gross profit margins and an increase in general and administrative expenses, offset by the increase in revenues. The cost of Digital display sales increased $854,000 or 36.6%, primarily due to the increase in revenues and an increase in freight costs.  The cost of Digital display sales represented 83.1% of related revenues in 2012 compared to 82.0% in 2011.  Digital display sales general and administrative expenses increased $532,000 or 42.3%, primarily due to the limited sponsorship agreement entered into with Joe Gibbs Racing and other consultant marketing expenses.

Digital display lease and maintenance operating income increased $36,000 or 20.0%, primarily as a result of a decrease in general and administrative expenses, offset by the reduction in revenues.  The cost of Digital display lease and maintenance decreased $170,000 or 10.4%, primarily due to a $134,000 decrease in depreciation expense and a $36,000 decrease in field service costs to maintain the displays.  The cost of Digital display lease and maintenance revenues represented 82.7% of related revenues in 2012 compared to 79.8% in 2011.  The cost of Digital display lease and maintenance includes field service expenses, plant repair costs, maintenance and depreciation.  Digital display lease and maintenance general and administrative expenses decreased $144,000 or 61.5%, primarily due a reduction in payroll and benefits.

Real estate rentals operating (loss) income decreased $15,000 to a loss of ($12,000) in 2012 compared to income of $3,000 in 2011, primarily due to the reduction of revenues and an increase in general and administrative expenses.  The cost of Real estate rentals represented 88.9% of related revenues in 2012 compared to 73.9% in 2011. Real estate rentals general and administrative expenses increased $11,000 to $14,000 in 2012 compared to $3,000 in 2011, primarily due to an increase in bad debt expense.

Corporate general and administrative expenses decreased $23,000 or 3.1%, primarily due to a decrease in payroll and benefits.  The 2012 corporate general and administrative expenses include a reduction of $10,000 in the Canadian currency exchange loss.

Net interest expense decreased $248,000 or 68.7%, primarily due to the reduction in long-term debt as a result of the restructuring plan, see Note 2 to the condensed consolidated financial statements – Plan of Restructuring, as well as a reduction in amortization of prepaid financing costs.

The gain on debt extinguishment is attributable to an exchange of the 9½% Debentures.  See Note 6 to the condensed consolidated financial statements – Long-Term Debt.

The change in warrant liabilities is attributable to the change in the fair market value of the warrants issued in connection with the restructuring plan.  See Note 5 to the condensed consolidated financial statements – Warrant Liabilities.

The effective tax rate for the three months ended March 31, 2012 and 2011 was 0.4% and 0.4%, respectively.  Both the 2012 and 2011 tax rate are being affected by the valuation allowance on the Company’s deferred tax assets as a result of reporting pre-tax losses.  The income tax expense relates to the Company’s Canadian subsidiary.

15

Liquidity and Capital Resources

The Company’s Board of Directors approved a comprehensive restructuring plan which included offers to the holders of the 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) to receive $225, without accrued interest, plus 250 shares of the Company’s Common  Stock for each $1,000 Note exchanged and to the holders of the 9½% Subordinated debentures due 2012 (the “Debentures”) to

receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lender under the Credit Agreement, among other senior claims.  $8,976,000approximately $428,000 principal amount of our 8¼% Limited Convertible Senior Subordinated Notes due 2012 (referred to herein as the Notes and $718,000 principal amount of the Debentures were exchanged.  The Company issued 2,244,000 shares of common stock in exchange for the Notes,Notes), which have not been registered under the Securities Exchange Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

As part of the restructuring plan, on November 14, 2011 the Company completed the sale of an aggregate of $8.3 million of securities (the “Offering”) consisting of 416,500 shares of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) having a stated value of $20.00 per share and convertible into 50 shares of the Company’s common stock (or an aggregate of 20,825,000 shares of common stock) and 4,165,000 one-year warrants (the “A Warrants”).  These securities were issuedaccrued interest at a purchase price of $20,000 per unit (the “Unit”).  Each Unit consists of 1,000 shares of Series A Preferred Stock, which are convertible into 50,000 shares of common stock and 10,000 A Warrants.  Each A Warrant entitles the holder to purchase one share of the Company’s common stock and a three-year warrant (the “B Warrants”), at an exercise price of $0.20 per share.  Each B Warrant shall entitle the holder to purchase one share of the Company’s common stock at an exercise price of $0.50 per share .

The net proceeds of the Offering were used to fund the restructuring of the Company’s outstanding debt, which included: (1) a cash settlement to holders of the 8 ¼ % Limited convertible senior subordinated notes due 2012 (the “Notes”) in the amount of $2,019,600; (2) a cash settlement to holders of the 9 ½ % Subordinated debentures due 2012 (the “Debentures”) in the amount of $71,800; (3) payment of the Company’s outstanding term loan with the senior lender in the amount of $320,833 and (4) payment of $1.0 million on the Company’s outstanding revolving loan with the senior lender under the Company’s amended and restated commercial loan and security agreement with People’s United Bank (as amended, the “Credit Agreement”).  Any net proceeds of the Offering remaining after payment to holders of the Notes, the Debentures and the senior lender were used for working capital and other general corporate purposes.

We may require additional financing in the future in order to execute our operating plan. We cannot predict whether future financing, if any, will be in the form of equity, debt or a combination of both. We may not be able to obtain additional funds on a timely basis, on acceptable terms or at all.

The Company has a bank Credit Agreement, as amended, which provides for a revolving loan of up to $1.0 million, based on eligible accounts receivable and inventory, at a variable rate of interest of Prime plus 2.00%, (5.25% at March 31, 2012), which matures November 1, 2012.  Subsequent to the end of the quarter, the senior lender reduced the revolving loan from $3.0 million to $1.0 million. As8.25% per annum, matured as of March 31,1, 2012 the Company has drawn $0.1 million against the revolving loan facility, of which $0.9 million was available for additional borrowing.  The Credit Agreement requires(which non-payments constituted an annual facility fee on the unused commitment of 0.25%, and requires compliance with certain financial covenants, as defined in the Credit Agreement, which include a minimum tangible net worth ratio of not less than $6.5 million, a loan-to-value ratio of not more than 50% and a $1.0 million quarterly cap on capital expenditures.  As of March 31, 2012, the Company was in compliance with the foregoing financial covenants, but was not in compliance with the senior debt coverage ratio of not less than 1.75 to 1.00 (-6.7 to 1.00 at March 31, 2012), which the senior lender waived subsequent to the end of the quarter.  In addition, the senior lender has waived the defaults on the Notes and the Debentures, but in the event that the holders of the Notes or the Debentures or trustees declare a default and begin to exercise any of their rights or remedies in connection with the non-payment defaults, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  The senior lender has also waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  The amounts outstanding under the Credit Agreement are collateralized by all ofindenture governing the Digital Display Division assets.

As of March 31, 2012, the Company has $1.2 million of 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) whichNotes) and are no longer convertible into common shares; interest is payable semi-annuallyshares, and the Notes may be redeemed, in whole or in part, at par.  The Company had not remitted the March 1, 2010 and 2011 and September 1, 2010 and 2011 semi-annual interest payments of $417,800 each and the March 1, 2012 semi-annual interest and principal(ii) payment of $1.4 millionapproximately $400,000 in required contributions under our defined benefit pension plan. We intend to use the trustee.  The non-payments constitute an event of default under the Indenture governing the Notes and the trustee, by notice to the Company, or the holders of 25%remainder of the principalnet proceeds for general corporate purposes.

The amount of the Notes outstanding by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.  Upon receipt of such notice by the Company, no payment shall be made by the Company to the holders or trustee until the earlier of (i) the date such non-payment event of default is cured or waived or (ii) 179 days from receipt by the trustee of notice of such event, unless the holder of Senior Indebtedness has accelerated the due date thereof.  If the holder of Senior Indebtedness accelerates the due date at any time, then no payment may be made until the default is cured or waived.  As part of the Company’s restructuring plan, the Company offered the holders of the Notes to receive $225, without accrued interest, plus 250 shares of the Company’s common stock for each $1,000 Note exchanged.  The offer expired on October 31, 2011.  $9.0 million principal amount of the Notes were exchanged, leaving $1.2 million outstanding. 

16

As of March 31, 2012, the Company has $0.3 million of 9½% Subordinated debentures due 2012 (the “Debentures”) which are due in annual sinking fund payments of $105,700 beginning in 2009, which payments have not been remitted by the Company, with the remainder due in 2012; interest is payable semi-annually and the Debentures may be redeemed, in whole or in part, at par.  The Company has not remitted theJune 1, 2010 and 2011 and December 1, 2010 and 2011 semi-annual interest payments of $50,200 each to the trustee.  The non-payments constitute an event of default under the Indenture governing the Debentures and 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.  During the continuation of any event which, with notice or lapse of time or both, would constitute a default under any agreement under which Senior Indebtedness is issued, if the effect of such default is to cause or permit the holder of Senior Indebtedness to become due prior to its stated maturity, no payment (including any required sinking fund payments) of principal, premium or interest shall be made on the Debentures unless and until such default shall have been remedied, if written notice of such default has been given to the trustee by the Company or the holder of Senior Indebtedness.  The failure to make the sinking fund and interest payments are events of default under the Credit Agreement and no payment can be madehas been used for short-term working capital.  Of the $1.5 million available to such trustee or the holders at this time as such defaults have not been waived.  At March 31, 2012, the total amount outstanding under the Debentures is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets.  As part of the Company’s restructuring plan, the Company offered the holders of the Debentures to receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The offer expired on October 31, 2011.  $0.7 million principal amount of the Debentures were exchanged, leaving $0.3 million outstanding.  The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lenderus under the Credit Agreement, among other senior claims.

$0.5 million was provided to BFI Capital Fund by Marco Elser, one of our directors.

On June 17, 2011,

THE RIGHTS OFFERING
Please read the Company entered into afollowing information concerning the subscription rights in conjunction with the statements under “Description of Subscription Agreement with Hackel Family Associates LLC (“HFA”) pursuant toRights” in this prospectus, which the Company soldfollowing information supplements.
The Subscription Rights
We are distributing, at no charge, to HFAholders of our common stock non-transferable subscription rights to purchase up to [●] shares of our Series B Preferred at a secured promissory note in the principal amountsubscription price of $650,000.  In connection with the sale$[●] per whole share, for an aggregate purchase price of $[●] million.
Basic Subscription Right
Your basic subscription right allows you to purchase [●] shares of Series B Preferred per subscription right, upon delivery of the Note,required documents and payment of the Company issued to HFA five-year warrants (the "HFA Warrants") to purchase 1,000,000subscription price of $[●] per whole share, before the expiration of the rights offering. For example, if you owned 100 shares of our common stock as of the Company at an initial exercise price of $1.00. The exercise price of the HFA Warrants was reduced to $0.10 upon the Company’s filing of its Amendedrecord date, you would receive 100 subscription rights and Restated Certificate of Incorporation on July 2, 2012. The HFA Warrants are exercisable on a cashless basis if at any time there is no effective registration statement for the underlying shares of common stock.

The Company has a $552,000 mortgage on its facility located in Des Moines, Iowa at a fixed rate of interest of 6.50% payable in monthly installments, which matures March 1, 2015 and requires a compensating balance of $200,000.

The Company has a $1.8 million mortgage on its real estate rental property located in Santa Fe, New Mexico at a variable rate of interest of Prime, with a floor of 6.75%, which was the interest rate in effect at March 31, 2012, payable in monthly installments, which matures December 12, 2012.

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. As a result, we have experienced a decline in the lease and maintenance bases.  The cash flows ofthe Company are constrained, and in order to more effectively manage its cash resources in these challenging economic times, the Company has, from time to time, increased the timetable of its payment of some of its payables.  There can be no assurance that we will meet our anticipated current and near term cash requirements.  The Company’s objective in regards to the Credit Agreement is to obtain additional funds from external sources through equity or additional debt financing prior to the maturity of the Credit Agreement on November 1, 2012, and is in discussions with senior lenders and others, but has no agreements, commitments or understanding from such senior lenders or others with respect to obtaining any additional funds, and the current global credit environment has been and continues to be a challenge in accomplishing these objectives.  If the Company is unable to obtain replacement financing before the maturity of the Credit Agreement on November 1, 2012, the senior lender has the right to declare all amounts outstanding thereunder due and payable.  Without the availability under the revolving loan, the Company would have difficulties meeting its obligations in the normal course of business.  Management believes that based on its actions taken, current cash resources and cash provided by continuing operations should be sufficient to fund its anticipated current and near term cash requirements.  The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements.

The Company has generated cash provided by operating activities from operations of $297,000 and $648,000 for the three months ended March 31, 2012 and 2011, respectively. The Company continues to explore initiatives to improve operational results and cash flows over future periods.  The Company continues to explore ways to reduce operational and overhead costs.  The Company periodically takes steps to reduce the cost to maintain the equipment on rental and maintenance.

In March 2011 and 2010, the Company submitted to the Internal Revenue Service requests for waivers of the minimum funding standard for its defined benefit plan.  The waiver requests were submitted as a result of the economic climate and the business hardship that the Company was experiencing.  The waivers, if granted, will defer payment of $559,000 and $285,000 of the minimum funding standard for the 2010 and 2009 plan years, respectively.  If the waivers are not granted, the Pension Benefit Guaranty Corporation and the Internal Revenue Service have various enforcement remedies they can implement to protect the participant’s benefits, such as termination of the plan and require the Company to make the unpaid contributions.  The senior lender has waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  At this time, the Company is expecting to make its required contributions for the 2011 and 2012 plan years; however, there is no assurance that the Companywill be able to make all payments.  In the event the Company requests waivers to defer payments in an amount greater than or equal to $1.0 million, the Pension Benefit Guaranty Corporation may place a lien on the Company’s assets for the amount owed.

17

Cash and cash equivalents decreased $419,000 for the three months ended March 31, 2012 compared to an increase of $37,000 for the three months ended March 31, 2011.  The decrease in 2012 is primarily attributable to $400,000 of payments on the revolving credit facility, investment in equipment for rental of $239,000, investment in property, plant and equipment of $48,000 and scheduled payments of long-term debt of $29,000, offset by cash provided by operating activities of $297,000.  The increase in 2011 is primarily attributable to cash provided by operating activities of $648,000, offset by investment in equipment for rental of $218,000, investment in property, plant and equipment of $17,000, scheduled payments of long-term debt of $187,000 and $190,000 of payments on the revolving credit facility.

Under various agreements, the Company is obligated to make future cash payments in fixed amounts.  These include payments under the Company’s long-term debt agreements, 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 until the underlying debts mature.

The following table summarizes the Company’s fixed cash obligations as of March 31, 2012 for the remainder of 2012 and the next four years:

 

Remainder of

 

 

 

 

In thousands

2012

2013

2014

2015

2016

Long-term debt, including interest

$4,171

$ 89

$ 89

$400

$ -

Employment agreement obligations

206

275

275

34

-

Operating lease payments

188

72

-

-

-

Total

$4,565

$436

$364

$434

$ -

2011 Compared to 2010

Total revenues for the year ended December 31, 2011 decreased 1.9% to $23.8 million from $24.3 million for the year ended December 31, 2010, principally due to a decrease in Digital display lease and maintenance revenues, offset by an increase in Digital display sales revenues.

Digital display sales revenues increased $475,000 or 3.1%, primarily due to an increase in sales from the gaming and catalog scoreboard markets, principally due to the Company’s introduction of the new TLVision product line.  LED lighting is a start-up business and had not yet generated revenues for the year ended December 31, 2011, but is now accepting orders and has had it first installation in the first quarter of 2012.

Digital display lease and maintenance revenues decreased $794,000 or 9.3%, primarily due to disconnects and non-renewals of equipment on lease on existing contracts in the financial services market and the continued expected revenue decline in the older equipment on lease and maintenance bases acquired in the early 1990s.  The global recession has negatively impacted the lease and maintenance revenues.  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.

Real estate rentals revenues decreased $139,000 or 60.2%, primarily due to the termination of tenant leases.  The Santa Fe, New Mexico real estate market is experiencing a decline in real estate rentals due to the economy.

Total operating loss for the year ended December 31, 2011 decreased $565,000 to $5.0 million from $5.5 million for the year ended December 31, 2010, principally due to a decline in general and administrative expenses and restructuring costs, offset by the decline in revenues and an increase in the reserve for obsolete inventory.

Digital display sales operating loss increased $474,000 to $3.0 million in 2011 compared to $2.5 million in 2010, primarily as a result of the increase in the reserve for obsolete inventory and start-up costs for the new LED lighting business, offset by a decrease in general and administrative expenses.  The cost of Digital display sales represented 87.4% of related revenues in 2011 compared to 83.2% in 2010.  The cost of Digital display sales increased $1.1 million or 8.2%, primarily due to the increase in revenues and an increase in the reserve for obsolete inventory related to the older technology that has been replaced by our new TLVision product line.  Digital display sales general and administrative expenses decreased $116,000 or 2.3%, primarily due to the 2010 charge to write-off engineering software of $456,000 and a $66,000 reduction in restructuring costs in 2011, offset by an increase of $300,000 in LED lighting start-up expenses and an increase of $121,000 in bad debt expense.

18

Digital display lease and maintenance operating income increased $132,000 to $215,000 in 2011 compared to $83,000 in 2010, primarily as a result of a reduction in depreciation expense and general and administrative expenses, offset by the decrease in revenues.   

The cost of Digital display lease and maintenance represented 84.8% of related revenues in 2011 compared to 85.3% in 2010.  Digital display cost of lease and maintenance decreased $715,000 or 9.8%, primarily due to a $676,000 decrease in depreciation expense and a $38,000 decrease in field service costs to maintain the equipment.  Digital display lease and maintenance general and administrative expenses decreased $211,000 or 18.0%, primarily due to an $846,000 reduction in restructuring costs, offset by a $280,000 increase in bad debt expense, a $66,000 goodwill impairment charge and an increase in certain administrative costs.  The Company periodically addresses the cost of field service to keep it in line with revenues from equipment leases and maintenance, but as lease and maintenance revenues have declined, it is difficult to reduce the cost of field service proportionately.  Cost of Digital display lease and maintenance includes field service expenses, plant repair costs, maintenance and depreciation.

Real estate rentals operating income (loss) decreased $204,000 to a loss of $39,000 in 2011 compared to income of $165,000 in 2010, primarily due to the reduction in revenues due to softness in the real estate rental market in Santa Fe, New Mexico.  The cost of Real estate rentals represented 71.7% of related revenues in 2011 compared to 24.2% in 2010.  Real estate rentals general and administrative expenses increased primarily due to an increase in the bad debt expense.

Corporate general and administrative expenses decreased $1.1 million or 34.2%.  The 2011 corporate general and administrative expenses include a positive change of $311,000 in the Canadian currency exchange gain (loss) compared to 2010.  Reductions in audit, consulting, insurance, payroll and benefits also contributed to the decrease this year, partly due to the outsourcing of the human resources department and benefits.  The Company continues to monitor and reduce certain overhead costs such as benefit and medical costs.

Net interest expense decreased $209,000 or 13.1%, primarily due to the reduction in long-term debt.

The gain on debt extinguishment is attributable to the exchange of the 8¼% Notes and 9½% Debentures.  See Note 12 to the Consolidated Financial Statments– Long Term Debt.

The change in warrant liabilities is attributable to the change in the fair market value of the warrants issued in connection with the Offering.  See Note 11 to the Consolidated Financial Statements– Warrant Liabilities.

The effective tax rate benefit for the years ended December 31, 2011 and 2010 was 0.6% and 0.3%, respectively.  Both the 2011 and 2010 tax rates are being affected by the valuation allowance on the Company’s deferred tax assets as a result of reporting pre-tax losses.

The loss from discontinued operations relates to an impairment in the fair market value of the land held for sale located in Silver City, New Mexico( which property has since been sold and is no longer owned by the Company).

Liquidity and Capital Resources

The Company has incurred significant recurring losses from continuing operations and has a significant working capital deficiency.  The Company incurred a net loss from continuing operations of $1.2 million in 2011 and had a working capital deficiency of $11.3 million as of December 31, 2011.  The 2011 results include an $8.8 million gain on debt extinguishment offset by a $3.6 million charge for marking the warrants to market.  See Note 2 to the Consolidated Financial Statements – Plan of Restructuring.  As further discussed in Note 12 to the Consolidated Financial Statements– Long-Term Debt, the Company had not remitted the December 1, 2009, 2010 and 2011 required sinking fund payments of $105,700 each, and had not remitted the June 1, 2010 and 2011 and December 1, 2010 and 2011 interest payments of $50,200 each on its 9½% Subordinated debentures (the “Debentures”).  In addition, the Company had not remitted the March 1, 2010 and 2011 and September 1, 2010 and 2011 interest payments of $417,800 each and the March 1, 2012 semi-annual interest and principal payment of $1.4 million on its 8¼% Limited convertible senior subordinated notes (the “Notes”).  Under the terms of the indenture agreements that govern the Debentures and the Notes, the non-payments constitute events of default; accordingly, the trustees or the holders of 25% of the outstanding Debentures and Notes have the right to declarepurchase [●] shares of Series B Preferred for $[●] per whole share with your basic subscription right. We will not issue fractional shares of Series B Preferred. If the outstanding principal and interest due and payable immediately.  Innumber of subscription rights you exercise would otherwise permit you to purchase a fraction of a share, the eventnumber of shares that you may purchase will be rounded down to the Company receives such notice, the senior lender has the right to demand payment on outstanding amounts on the Credit Agreement.  All outstanding debt has been classified as Currentnearest whole share. You may exercise all or a portion of long-term debt inyour basic subscription right. However, if you exercise less than your full basic subscription right, you will not be entitled to purchase shares pursuant to your over-subscription right.

Over-Subscription Right
We do not expect all of our stockholders to exercise all of their basic subscription rights. The over-subscription right provides stockholders who exercise all of their basic subscription rights the Consolidated Balance Sheets.

The Company used cash in operating activities of continuing operations of $0.5 million and generated cash provided by operations of $1.7 million foropportunity to purchase the years ended December 31, 2011 and 2010, respectively. The Company has implemented several initiatives to improve operational results and cash flows over future periods, including the consolidation of the Stratford, Connecticut manufacturing facility into its Des Moines, Iowa facility, reducing head count and outsourcing its human resources department.  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 displays on lease and maintenance agreements.

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Cash and cash equivalents increased $711,000 in 2011.  The increase is primarily attributable to the $7.9 million net proceeds from issuanceshares of Series AB Preferred Stock and Warrants and the $0.7 million proceeds from mortgage borrowings, offset by $6.8 million in payments of long-term debt, $0.4 million investment in equipment manufactured for rental, $0.1 million investment in property, plant and equipment and cash used in operating activities of $0.5 million.  The current economic environment has increased the Company’s trade receivables collection cycle, and its allowances for uncollectible accounts receivable, but collections continues to be favorable.  Cash and cash equivalents decreased $143,000 in 2010.  The decrease was primarily attributable to the investment in equipment for rental of $1.3 million, the investment in property, plant and equipment of $0.2 million and scheduled payments of long-term debt of $0.8 million, offset by cash provided by operating activities of $1.7 million, the net proceeds from mortgage borrowings of $0.3 million and borrowing on the revolving loan facility of $0.1 million.

Under various agreements, the Company is obligated to make future cash payments in fixed amounts.  These include payments under the Company’s long-term debt agreements, employment and consulting 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 2011 until the underlying debts mature.

The following table summarizes the Company’s fixed cash obligations as of December 31, 2011 over the next five fiscal years:

In thousands

2012

2013

2014

2015

2016

Long-term debt, including interest

$4,669

$ 89

$89

$400

$ -

Employment agreement obligations

31

-

-

-

-

Operating lease payments

262

72

-

-

-

Total

$4,962

$161

$89

$400

$ -

Off-Balance Sheet Arrangements:  The Company has no majority-owned subsidiaries that are not included inpurchased by other stockholders. If you fully exercise your basic subscription right and other stockholders do not fully exercise their basic subscription rights, you may also exercise an over-subscription right to purchase additional shares of Series B Preferred that remain unsubscribed at the consolidated financial statements nor does it have any interests in or relationships with any special purpose off-balance sheet financing entities.

Forward-Looking Statements

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.  Except as may be required under applicable securities laws, 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 purchasersexpiration of the Company’s products, interest rate and foreign exchange fluctuations, terrorist acts and war.

BUSINESS

The Company is a leading designer and manufacturer of digital signage display solutions.  The essential elements of these systems arerights offering, subject to availability. To the real-time, programmable electronic information displaysextent the Company designs, manufactures, distributes and services.  These display systems utilize LED (light emitting diode) technologies.  Designed to meet the digital signage solutions for any size venue's indoor and outdoor needs, these display products include text, graphic and video displays for stock and commodity exchanges, financial institutions, college and high school sports stadiums, schools, casinos, convention centers, corporate applications, government applications, theatres, retail sites, airports, billboard sites and numerous other applications.  In 2010, the Company started a new business opportunity in the LED lighting market with energy-saving lighting solutions that will feature a comprehensive offeringnumber of the latest LED lighting technologies that provide facilities and public infrastructure with "green" lighting solutions that emit less heat, save energy and enable creative designs. The Company also owns an income-producing real estate property which has been placed on the market for sale.

DIGITAL DISPLAY PRODUCTS

The Company’s new generationunsubscribed shares of LED large screen systems features the latest digital display technologies and capabilities.  The Company’s product line of high performance state-of-the art digital displays and controllersSeries B Preferred are usednot sufficient to communicate messages and information in virtually any configuration in a variety of indoor and outdoor applications.  Most of the Company’s digital display products include hardware components and sophisticated software.  In both the indoor and outdoor markets in which the Company serves, the Company adapts basic product types and technologies for specific use in various niche market applications.  The Company also operates a direct service networkthroughout the United States and parts of Canada, which performs on-site project management, installation, service and maintenance for its customers and others.

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The Company employs a modular engineering design strategy, allowing basic “building blocks” of electronic modules to be easily combined and configured in order to meet the broad application requirements of the various industries it serves.  This approach ensures product flexibility, reliability, ease of service and minimum spare parts requirements.

The Company’s Digital display market is comprised of two distinct segments: the Digital display sales division and the Digital display lease and maintenance division.  Digital displays are used by financial institutions, including brokerage firms, banks, energy companies, insurance companies and mutual fund companies; sports stadiums and venues; educational institutions; outdoor advertising companies; corporate and government communication centers; retail outlets; casinos, race tracks and other gaming establishments; airports, train stations, bus terminals and other transportation facilities; movie theatres; health maintenance organizations and in various other applications.

Digital Display Sales Division:  The Digital display sales market is currently dominated by five categories of users: financial, government/private sector, gaming, scoreboards and outdoor advertising.

The financial sector, which includes trading floors, exchanges, brokerage firms, banks, mutual fund companies and energy companies, has long been a user of electronic information displays due to the need for real-time dissemination of data.  The major stock and commodity exchanges depend on reliable information displays to post stock and commodity prices, trading volumes, interest rates and other financial data.  Brokerage firms use electronic ticker displays for both customers and brokers; they have also installed other larger displays to post major headline news events in their brokerage offices to enable their sales force to stay up-to-date on events affecting general market conditions and specific stocks.  Banks and other financial institutions also use information displays to advertise product offerings to consumers.  The financial sector has a product line of advanced last sale price displays, full color LED tickers and graphic/video displays.

The government/private sector includes applications found in major corporations, public utilities and government agencies for the display of real-time, critical data in command/control centers, data centers, help desks, visitor centers, lobbies, inbound/outbound telemarketing centers, retail applications to attract customers and for employee communications.  Digital displays have found acceptance in applications for the healthcare industry such as outpatient pharmacies, military hospitals and HMOs to automatically post patient names when prescriptions are ready for pick up.

Theatres use digital displays to post current box office and ticket information, directional information and to promote concession sales.  Information displays are consistently used in airports, bus terminals and train stations to post arrival and departure times and gate and baggage claim information, all of which help to guide passengers through these facilities.

The gaming sector includes casinos, Indian gaming establishments and racetracks.  These establishments generally use large information displays to post odds for race and sporting events and to display timely information such as results, track conditions, jockey weights, scratches and real-time video.  Casinos and racetracks also use digital displays throughout their facilities to advertise to and attract gaming patrons. 

The scoreboard sector includes digital displays used by high schools, college sports stadiums, sports venues, municipal sports playing fields, entertainment facilities and recreational facilities.  This sector generally sells through dealers and distributors.

The outdoor advertising sector includes digital displays used by automobile dealerships, churches, military installations, gas stations, highway departments, entertainment facilities and outdoor advertisers, such as digital billboards, attempting to capture the attention of passers-by.

Equipment for the digital display sales segment generally has a lead-time of 30 to 120 days depending on the size and type of equipment ordered and material availability.

Digital Display Lease and Maintenance Division:  The Digital display lease and maintenance division leases and performs maintenance on digital displays acrosssatisfy all of the sectors under agreement terms ranging from 30 daysproperly exercised over-subscription rights requests, the available shares will be prorated among those who properly exercised over-subscription rights in proportion to 10 years.

Sales Order Backlog (excluding leases):  The amount of sales order backlog at June 30, 2012 and December 31, 2011  was approximately $2.9 million and $2.9 million, respectively.  The December 31, 2011 backlog is expected to be recognized in 2012.  These amounts include only the sale of products; they do not include new lease orders or renewals of existing lease agreements that may be presently in-house.


their respective basic subscription rights.
 

ENGINEERING AND PRODUCT DEVELOPMENT

The Company’s abilityIn order to compete and operate successfully depends on its abilityproperly exercise your over-subscription right, you must deliver the subscription payment related to anticipate and respond toyour over-subscription right before the changing technological and product needs of its customers, among other factors.  For this reason, the Company continually develops enhancements to its existing product lines and examines and tests new display technologies.

In 2010, the Company introduced TLVision, our new generation of LED Large Screen Systems that feature the latest digital display technologies and capabilities, available in various pitch design, including the industry’s first 3mm LED display solution.  This new line of products consists of full color video products that can be used in a multitude of applications.  These applications range from posting alphanumeric data to the displaying of full HD video.  The pixel pitchesexpiration of the products range from 3mm for very close distance viewing and up to 127mm for very long distance viewing.  The Company also recently expanded its line of scoreboard solutions using its TLVision technology and improved hand-held, simple to operate remotes and wireless control devices.

As part of its ongoing development efforts,rights offering. Because we will not know the Company seeks to package certain products for specific market segments as well as continually tracking emerging technologies that can enhance its products.  Full color, live video and digital input technologies continue to be enhanced.

The Company maintains a staff of 9 people who are responsible for product development and support.  The engineering, product enhancement and development efforts are supplemented by outside independent engineering consulting organizations, as required.  Engineering expense and product enhancement and development costs amounted to $0.8 million and $1.1 million in 2011 and 2010, respectively.

MARKETING AND DISTRIBUTION

The Company markets its digital display products in the United States and Canada using a combination of distribution channels, including 15 direct sales representatives, three telemarketers and a network of independent dealers and distributors.  By working with software vendors and using the internet to expand the quality and quantity of multimedia content that can be delivered to our digital displays, we are able to offer customers relevant, timely information, content management software and display hardware in the form of turnkey display communications packages.

The Company employs atotal number of different marketing techniques to attract new customers, including direct marketing efforts by its sales force to known and potential users of information displays; internet marketing; advertising in industry publications; and exhibiting at approximately 12 domestic and international trade shows annually.

Internationally,unsubscribed shares before the Company uses a combination of internal sales people and independent distributors to market its products outside the United States.  The Company has existing relationships with approximately 20 independent distributors worldwide covering Europe, the Middle East, South America, Africa, the Far East and Australia.  Foreign revenues represented less than 10% and 11% of total revenues for the years ended December 31, 2011 and 2010, respectively.

Headquartered in Norwalk, Connecticut, the Company has sales and service offices in Des Moines, Iowa and Burlington, Ontario as well as approximately 24 satellite offices in the United States and Canada.

The Company’s revenues in 2011 and 2010 did not include any single customer that accounted for more than 10% of total revenues.

MANUFACTURING AND OPERATIONS

The Company’s production facilities are located in Des Moines, Iowa.  During 2010, the Company consolidated its production facility in Stratford, Connecticut to its Des Moines, Iowa facility.  The production facilities consist principallyexpiration of the manufacturing, assembly and testing of digital display units and related components.  The Company performs most subassembly and most final assembly of its products.

All product lines are design engineered byrights offering, if you wish to maximize the Company and controlled throughout the manufacturing process.  The Company has the ability to produce very large sheet metal fabrications, cable assemblies and surface mount and through-hole designed assemblies.  Some of the subassembly processes are outsourced.  The Company’s production of many of the subassemblies and final assemblies gives the Company the control needed for on-time delivery to its customers.

The Company has the ability to rapidly modify its product lines.  The Company’s displays are designed with flexibility in mind, enabling the Company to customize its displays to meet different applications with a minimum of lead-time.  The Company designs certain of its materials to match components furnished by suppliers.  If such suppliers were unable to provide the Company with those components, the Company would have to contract with other suppliers to obtain replacement sources.  Such replacement might result in engineering design changes, as well as delays in obtaining such replacement components.  The Company believes it maintains suitable inventory and has contracts providing for delivery of sufficient quantities of such components to meet its needs.  The Company also believes there presently are other qualified vendors of these components.  The Company does not acquire significant amounts of components directly from foreign suppliers, other thanthe LEDs and LED modules which are manufactured by foreign sources.  The Company’s products are third-party certified as complying with applicable safety, electromagnetic emissions and susceptibility requirements worldwide.


SERVICE AND SUPPORT

The Company emphasizes the quality and reliability of its products and the ability of its field service personnel and third-party agents to provide timely and expert service to the Company’s equipment on lease and maintenance bases and other types of customer-owned equipment.  The Company believes that the quality and timeliness of its on-site service personnel are important components in the Company’s ongoing and future success.  The Company provides turnkey installation and support for the products it leases and sells in the United States and Canada.  The Company provides training to end-users and provides ongoing support to users who have questions regarding operating procedures, equipment problems or other issues.  The Company provides installation and service to those who purchase and lease equipment.  The Company’s dealers and distributors offer support for the products they sell in the market segments they cover.

Personnel based in regional and satellite service locations throughout the United States and Canada provide high quality and timely on-site service for the installed equipment on lease and maintenance bases and other types of customer-owned equipment.  Purchasers or lessees of the Company’s larger products, such as financial exchanges, casinos and sports stadiums, often retain the Company to provide on-site service through the deployment of a service technician who is on-site daily for scheduled events.  The Company operates its National Technical Services and Repair Center from its Des Moines, Iowa facility.  Equipment repairs are performed in Des Moines and service technicians are dispatched nationwide from the Des Moines facility.  The Company’s field service is augmented by various service companies in the United States, Canada and overseas.  From time to time the Company uses various third-party service agents to install, service and/or assist in the service of certain displays for reasons that include geographic area, size and height of displays.

COMPETITION

The Company’s offers of short and long-term leases to customers and its nationwide sales, service and installation capabilities are major competitive advantages in the digital display business.  The Company believes that it is the largest supplier of large-scale stock, commodity, sports and race book gaming digital displays in the United States, as well as one of the larger digital display and service organizations in the country.

The Company competes with a number of competitors, both larger and smaller than itself, with products based on different forms of technology.  There are several competitors whose current products utilize similar technologyshares you purchase pursuant to the Company’s and who possess the resources necessaryyour over-subscription right, you will need to develop competitive and more sophisticated products in the future.

LED LIGHTING

In 2010 the Company started a new business opportunity in the LED lighting market with energy-saving lighting solutions that features a comprehensive offering of the latest LED lighting technologies that provide facilities and public infrastructure with “green” lighting solutions that emit less heat, save energy and enable creative designs.  LED lighting is a start-up business and just started to generate revenues.

REAL ESTATE RENTALS OPERATIONS

The Company owns an income-producing real estate property located in Santa Fe, New Mexico, which currently has a 10% occupancy rate.  This property has been placed on the market for sale because it does not directly relate to our core business. 

INTELLECTUAL PROPERTY

The Company owns or licenses a number of patents and holds a number of trademarks for its digital display equipment and considers such patents, licenses and trademarks important to its business.

EMPLOYEES

The Company has approximately 127 employees as of July 6, 2012.  Approximately 26% of the employees are unionized.  The Company believes its employee relations are good.

PROPERTIES


                The Company’s headquarters and principal executive offices are located in a leased facility at 26 Pearl Street, Norwalk, Connecticut, which is used for administration, engineering and sales.  The Company owns a facility in Des Moines, Iowa where its manufacturing operationsare maintained.  In 2010, the Company consolidated its manufacturing and assembly functions, previously located in Stratford, Connecticut, into its facility in Des Moines, Iowa.

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MANAGEMENT

The following persons hold the positions set forth opposite their respective names.

Name

Office

Age

Jean-Marc (J.M.) Allain

President, Chief Executive Officer and Class A Director

42

Angela D. Toppi

Executive Vice President, Chief Financial Officer, Assistant Secretary

56

Kostas Ktistakis

Executive Vice President

54

Kristin A. Kreuder

Vice President, General Counsel and Corporate Secretary

41

Marco M. Elser

Class A Director

53

Jean Firstenberg

Class B Director

76

Richard Nummi

Class B Director

53

George W. Schiele

Class A Director

80

Elliot Sloyer

Class B Director

47

Salvatore J. Zizza

Class C Director

66

J.M. Allain became the President and CEO of Trans-Lux Corporation on February 16, 2010 and has served as a director since June 2011.  Mr. Allain served as President of Panasonic Solutions Company from July 2008 through October 2009; Vice President of Duos Technologies from August 2007 through June 2008; General Manager of Netversant Solutions from October 2004 through June 2005; and Vice President of Adesta, LLC from May 2002 through September 2004.  Mr. Allain has familiarity with the operational requirements of complex organizations and has experience dealing with reorganizations and turnarounds. 

Angela D. Toppi served as a director from 2009 through 2012 and has been Executive Vice President, Assistant Secretary and Chief Financial Officer of Trans-Lux Corporation for the past ten years.  Ms. Toppi's extensive leadership experience at Trans-Lux for over 24 years of service and involvement with numerous restructuring and organizational transactions gives her a deep understanding of the Company.  Ms. Toppi is a Certified Public Accountant. 

Kostas Ktistakis was independently employed from February 2009 through January 2012, served as Vice President of Program and Product & Project Management of HiTech Electronics from August 2008 through January 2009, Vice President of Program and Product & Management of Santech from August 2007 through July 2008 and Director of Program, Product & Project Management of Optec Digital Displays Inc. from January 2007 through July 2007. 

Kristin Kreuder became Corporate Counsel of Trans-Lux Corporation on February 14, 2011 and became Vice President, General Counsel and Corporate Secretary on March 6, 2012.  Ms. Kreuder served as Associate General Counsel, Assistant Corporate Secretary and Member of Disclosure Committee of MXenergy Inc. from September 2007 through September 2009 and Associate General Counsel, Assistant Corporate Secretary and Corporate Compliance Officer of Competitive Technologies, Inc. from January 2006 through August 2007. 

Marco M. Elser has served as a director since May 25, 2012. Mr. Elser is a partner with AdviCorp Plc,a London-based investment banking firm.  Mr. Elser previously served asInternational Vice President of Northeast Securities, managing distressed funds for family offices and small institutions; and served as a first Vice President of Merrill Lynch Capital Markets in Rome and London.  Mr. Elser is currently Chairman of the Board of Pine Brook Capital and a director of North Hills Signal Processing Corporation.  Mr. Elser’s extensive knowledge of international finance and commerce allows him to make valuable contributions to the Board.

Jean Firstenberg has served as a director since 1989 when she was elected an independent director.  Ms. Firstenberg is President Emerita and a member of the Board of Trustees of the American Film Institute.  She was President and Chief Executive Officer of the American Film Institute from 1980 to 2007.  She is Chairperson of the Citizen’s Stamp Advisory Committee; a member of the Board of Trustees of Women’s Sports Foundation; and was formerly a Trustee of Boston University. Ms. Firstenberg’s more than twenty years of experience as a director of the Corporation and her prior role as Chairman of the Audit Committee gives her a deep understanding of the operations of the Corporation and allows her to make valuable contributions to the Board.

24

Richard Nummi has served as a director since March 6, 2012 when he was elected an independent director.  Mr. Nummi is an attorney and is currently responsible for legal oversight and compliance with security industry rules and regulations as Managing Partner of Nummi & Associates, P.A.  Previously, Mr. Nummi was Chief Compliance Officer at INVEST Financial Corporation; Chief Compliance Officer at Jefferson-Pilot Financial; President, Executive Vice President, Chief Compliance Officer, General Counsel and Business Analyst for several top wall street firms; a securities regulator with the U.S. Securities and Exchange Commission; and served in the U.S. Navy in Naval Aviation and Naval Intelligence for 12 years.  Mr. Nummi’s extensive experience in compliance allows him to make valuable contributions to the Board.

George W. Schiele has served as a director since 2009 when he was elected an independent director.  Mr. Schiele was elected Chairman of the Board (a non-executive position) of Trans-Lux Corporation on September 29, 2010.  Mr. Schiele is currently President of George W. Schiele, Inc., a trust management and private investment company; he is also President of four other private companies; a Director of Connecticut Innovations, Inc., the nation’s fourth most active venture capital firm, and Chairman of its Investment Advisory and Investment Committees; Trustee of seven private Trusts; President of one and an Officer and Director of two other private Charitable Foundations; the Managing Partner of two private Investment partnerships; and a Director and Executive Board member of The Yankee Institute.  Mr. Schiele was elected in accordance with a Settlement Agreement approved by the United States District Court for the Southern District of New York described in the Corporation’s proxy statement for the December 11, 2009 Annual Meeting of Stockholders.  Mr. Schiele’s long experience in previous start-ups and corporate restructurings and his service to other boards of directors allows him to make valuable contributions to the Board. 

Elliot Sloyer has served as a director since March 6, 2012 and is currently a Managing Member and Portfolio Manager of WestLane Capital Management, LLC, which was founded in 2005, and a Director of Arotech Corporation, a worldwide provider of defense and security products to the military and law enforcement.  Mr. Sloyer was a founder and Managing Director of Harbor Capital Management LLC where he managed portfolios of convertible and distressed securities including bonds, preferred stocks and warrants for 13 years.  Previously, Mr. Sloyer was Director of Convertible Arbitrage Trading at R.F. Lafferty & Company.  Mr. Sloyer’s extensive experience and service to other boards of directors allows him to make valuable contributions to the Board.

Salvatore J. Zizza has served as a director since 2009 when he was elected an independent director.  Mr. Zizza was elected Vice Chairman of the Board (a non-executive position) of Trans-Lux Corporation on September 29, 2010.  Mr. Zizza is currently the Chairman of Zizza & Co. Ltd.; Chairman of Metropolitan Paper Recycling; Chairman of Bethlehem Advanced Materials; a Director of Hollis-Eden Pharmaceuticals; and a Director of several of the Gabelli open and closed-end funds, including The Gabelli Equity Trust, The Gabelli Asset Fund, The Gabelli Growth Fund, The Gabelli Convertible and Income Securities Fund, The Gabelli Utility Trust Fund, The Gabelli Global Multimedia Trust, The Gabelli Equity Series Fund, The Gabelli Dividend and Income Trust, The Gabelli Gold Fund, The Gabelli International Growth Fund, The Gabelli Global Gold & Natural Resources Fund, and the GAMCO Westwood Funds.  Previously, Mr. Zizza was a Director of Earl Scheib, Inc.  Mr. Zizza was elected in accordance with a Settlement Agreement approved by the United States District Court for the Southern District of New York described in the Corporation’s proxy statement for the December 11, 2009 Annual Meeting of Stockholders.  Mr. Zizza’s extensive experience and service to numerous other boards of directors allows him to provide valuable contributions to the Board.  In addition, Mr. Zizza also serves as Chairman of the Audit Committee and is the “audit committee financial expert” as required under the rules of the United States Securities and Exchange Commission (the “SEC”).

Employment Agreement and Compensation 

The Corporation executed an employment agreement with J.M. Allain on February 16, 2010 (the “First Allain Agreement”) which expired on February 16, 2012.  Mr. Allain was appointed as President and Chief Executive Officer of the Corporation at that time.  After the First Allain Agreement expired, the Corporation entered into a new employment agreement with Mr. Allain (the “Second Allain Agreement”) with a term of three years and under which Mr. Allain was to remain the President and Chief Executive Officer of the Corporation. The Second Allain Agreement provides for compensation at the annual rate of $275,000 per annum, with a minimum raise of 6% per annum if the Corporation has a positive level of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) during a given year.  Mr. Allain is entitled under the Second Allain Agreement to receive an annual bonus based on the Corporation’s yearly EBITDA.  The Second Allain Agreement further provides that, on its effective date, Mr. Allain became entitled to a grant of warrants to purchase 2,000,000 shares of the Corporation’s common stock, 50% of which are exercisable at $0.40 per share and 50% of which are exercisable at $0.60 per share.  The Second Allain Agreement entitles Mr. Allain to twenty days’ paid vacation per year, a vehicle allowance, “key person” insurance, business expense reimbursement (including membership at the Core Club in New York City), and certain employee benefits generally available to employees of the Corporation.  The Second Allain Agreement provides for certain severance benefits depending on whether Mr. Allain leaves the employ of the Corporation for “Cause,” “Good Reason” or “Without Cause and for Good Reason” prior to the termination of the Second Allain Agreement.  The Second Allain Agreement contains standard non-disparagement, confidentiality and non-solicitation provisions.  


Involvement in Certain Legal Proceedings

Except as set forth in the director and officer biographies above, to the Company’s knowledge, during the past ten (10) years, none of the Company’s directors, executive officers, promoters, control persons, or nominees has been:

·

the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

·

convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

·

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

·

found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.

Board Independence

We are not a listed issuer and, as such, are not subject to any director independence standards.  Using the definition of independence set forth under the Nasdaq Marketplace Rules, Jean Firstenberg, George W. Schiele, Salvatore J. Zizza, Richard Nummi, Marco Elser and Elliot Sloyer would be considered independent directors of the Company.

Corporate Leadership Structure

Two separate individuals serve as the Corporation’s Chairman of the Board and Chief Executive Officer.  The Chairman is not an executive officer.  He provides leadership to the Board in the fulfillment of its responsibilities in presiding over Board meetings.  He also presides over meetings of the stockholders. The Chief Executive Officer is responsible for directing the operational activities of the Corporation.

Risk Management

Our Board and Audit Committee are actively involved in risk management.  Both the Board and Audit Committee regularly review the financial position of the Corporation and operations of the Corporation and other relevant information, especially cash management and risks associated with the Corporation’s financial position and operations.

The Board of Directors of Trans-Lux Corporation is divided into three classes with the term of office of one of the three classes of directors expiring each year and with each class being elected for a three-year term.  The Class A directors will serve until the Annual Meeting of Stockholders in 2014, or until their successors are duly elected and qualified, the Class B directors will serve until the Annual Meeting of Stockholders in 2013, or until their successors are duly elected and qualified, and the Class C directors will serve until the 2015 Annual Meeting of Stockholders, or until their successors are duly elected and qualified.  

There are no family relationships between any of our directors and our executive officers.

Compensation Committee

The members of the Compensation Committee of the Board of Directors are Ms. Firstenberg and Messrs. Sloyer and Zizza.  The Compensation Committee operates under a formal written charter approved by the Compensation Committee and adopted by the Board of Directors.  The Compensation Committee reviews compensation and other benefits.  The Compensation Committee held one meeting in 2011.  None of the members of the Compensation Committee is or has been an officer or employee of the Corporation.  There are no Compensation Committee interlock relationships with respect to the Corporation.  Members of said Committee receive a fee of $320 for each meeting of the Committee they attend and the Chairperson, Ms. Firstenberg, receives an annual fee of $1,600.

Audit Committee

The members of the Audit Committee of the Board of Directors are Messrs. Zizza, Nummi and Sloyer.  The Audit Committee operates under a formal written charter approved by the Committee and adopted by the Board of Directors, a copy of which is available on the Corporation’s website at http://www.trans-lux.com/about/investor-information.  The Board of Directors had determined that Mr. Zizza meets the definition of “audit committee financial expert” set forth in Item 407 of Regulation S-K, as promulgated by the SEC.  The Audit Committee held three meetings in 2011.  The responsibilities of the Audit Committee include the appointment of the independent registered public accounting firm, review of the audit function and material aspects thereof with the Corporation’s independent registered public accounting firm, and compliance with the Corporation’s policies and applicable laws and regulations.  Members of said Committee receive a fee of $400 for each meeting of the Committee they attend and the Chairman, Mr. Zizza, receives an annual fee of $2,400 and $100 for each quarterly telephonic meeting with the independent auditors.


Nominating Committee

The members of the Nominating Committee of the Board of Directors are Ms. Firstenberg and Mr. Zizza, each of who is independent in accordance with the Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The Nominating Committee operates under a formal written charter approved by the Committee and adopted by the Board of Directors.  The Nominating Committee recommends for consideration by the Board of Directors, nominees for election of directors at the Corporation’s Annual Meeting of Stockholders.  Director nominees are considered on the basis of, among other things, experience, expertise, skills, knowledge, integrity, understanding the Corporation’s business and willingness to devote time and effort to Board responsibilities.  The Nominating Committee had one meeting in 2011 to discuss, among other things, nominating the directors for election by our stockholders at the Annual Meeting of Stockholders held June 26, 2012.

The Nominating Committee does not have a separate policy regarding diversity of the Board.  George W. Schiele and Salvatore J. Zizza (the “Gamco Nominees”) were elected in accordance with a Settlement Agreement approved by the United States District Court for the Southern District of New York described in the Corporation’s proxy statement for the December 11, 2009 Annual Meeting of Stockholders.  If either of them or their replacements is unwilling or unable to serve as a director prior to the 2012 Annual Meeting of Stockholders, the Corporation, consistent with duties and obligations under Delaware law, shall use its best efforts to replace said director with a nominee suggested by the Gabelli parties:  the Settlement Group, consisting of Gabelli Funds, LLC, Gamco Asset Management, Inc., Gabelli Cap Growth Fund, Gabelli Global Multimedia Trust, Inc., Gabelli Dividend and Income Trust and Gabelli Convertible Fund.

Corporate Governance Committee

The Board of Directors has not established a corporate governance committee.  The Board of Directors acts as the corporate governance committee.

Non-Employee Director Stock Option Plan

The Board of Directors has previously established a Non-Employee Director Stock Option Plan which, as amended, covers a maximum of 30,000 shares for grant.  Such options are granted for a term of six years and are priced at fair market value on the grant date.  The determination as to the amount of options to be granted to directors is based on years of service, and are calculated on a yearly basis as follows: a minimum of 500 stock options are granted for each director; an additional 500 stock options are granted if a director has served for five years or more; an additional 500 stock options are granted if a director has served for ten years or more; and an additional 1,000 stock options are granted if a director has served for twenty years or more. Such options are exercisable at any time upon the first anniversary of the grant date. The Corporation grants additional stock options upon the expiration or exercise of any such option if such exercise or expiration occurs no earlier than four years after date of grant,deliver payment in an amount equal to the aggregate subscription price for the maximum number of optionsshares of our Series B Preferred, assuming that have been exercisedno stockholder other than you has purchased any shares of our Series B Preferred pursuant to their basic subscription right and over-subscription right.

We can provide no assurances that you will actually be entitled to purchase the number of shares issuable upon the exercise of your over-subscription right in full, or that have expired.

Retirement Plan

The Company made a cash contributionat all, at the expiration of $605,000 during 2011, which was less than the minimum required contribution,rights offering. We will not be able to satisfy your exercise of the over-subscription right if all of our stockholders exercise their basic subscription rights in full, and we will only honor an over-subscription right to the Company’s retirement plan for all eligible employees andextent sufficient shares of our Series B Preferred are available following the eligible individuals listed in the Summary Compensation Table.  The Company has filed requests for waiversexercise of the 2009 and 2010 minimum funding standard as permitted under 412(d)basic subscription rights.

24
Table of the Internal Revenue Code and section 303 of the Employee Retirement Income Security Act of 1974.

The Company’s retirement plan, prior to being frozen, covered all salaried employees over age 21 with at least one year of service who are not covered by a collective bargaining agreement to which the Company is a party.  Retirement benefits are based on the final average salary for the highest five of the ten years preceding retirement.  For example, estimated annual retirement benefits payable at normal retirement date, which normally is age 65, is approximately $15,000 for an individual with ten years of credited service and with a final average salary of $100,000; and approximately $120,000 for an individual with 40 years of credited service and with a final average salary of $200,000.  Currently, $250,000 is the legislated annual cap on determining the final average salary and $195,000 is the maximum legislated annual benefit payable from a qualified pension plan.

As of January 1, 2012, Ms. Toppi had 17 years of credited service.  As of December 31, 2003, the benefit service under the pension plan had been frozen, and, accordingly, no further years of credited service have been allowed, and as of April 30, 2009, the benefit under the pension plan has been frozen, and, accordingly, there is no further increase in benefit being accrued.  The normal annual retirement benefit for Ms. Toppi is approximately $36,000.

Supplemental Executive Retirement AgreementContents

In accordance with the former President and Chief Executive Officer’s agreement, he was due a supplemental executive retirement payment on July 1, 2010 in the amount of $353,000 plus tax effect of approximately $170,000, but has not yet been paid.

27

EXECUTIVE COMPENSATION

The following table provides certain summary information for the last two fiscal years of the Corporation concerning compensation paid or accrued by the Corporation and its subsidiaries to or on behalf of the Corporation’s Chief Executive Officer, Chief Financial Officer and other Named Executive Officers of the Corporation:

Summary Compensation Table

Annual Compensation

Name and

Principal Position

Year

Salary ($)

Bonus

($)

Stock Awards

($)

Option Awards ($)

Non-Equity Incentive Plan Compensation ($)

Change in Pension Value of Nonqualified Deferred Compensation Earnings ($)

All Other Compensation ($)(1) 

Total

($)

J.M. Allain

 

2011

 

 

254,808

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18,640

 

 

 

273,448

 

President and Chief Executive Officer

 

2010

 

 

215,145

 

 

 

-

 

 

 

48,500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,000

 

 

 

278,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Angela D. Toppi

 

2011

 

 

173,269

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,180

 

 

 

177,449

 

Executive Vice President, Chief Financial Officer and Assistant Secretary

 

2010

 

 

173,535

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,244

 

 

 

176,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kostas Ktistakis(2)  

 

2011

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Executive Vice President

 

2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andrew Aldrich

 

2011

 

 

120,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

120,000

 

Senior Vice President and Chief Strategy Officer(3) 

 

2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kristin A. Kreuder(4)  

 

2011

 

 

93,473

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

93,473

 

Vice President, General Counsel  and Secretary

 

2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

(1)      

See “All Other Compensation” below for further details.

(2)

Elected an Executive Officer on March 6, 2012.

(3)

Elected an officer on March June 22, 2011. Mr. Aldrich is no longer with the Company.

(4)

Elected an Executive Officer on March 6, 2012.  Ms. Kreuder began employment on February 14, 2011 and the data above represents payment for work on a part-time basis for a portion of the year.

28

All Other Compensation

During 2011 and 2010, “All Other Compensation” consisted of director and/or trustee fees, insurance premiums and other items.  The following is a table of amounts per named individual:

Name

 

Year

 

Director and/or Trustee Fees

($)

 

 

Insurance Premiums

($)

 

 

Other

($)(1) 

 

 

Total All Other Compensation ($)

 

J.M. Allain                                                 

 

2011

 

 

640

 

 

 

-

 

 

 

18,000

 

 

 

18,640

 

 

 

2010

 

 

-

 

 

 

-

 

 

 

15,000

 

 

 

15,000

 

Angela D. Toppi                                                 

 

2011

 

 

2,400

 

 

 

1,780

 

 

 

-

 

 

 

4,180

 

 

 

2010

 

 

1,360

 

 

 

1,884

 

 

 

-

 

 

 

3,244

 

Kostas Ktistakis                                                 

 

2011

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Andrew Aldrich (2)                                                

 

2011

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Kristin A. Kreuder                                                 

 

2011

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

(1)

Other consists·

To the extent the aggregate subscription price of vehicle allowance.

(2)

M. Aldrichthe maximum number of unsubscribed shares available to you pursuant to the over-subscription right is no longerless than the amount you actually paid in connection with the Company.

exercise of the over-subscription right, you will be allocated only the number of unsubscribed shares available to you, and any excess subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable.

·To the extent the stockholders properly exercise their over-subscription rights for an aggregate amount of shares that is less than the number of the unsubscribed shares, you will be allocated the full number of unsubscribed shares for which you actually paid in connection with the over-subscription right.
Reasons for the Rights Offering
In authorizing the rights offering, our Board carefully evaluated our need for liquidity, financial flexibility and additional capital. Our Board considered several alternative capital raising methods before concluding that the rights offering was the appropriate alternative in the circumstances for a number of reasons, including that it provides an opportunity to our stockholders to participate on a pro rata basis. We are conducting the rights offering to raise capital for repayment of certain debt, for payment of certain required contributions under our defined benefit pension plan and for general corporate purposes. We believe that the rights offering will strengthen our financial condition by generating additional cash and increasing our stockholders’ equity.
Subscription Price
In determining the subscription price, our Board considered a number of factors, including the likely cost of capital from other sources, the price at which our stockholders might be willing to participate in the rights offering, historical and current trading prices for our common stock, the terms of the Series B Preferred and our need for liquidity and capital. The subscription price was established at a price of $[●] per whole share of Series B Preferred.
Method of Exercising Subscription Rights
You may exercise your subscription rights as follows:
1.Subscription by Registered Holders
You may exercise your subscription rights by properly completing and executing the rights certificate together with any required signature guarantees and an IRS Form W-9 and forwarding it, together with your full subscription payment for a whole number of shares of Series B Preferred, to the Subscription Agent at the address set forth below under “Subscription Agent,” before the expiration of the rights offering.
2.Subscription by DTC Participants
We expect that the exercise of your subscription rights may be made through the facilities of DTC. If your subscription rights are held of record through DTC, you may exercise your subscription rights by instructing DTC, or having your broker instruct DTC, to transfer your subscription rights from your account to the account of the Subscription Agent, together with certification as to the aggregate number of subscription rights you are exercising and the number of whole shares of our Series B Preferred you are subscribing for under your basic subscription right and your over-subscription right, if any, and your full subscription payment.
3.Subscription by Beneficial Owners
If you are a beneficial owner of shares of our common stock that are registered in the name of a broker, bank or other nominee, or if you hold our common stock certificates and would prefer to have an institution conduct the transaction relating to the subscription rights on your behalf, you should instruct your broker, bank or other nominee to exercise your subscription rights and deliver all documents and payment on your behalf before the expiration of the rights offering. Your subscription rights will not be considered exercised unless the Subscription Agent receives from you or such other party all of the required documents and your full subscription payment (in good, cleared funds) by that date.
Delivery of Subscriptions
You should read the instruction letter accompanying the rights certificate carefully and strictly follow it. DO NOT SEND RIGHTS CERTIFICATES OR PAYMENTS TO TRANS-LUX. Except as described below under “Guaranteed Delivery Procedures,” we will not consider your subscription received until the Subscription Agent has received delivery of a properly completed and duly executed rights certificate and the full subscription amount, payment of which has cleared. The risk of delivery of all documents and payments is borne by you or your nominee, not by the Subscription Agent or us.
The method of delivery of rights certificates and payment of the subscription amount to the Subscription Agent will be at the risk of the holders of subscription rights. If sent by mail, we recommend that you send those certificates and payments by overnight courier or by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the Subscription Agent and clearance of payment before the expiration of the rights offering.
Subscription Rights Held by Multiple Holders; Multiple Subscription Rights
If the underlying common stock with respect to which subscription rights are issued is held by more than one record holder, the applicable offering documents must be signed by each such holder. If a holder or joint holders hold more than one position in the company, as indicated by different accounts on the relevant record holder list, separate, properly completed and executed subscriptions must be submitted for each such position held by that or those joint holders.
Form of Payment
As described in the instructions accompanying the rights certificate, all payments submitted to the Subscription Agent must be made in full United States currency by:
·cashier’s or certified check or bank draft drawn on a U.S. bank payable to “Continental Stock Transfer & Trust Company, as Subscription Agent for Trans-Lux,”
·U.S. postal, telegraphic or express money order, or
·wire transfer of immediately available funds directly to the account maintained by “Continental Stock Transfer & Trust Company as agent for Trans-Lux”; at Bank Name: JP Morgan Chase; ABA #: 021000021; Account #: 475-584635, with reference to the rights holder’s name and the account number listed on the Subscription Rights Certificate or Notice of Guaranteed Delivery.
Payment received after the expiration of the rights offering will not be honored, and the Subscription Agent will return your payment to you, without interest, as soon as practicable. The Subscription Agent will be deemed to receive payment upon:
·receipt by the Subscription Agent of any certified or cashier’s check or bank draft drawn upon a U.S. bank;
·receipt by the Subscription Agent of any U.S. postal, telegraphic or express money order; or
·receipt of collected funds in the Subscription Agent’s account.
If you elect to exercise your subscription rights, we urge you to consider using a certified or cashier’s check, U.S. money order, or wire transfer of funds to ensure that the Subscription Agent receives your funds before the expiration of the rights offering. If you send an uncertified check, payment will not be deemed to have been received by the Subscription Agent until the check has cleared. The clearinghouse may require five or more business days. Accordingly, holders that wish to pay the subscription price by means of an uncertified personal check are urged to make payment sufficiently before the expiration of the rights offering to ensure such payment is received and clears by such date.
Where to Submit Subscriptions
The address to which subscription documents, rights certificates, notices of guaranteed delivery and subscription payments other than wire transfers should be mailed or delivered is:
Continental Stock Transfer & Trust Company
17 Battery Place, 8th Floor
New York, NY 10004
Attn: Corporate Actions Department
Phone Number: (917) 262-2378

If you deliver subscription documents, rights certificates or notices of guaranteed delivery in a manner different than that described in this prospectus, we may not honor the exercise of your subscription rights.
You should direct any questions or requests for assistance concerning the method of subscribing for the shares of our Series B Preferred or for additional copies of this prospectus to the Information Agent, Morrow & Co., LLC, by email at tnlx.info@morrowco.com or by telephone at (800) 662-5200.  Banks and brokerage firms also may contact Morrow & Co., LLC at (203) 658-9400.
Missing or Incomplete Subscription Information
If you do not indicate the number of subscription rights being exercised, or the Subscription Agent does not receive the full subscription payment for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised the maximum number of subscription rights that may be exercised with the aggregate subscription payment you delivered to the Subscription Agent.  If we do not apply your full subscription payment to your purchase of shares of our Series B Preferred, any excess subscription payment received by the Subscription Agent will be returned, without interest, as soon as practicable.
Medallion Guarantee May Be Required
Your signature on each subscription rights certificate must be guaranteed by an eligible institution, subject to standards and procedures adopted by the Subscription Agent, unless:
·your subscription rights certificate provides that shares are to be issued to you as record holder of those subscription rights; or
·you are an eligible institution.
You can obtain a signature guarantee from a financial institution, such as a commercial bank, savings, bank, credit union or broker-dealer, that participates in a Medallion signature guarantee program.  If you are not a customer of a participating financial institution, it is likely the financial institution will not guarantee your signature.  Therefore, the best source of a Medallion guarantee would be a bank, savings and loan association, brokerage firm, or credit union with whom you do business.  The participating financial institution will use a Medallion imprint or stamp to guarantee the signature, indicating that the financial institution is a member of a Medallion signature guarantee program and is an acceptable signature guarantor.
Notice to Nominees
If you are a broker, bank or other nominee that holds shares of our common stock for the account of others on the record date, you should notify the beneficial owners of the shares for whom you are the nominee of the rights offering as soon as possible to learn their intentions with respect to exercising their subscription rights.  You should obtain instructions from the beneficial owner as set forth in the instructions we have provided to you for your distribution to beneficial owners.  If the beneficial owner so instructs, you should complete the appropriate rights certificate and submit it to the Subscription Agent with the proper subscription payment.  If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all beneficial owners in the aggregate otherwise would have been entitled had they been direct holders of our common stock on the record date, provided that you, as a nominee record holder, make a proper showing to the Subscription Agent by submitting the form entitled “Nominee Holder Certification,” which is provided with your rights offering materials. If you did not receive this form, you should contact the Subscription Agent to request a copy.
Beneficial Owners
If you are a beneficial owner of shares of our common stock that are held of record in the name of a broker, bank or other nominee, we will ask your broker, bank or other nominee to notify you of the rights offering.  If you wish to exercise your subscription rights, you will need to have your broker, bank or other nominee act for you.  If you hold certificates of our common stock directly and would prefer to have your broker, bank or other nominee act for you, you should contact your nominee and request such nominee to effect the transactions for you.  To exercise your subscription rights, you should complete and return to your broker, bank or other nominee the form entitled “Beneficial Owners Election Form.”  You should receive such form from your broker, bank or other nominee with the other rights offering materials.  If you wish to obtain a separate subscription rights certificate, you should contact the nominee as soon as possible and request that a separate subscription rights certificate be issued to you.  You should contact your broker, bank or other nominee if you do not receive this form but you believe you are entitled to participate in the rights offering.  We are not responsible if you do not receive the form from your broker, bank or other nominee or if you receive it without sufficient time to respond.
Guaranteed Delivery Procedures
If you wish to exercise subscription rights but you do not have sufficient time to deliver the rights certificate evidencing your subscription rights to the Subscription Agent before the expiration of the rights offering, you may exercise your subscription rights by the following guaranteed delivery procedures:
·deliver to the Subscription Agent before the expiration of the rights offering the subscription payment for each share you elected to purchase pursuant to the exercise of subscription rights in the manner set forth above under “Method of Exercising Subscription Rights;”
·deliver to the Subscription Agent before the expiration of the rights offering the form entitled “Notice of Guaranteed Delivery;” and
·deliver the properly completed rights certificate evidencing your subscription rights being exercised and the related nominee holder certification, if applicable, with any required signatures guaranteed, to the Subscription Agent within three business days following the date you submit your Notice of Guaranteed Delivery.
Your Notice of Guaranteed Delivery must be delivered in substantially the same form provided with the “Form of Instructions for Use of Trans-Lux Subscription Rights Certificates,” which will be distributed to you with your rights certificate.  Your Notice of Guaranteed Delivery must include a signature guarantee from an eligible institution acceptable to the Subscription Agent.  A form of that guarantee is included with the Notice of Guaranteed Delivery.
In your Notice of Guaranteed Delivery, you must provide:
·your name;
·the number of subscription rights represented by your rights certificate, the number of shares of our Series B Preferred for which you are subscribing under your basic subscription right, and the number of shares of our Series B Preferred for which you are subscribing under your over-subscription right, if any; and
·your guarantee that you will deliver to the Subscription Agent a rights certificate evidencing the subscription rights you are exercising within three business days following the date the Subscription Agent receives your Notice of Guaranteed Delivery.
You may deliver your Notice of Guaranteed Delivery to the Subscription Agent in the same manner as your rights certificate at the address set forth above under “Subscription Agent.”  The Information Agent will send you additional copies of the form of Notice of Guaranteed Delivery if you need them.  You should contact Morrow & Co., LLC by email at tnlx.info@morrowco.com or by telephone at (800) 662-5200, and banks and brokerage firms also may contact Morrow & Co., LLC at (203) 658-9400, to request additional copies of the form of Notice of Guaranteed Delivery.
Non-Transferability of Subscription Rights
           The subscription rights granted to you are non-transferable and, therefore, you may not sell, transfer or assign your subscription rights to anyone. The subscription rights will not be listed for trading on any stock exchange or market.
No Fractional Shares
We will not issue fractional shares of Series B Preferred. If the number of subscription rights you exercise would otherwise permit you to purchase a fraction of a share, the number of shares that you may purchase will be rounded down to the nearest whole share.  Any excess subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable.
Validity of Subscriptions
We will resolve all questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility to participate in the rights offering.  In resolving all such questions, we will review the relevant facts, consult with our legal advisors and may request input from the relevant parties.  Our determination will be final and binding.  Once made, subscriptions and directions are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights offering is extended by our Board, and we will not accept any alternative, conditional or contingent subscriptions or directions.  We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful.  You must resolve any irregularities in connection with your subscriptions before the subscription period expires, unless waived by us in our sole discretion.  Neither we nor the Subscription Agent shall be under any duty to notify you or your representative of any defect in your subscription.  A subscription will be considered accepted, subject to our right to terminate the rights offering, only when a properly completed and duly executed rights certificate and any other required documents and the full subscription payment have been received by the Subscription Agent.  Our interpretations of the terms and conditions of the rights offering will be final and binding.
Escrow Arrangements; Return of Funds
The Subscription Agent will hold funds received in payment for shares of our Series B Preferred in a segregated account pending completion of the rights offering.  The Subscription Agent will hold this money in escrow until the rights offering is completed or is withdrawn and canceled.  If the rights offering is canceled for any reason, all subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable.  In addition, all subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable, if subscribers decide to cancel their subscription rights in the event that we extend the rights offering for a period of more than 30 days after the expiration date or if there is a fundamental change to the rights offering.
Expiration Date, Extension, and Amendments
The subscription period, during which you may exercise your subscription rights, expires at 5:00 p.m., Eastern Time, on [●], 2015, which is the expiration of the rights offering.  If you do not exercise your subscription rights before that time, your subscription rights will expire and will no longer be exercisable.  We will not be required to issue shares of our Series B Preferred to you if the Subscription Agent receives your rights certificate or your subscription payment (in good, cleared funds) after that time, regardless of when the rights certificate and subscription payment were sent, unless you send the documents in compliance with the guaranteed delivery procedures described below.
We may extend the expiration of the rights offering for a period not to exceed 30 days by giving oral or written notice to the Subscription Agent before the expiration of the rights offering, although we do not presently intend to do so.  If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration of the rights offering.  We will extend the duration of the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in the rights offering. If we elect to extend the rights offering for a period of more than 30 days, then holders who have subscribed for rights may cancel their subscriptions and receive a refund of all money advanced.
Our Board also reserves the right to amend the terms of the rights offering.  Although we do not presently intend to do so, we may choose to amend the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering.  Such amendments or modifications may include a change in the subscription price, although no such change is presently contemplated.  If we should make any fundamental changes to the terms set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included, offer potential purchasers who have subscribed for rights the opportunity to cancel such subscriptions and issue a refund of any money advanced by such stockholder and recirculate an updated prospectus after the post-effective amendment is declared effective with the SEC.  In addition, upon such event, we may extend the expiration date of the rights offering to allow holders of rights ample time to make new investment decisions and for us to recirculate updated documentation.  Promptly following any such occurrence, we will issue a press release announcing any changes with respect to the rights offering and the new expiration date.  The terms of the rights offering cannot be modified or amended after the expiration date of the rights offering.
Conditions and Termination
We reserve the right to terminate the rights offering before its expiration for any reason.  In particular, we may terminate the rights offering, in whole or in part, if at any time before completion of the rights offering there is any judgment, order, decree, injunction, statute, law or regulation entered, enacted, amended or held to be applicable to the rights offering that in the sole judgment of our Board would or might make the rights offering or its completion, whether in whole or in part, illegal or otherwise restrict or prohibit completion of the rights offering.  We may waive any of these conditions and choose to proceed with the rights offering even if one or more of these events occur.  If we terminate the rights offering in whole or in part, we will issue a press release notifying the stockholders of such event, all affected subscription rights will expire without value, and all excess subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable following such termination.
No Revocation or Change
Your exercise of subscription rights is irrevocable and may not be cancelled or modified, even if the rights offering is extended by our Board.  However, if we amend the rights offering to allow for an extension of the rights offering for a period of more than 30 days or make a fundamental change to the terms set forth in this prospectus, you may cancel your subscription and receive a refund of any money you have advanced.
Stockholder Rights
You will have no rights as a holder of the shares of our Series B Preferred you purchase in the rights offering, if any, until such shares are issued to you through the DRS or, if your shares are registered in “street name,” your broker or bank has received the shares.  You will have no right to revoke your subscriptions after you deliver your completed rights certificate, the full subscription payment and any other required documents to the Subscription Agent.
Issuance of Shares of Series B Preferred; Trading Market
Shares of Series B Preferred purchased in the rights offering will be issued only in book-entry form, and no physical stock certificates will be issued for shares of Series B Preferred.  If you are the holder of record of our common stock (whether you hold share certificates or your shares are maintained in book-entry form by our transfer agent), you will receive a statement of ownership reflecting the shares of Series B Preferred purchased in the offering in the Direct Registration System, or DRS, as soon as practicable after the expiration of the rights offering.  If your shares are registered in “street name,” in the name of a broker or bank, you may request a statement of ownership from the holder of your shares following the expiration of the rights offering.  We will not issue fractional shares of Series B Preferred. If the number of subscription rights you exercise would otherwise permit you to purchase a fraction of a share, the number of shares that you may purchase will be rounded down to the nearest whole share.  Any excess subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable.  There is currently no market for the Series B Preferred and an active trading market is unlikely to develop.
Foreign Stockholders
We will not mail this prospectus or rights certificates to stockholders with addresses that are outside the United States or that have an army post office or foreign post office address.  The Subscription Agent will hold rights certificates for the account of such stockholders.  To exercise subscription rights, our foreign stockholders must notify the Subscription Agent before 11:00 a.m., Eastern Time, at least three business days before the expiration of the rights offering and demonstrate to the satisfaction of the Subscription Agent that the exercise of such subscription rights does not violate the laws of the jurisdiction of such stockholder.  The deadlines for delivery of subscription materials and payment described above also apply.
Regulatory Limitation
We will not be required to issue to you shares of our Series B Preferred pursuant to the rights offering if, in our opinion, you are required to obtain prior clearance or approval from any state or federal regulatory authorities to own or control such shares and if, at the time the rights offering expires, you have not obtained such clearance or approval.
Fees and Expenses
We will pay all fees due to the Subscription Agent and Information Agent, as well as any other expenses we incur in connection with the rights offering.  You are responsible for paying any other commissions, fees, taxes or other expenses incurred by you in connection with the exercise, sale or purchase of subscription rights.
No Recommendation to Rights Holders
Our Board is making no recommendation regarding your exercise of the subscription rights.  You are urged to make your decision based on your own assessment of our business and the rights offering.  Please see “Risk Factors” for a discussion of some of the risks involved in investing in our Series B Preferred.
Shares of Our Common Stock Outstanding After the Rights Offering
The closing price of our common stock on August 5, 2015 was $3.15.  [●] shares of our common stock were issued and outstanding on the record date.  There were no shares of Series B Preferred outstanding on the record date.  Assuming that all shares offered hereby are issued, we expect that [●] shares of our Series B Preferred will be outstanding immediately after completion of the rights offering.  Up to [●] shares of common stock would be outstanding, assuming full participation in the rights offering and full conversion of the Series B Preferred into common stock.
Other Matters
We are not making the rights offering in any state or other jurisdiction in which it is unlawful to do so, nor are we distributing or accepting any offers to purchase any shares of our Series B Preferred from subscription rights holders who are residents of those states or other jurisdictions or who are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights.  We may delay the commencement of the rights offering in those states or other jurisdictions, or change the terms of the rights offering, in whole or in part, in order to comply with the securities laws or other legal requirements of those states or other jurisdictions.  Subject to state securities laws and regulations, we also have the discretion to delay allocation and distribution of any shares of Series B Preferred you may elect to purchase by exercise of your subscription rights in order to comply with state securities laws.  We may decline to make modifications to the terms of the rights offering requested by those states or other jurisdictions, in which case, if you are a resident in those states or jurisdictions or if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights you will not be eligible to participate in the rights offering.  However, we are not currently aware of any states or jurisdictions that would preclude participation in the rights offering.
PLAN OF DISTRIBUTION
As soon as practicable after the record date for the rights offering, we will distribute the subscription rights and rights certificates to individuals who owned shares of our common stock on the record date.  If you wish to exercise your subscription rights and purchase shares of our Series B Preferred, you should follow the procedures described in “The Rights Offering — Method of Exercising Subscription Rights.”  If you have any questions, you should contact the Information Agent, Morrow & Co., LLC, by email at tnlx.info@morrowco.com or by telephone at (800) 662-5200.  Banks and brokerage firms also may contact Morrow & Co., LLC at (203) 658-9400.
To the extent that our directors and officers held shares of our common stock as of the record date, they will receive the subscription rights and, while they are under no obligation to do so, will be entitled to participate in the rights offering.
We have agreed to pay the Subscription Agent and Information Agent customary fees plus certain expenses in connection with the rights offering.
We have not employed any brokers, dealers or underwriters in connection with the solicitation of exercise of subscription rights, we do not know of any existing agreements between or among any stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the Series B Preferred or the underlying common stock, and we are not paying any other commissions, underwriting fees or discounts in connection with the rights offering.  Some of our directors and employees may solicit responses from holders of subscription rights, but we will not pay them any commissions or special compensation for these activities.
CAPITALIZATION
The following table sets forth information as to the named executive officers with respect to unexercised optionsour consolidated cash and equity incentive plan awardscash equivalents, liabilities and capitalization as of DecemberMarch 31, 2011.

Outstanding Equity Awards2015 (a) on an actual basis and (b) on an adjusted basis after giving effect to our sale of [●] shares of Series B Preferred offered hereby at Fiscal Year-End

a subscription price of $[●] per share and after deducting estimated offering expenses of $[●].  The data in the table have been derived from our unaudited consolidated financial statements.  You should read this table together with our historical consolidated financial statements and related notes and the other financial information included and incorporated by reference in this prospectus supplement and the accompanying prospectus.  See “Incorporation by Reference” and “Available Information” on page 50.

Name

Number of Securities Underlying Unexercised Options (#)

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)

Option Exercise Price
($)

Option Expiration Date

Number of Shares or Units of Stock that have not Vested
(#)

Market Value of Shares or Units of Stock that have not Vested
($)

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested
(#)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights that have not Vested
($)

 

 

 

 

 

 

 

 

 

Angela D. Toppi…..

5,000

-

7.00

03/24/14

-

-

-

-


  
As of March 31, 2015
 
  
Actual
  
As adjusted
 
  (in thousands) 
Cash and cash equivalents $173  $[●] 
Liabilities:        
Total current liabilities $11,794  $[●] 
Mortgage payable  316   [●] 
Deferred pension liability and other  5,454   [●] 
Total liabilities $17,564  $[●] 
Stockholders’ equity:        
Preferred stock, $0.001 par value, 500,000 shares authorized; 0 shares issued and outstanding, actual; and [●] shares issued and outstanding, as adjusted(1)
  –   [●] 
Common stock, $0.001 par value, 10,000,000 shares authorized; 1,700,429 issued and 1,685,085 outstanding, actual; and 1,700,429 issued and 1,685,085 outstanding, as adjusted  2   [●] 
Additional paid-in capital  27,976   [●] 
Accumulated deficit  (21,986)  [●] 
Accumulated other comprehensive loss  (5,697)    
Treasury stock; at cost; 15,344 common shares  (3,063)  [●] 
Total stockholders’ equity  (2,768)  [●] 
Total liabilities and stockholders’ equity $14,796  $[●] 
(1)The material terms of the Series B Preferred are set forth in “Description of Capital Stock – Series B Convertible Preferred Stock” beginning on page 39.
 
DILUTION
Purchasers of our Series B Preferred in the rights offering will experience an immediate and substantial dilution of the net tangible book value of our common stock.  At March 31, 2015, we had a net tangible book value of approximately $(3.5) million, or $(2.08) per share of our common stock.  Net tangible book value per share is equal to our total net tangible book value, which is our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common stock.  Dilution per share equals the difference between the amount per share of common stock underlying the Series B Preferred paid by purchasers in the rights offering and the net tangible book value per share of our common stock immediately after the rights offering.
After giving effect to the sale of all the [●] shares of Series B Preferred offered in the rights offering at the subscription price of $[●] per share (equivalent to [●] shares of common stock issuable upon conversion of such shares of Series B Preferred at a conversion ratio of [approximately] [●] shares of common stock for each share of Series B Preferred held at the time of conversion), and after deduction of estimated offering expenses of $[●] payable by us, our net tangible book value as of March 31, 2015 would have been approximately $[●] or $[●] per share of common stock (on an as-converted basis). This represents an immediate increase of $[●] in net tangible book value per share of common stock to our existing stockholders and an immediate dilution in net tangible book value of $[●] per share of common stock (on an as-converted basis) to purchasers of Series B Preferred in the rights offering.  The following table illustrates this per share dilution:
Subscription price per share of common stock upon conversion of Series B Preferred $[●] 
Net tangible book value per share of common stock at March 31, 2015, before the rights offering $(2.08)
Net increase in pro forma tangible book value per share of common stock attributable to the rights offering $[●] 
Pro forma tangible book value per share of common stock after giving effect to the rights offering $[●] 
Dilution in pro forma net tangible book value per share of common stock to purchasers of Series B Preferred $[●] 

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is quoted on the OTC Pink under the symbol “TNLX.”  We had approximately 205 holders of record of our common stock as of August 5, 2015.  This number does not include DTC participants or beneficial owners holding shares through nominee names.  On August 5, 2015, the last closing sale price reported on the OTC Pink for our common stock was $3.15 per share.
The following table sets forth information as to the named executive officers with respect to the value realized on exercise of stock options and fiscal year end option values:

Aggregate Option Exercises in Last Fiscal

Year And Fiscal Year End Option Values

Option Exercises

Number of Unexercised Options at Fiscal Year End

Value of Unexercised In-the-Money Options at Fiscal Year End ($)(1) 

Name

Shares Acquired

on Exercise

Value Realized

($)

Exercisable/ Unexercisable

Exercisable/ Unexercisable

J.M. Allain                                                              

None

-

-/-

-/-

Angela D. Toppi                                                              

None

-

5,000/-

-/-

Kostas Ktistakis                                                              

None

-

-/-

-/-

Andrew Aldrich(2)                                                               

None

-

-/-

-/-

Kristin A. Kreuder                                                              

None

-

-/-

-/-

(1)

(2)

Market value of underlying securities at fiscal year-end, minus the exercise price.

Mr. Aldrich is no longer employed by the Company.

Stock Incentive Plans

The Company had an incentive stock option plan, which provided for the grant of incentive stock options at fair market value on date of grant.  The plan has expired and no further options may be granted.  Options outstanding are exercisable during the period one to 10 years after date of grant and while the holder is in the employ of the Company and survive the termination of the plan. The Company has a Non-Employee Director Stock Option Plan, which provides for the grant of incentive stock options at fair market value on date of grant, pursuant to which the option set forth below was granted.  Options outstanding are exercisable during the period one to six years after date of grant and while a director.  There were no stock options granted in fiscal 2010 to the named executive officers and no stock options were exercised in fiscal 2010.

On June 26, 2012, the Company’s shareholders approved our 2012 Long-Term Incentive Plan, pursuant to which an aggregate of 5,000,000 shares of common stock that may be issued.  The 2012 Long-Term Incentive Plan was adopted by the Company's Board of Directors on July 2, 2010, with amendments adopted by the Company’s Board of Directors on December 21, 2011.

Director Compensation

Non-Employee Director Stock Option Plan

The Board of Directors has previously established a Non-Employee Director Stock Option Plan, which as amended, covers a maximum of 30,000 shares for grant.  Options are for a period of six years from date of grant, are granted at fair market value on date of grant, may be exercised at any time after one year from date of grant while a director and are based on years of service, with a minimum of 500 stock options for each director, an additional 500 stock options based on five or more years of service, another 500 stock options based on 10 or more years of service and an additional 1,000 stock options based on 20 or more years of service.  Additional stock options are granted upon the expiration or exercise of any such option, which is no earlier than four years after date of grant, in an amount equal to such exercised or expired options.


Compensation of Directors

The following table represents director compensation for 2011.

Name

Year

Fees Earned
($)

Stock Awards
($)

Option Awards
($)

Non-Equity Incentive Plan Compensation
($)

Nonqualified Deferred Compensation Earnings
($)

All Other Compensation
($)

Total
($)

J.M. Allain(1)

2011

640

-

-

-

-

-

640

Glenn Angiolillo(2)

2011

4,000

-

-

-

-

-

4,000

Jean Firstenberg

2011

4,320

-

-

-

-

-

4,320

Howard S. Modlin(3)

2011

6,000

-

-

-

-

-

6,000

Michael R. Mulcahy(4)

2011

4,400

-

-

-

-

25,094

29,494

George W. Schiele

2011

34,720

-

-

-

-

-

34,720

Angela D. Toppi(5)

2011

2,400

-

-

-

-

-

2,400

Salvatore J. Zizza

2011

36,700

-

-

-

-

-

36,700

(1)   Mr. Allain was appointed a director by the Board of Directors on June 22, 2011.

(2)   Mr. Angiolillo resigned from the Board of Directors on November 28, 2011.

(3)   Mr. Modlin retired from the Board of Directors on March 6, 2012.

(4)   All other compensation consists of medical insurance premiums paid and cash surrender value of all life insurance policy transferred to Mr. Mulcahy.  Mr. Mulcahy retired from the Board of Directors on March 6, 2012.

(5)   Ms. Toppi resigned from the Board of Directors on March 6, 2012.

Risk Management

The Company does not believe risks arising from its compensation policies and practices for its employees are reasonably likely to have a material adverse effect on the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Transactions

During the year 2010, $105,000 in fees for legal services rendered was paid by the Company to the law firm of which Howard S. Modlin, then a director of the Company, was the president.

During the year 2011, there were no transactions requiring disclosure.

Independence of Non-Employee Directors

 `

A director is considered independent if the Board of Directors determines that the director does not have any direct or indirect material relationship with the Corporation.  Mr. Allain is an employee of the Corporation and, therefore, has been determined by the Board to fall outside the definition of “independent director.”  Messrs. Nummi,Schiele, Sloyer,Zizza and Elser and Ms. Firstenberg are non-employee directors of the Corporation.  The Board of Directors has determined that Messrs. Nummi,Schiele, Sloyer,Zizza and Elser and Ms. Firstenberg are “independent directors” since they had no relationship with the Corporation other than their status and payment as non-employee directors, and as stockholders.  The Board of Directors has determined that Messrs. Nummi and Sloyer are independent under the SEC’s audit committee independence standards.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information as of July 13, 2012 (or such other date specified) with respect to the beneficial ownership of common stock or shares acquirable within 60 days of such date by (i) each person known by the Corporation to own more than 5% of the common stock and who is deemed to be such beneficial owner of common stock under Rule 13d-3(a)(ii); (ii) each person who is a director of the Corporation; (iii) each named executive in the Summary Compensation Table and (iv) all persons as a group who are executive officers and directors of the Corporation, and as to the percentage of outstanding shares held by them on that date:

Name, Status and Mailing Address

 

Number of Shares

Beneficially Owned

 

 

Percent of

Class (%)

 

5% Stockholders: 

 

 

 

 

 

 

Gabelli Funds, LLC                                                                                      

One Corporate Center

Rye, NY  10580-1434

 

 

14,055,000

(1)

 

 

47.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Employee Directors: 

 

 

 

 

 

 

 

 

Marco M. Elser

 

 

795,000

(2)

 

 

3.1

 

Jean Firstenberg                                                                                      

 

 

1,420

(3)

 

 

*

 

Richard Nummi                                                                                      

 

 

-

 

 

 

*

 

George W. Schiele                                                                                      

 

 

175,500

(4)

 

 

*

 

  Elliot Sloyer                                                                                      

 

 

350,000

    (5)

 

 

1.4  

 

Salvatore J. Zizza                                                                                      

 

 

500

(6)

 

 

*

 

 

 

 

 

 

 

 

 

 

Named Executive Officers: 

 

 

 

 

 

 

 

 

J.M. Allain                                                                                      

 

 

52,000

(7)

 

 

*

 

Angela D. Toppi                                                                                      

 

 

6,000

(8)

 

 

*

 

Konstantinos (Kostas) Ktistakis

 

 

0

 

 

 

*

 

Kristin A. Kreuder                                                                                      

 

 

0

 

 

 

*

 

All directors and executive officers as a group                                                                                      

 

 

1,380,420

 

 

 

5.3

 

*Represents less than 1% of total number of outstanding shares.

(1)

Based on Schedule 13D dated November 21, 2011 by Mario J. Gabelli, GGCP, Inc., Gabelli Funds, LLC, Teton Advisors, Inc., Gamco Investors, Inc., GGCP, Inc., and Gamco Asset Management Inc., which companies are parent holding companies and/or registered investment advisers.  All securities are held as agent for the account of various investment company fund accounts managed by such reporting person.  Except under certain conditions, Gabelli Funds, LLC has sole voting power and sole dispositive power over such shares.  The amount includes 10,000,000 shares of common stock issued upon conversion of 200,000 shares of Series A Preferred Stock, 2,000,000 shares issuable upon exercise of A Warrants and 2,000,000 shares issuable upon exercise of B Warrants.  In addition, on February 10, 2012, Gabelli Equity Series Funds, Inc. – The Gabelli Small Cap Growth Fund filed a Schedule 13G relating to the aforementioned 14,055,000 shares.

(2)         

The amount includes 450,000 shares of common stock issued upon conversion of 9,000 shares of Series A Preferred Stock, 90,000 shares issuable upon exercise of A Warrants, and 90,000 shares issuable upon exercise of B Warrants, which are owned by AdviCorp plc, Carlisle Investments and Elser & Co., of which Mr. Elser exercises voting and dispositive rights over these shares.

(3)

The amount includes 1,000 shares of common stock acquirable upon exercises of stock options.

(4)         

The amount includes 125,000 shares of common stock issued upon conversion of 2,500 shares of Series A Preferred Stock, 25,000 shares issuable upon exercise of A Warrants, 25,000 shares issuable upon exercise of B Warrants and 500 shares of common stock acquirable upon exercise of stock options.


(5)         

The amount includes 250,000 shares of common stock issued upon conversion of 5,000 shares of Series A Preferred Stock, 50,000 shares issuable upon exercise of A Warrants and 50,000 shares issuable upon exercise of B Warrants, which are owned by WestLane Equity Income Fund LP, of which Mr. Sloyer exercises voting and investment control as fund manager and investor.

(6)     

Mr. Zizza disclaims any interest in the shares set forth in footnote 1 above.  The amount includes 500 shares of common stock acquirable on the exercise of stock options.

(7)   

The amount includes 50,000 shares of restricted stock granted on February 16, 2010 which vested on the two-year anniversary date of grant.

(8)

The amount includes 5,000 shares of common stock acquirable upon exercise of stock options.

SELLING STOCKHOLDERS

Up to 31,835,000 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the accounts of the selling security holder and consist of 20,825,000 shares were issued upon the conversion of our Series A Convertible Preferred Stock, 4,165,000 shares that are issuable upon the exercise of our A Warrants, 4,165,000 shares that are issuable upon the exercise of our B Warrants, and 1,000,000 shares issuable upon exercise of the HFA Warrants.

The transactions by which the selling stockholders acquired their securities from us were exempt under the registration provisions of the Securities Act.

The shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus. The selling stockholder may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements or amendments to this prospectus.

The table below sets forth certain information regarding the selling stockholders and the sharesrange of our common stock offered by themprices on the OTC Pink, adjusted for the reverse and forward stock splits effected in this prospectus. The selling stockholders have had no material relationship with us within the past three years other than as described in the footnotes to the table below or as a result of their acquisition ofOctober 2013.

  Price Range 
  High  Low 
Fiscal 2015      
First Quarter $5.55  $3.75 
Second Quarter $4.95  $2.00 
Third Quarter (through August 5, 2015) $3.30  $3.05 
Fiscal 2014        
First Quarter $5.45  $3.47 
Second Quarter $7.60  $3.55 
Third Quarter $11.00  $7.17 
Fourth Quarter $7.75  $5.55 
Fiscal 2013        
First Quarter $8.00  $5.25 
Second Quarter $9.00  $3.75 
Third Quarter $6.75  $3.25 
Fourth Quarter $8.55  $4.56 

Our Board did not declare any cash dividends for our shares or other securities. To our knowledge, subject to the community property laws where applicable, each person named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such person’s name.

Beneficial ownership is determined in accordance with the rules of the SEC. The selling stockholder’s percentage of ownership ofduring 2014 and we do not anticipate paying any cash dividends on our outstanding shares in the table below is based upon 25,511,923 shares of common stock outstanding asfor the foreseeable future.

37
 

DESCRIPTION

 

Jessica Hackel 

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

 

Sidney N. Herman

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

 

Alexis Bard Johnson 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Timothy B. Johnson

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

 

T. Michael and Patricia R. Johnson

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Robert Kelley Jr.

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Marc H. Klee 

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

 

Dolores Kletter 

 

 

105,000

(9)

 

 

105,000

(9)

 

 

0

 

 

 

0

 

 

Robert Leggio 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Jeffrey Mark Lesse 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Mark J. Liu 

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

 

Robert E. and Maxine D. Lowy 

 

 

35,000

(4)

 

 

35,000

(4)

 

 

0

 

 

 

0

 

 

Richard Lowish

 

 

490,000

(10)

 

 

490,000

(10)

 

 

0

 

 

 

0

 

 

John C. Meditz 

 

 

280,000

(11) 

 

 

280,000

(11)

 

 

0

 

 

 

0

 

 

Stanley Merdinger 

 

 

105,000

(9)

 

 

105,000

(9)

 

 

0

 

 

 

0

 

 

Steven Millner 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Bruce Misset 

 

 

350,000

(3)

 

 

350,000

(3)

 

 

0

 

 

 

0

 

 

Matthew Moog 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Elizabeth Burgess Rice 

 

 

35,000

(4)

 

 

35,000

(4)

 

 

0

 

 

 

0

 

Marvin Rosen 

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

Ann H. Ross Lyon 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Martin and Carol Rudolph 

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

George W. Schiele (44)

 

 

175,500

 

 

175,000

(6)

 

 

500

 

 

 

*

 

M. Edward Sellers and Susan B. Boyd

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ronald Shaver

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0


OF CAPITAL STOCK
 

 

Daniel Siegel

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Alexander Spitzer

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Burt Stangarone

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

Michael Stein

 

 

35,000

(4)

 

 

35,000

(4)

 

 

0

 

 

 

0

 

Robert S. Steinbaum

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Thomas T. and Maureen B. Thresher

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Philip D. Turits

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Richard Hoffman

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

Henricus P. Beekwilder Family Revocable Trust (14)

 

 

490,000

(10)

 

 

490,000

(10)

 

 

0

 

 

 

0

 

PFSI custodian F/B/O Carole Weintraub, IRA (15)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

PFSI custodian F/B/O Robert Hackel, IRA (16)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

PFSI custodian F/B/O Michael Capolino, IRA (17)

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

R.F. Lafferty & Co., Inc. PSP FBO Holly Begley (18)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Integral Derivatives LLC (19)

 

 

350,000

(3)

 

 

350,000

(3)

 

 

0

 

 

 

0

 

R F Lafferty & Co., Inc PSP FBO Robert Hackel (18)

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

R F Lafferty & Co., Inc PSP FBO Fred Froewiss (18)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

R F Lafferty & Co., Inc PSP FBO Phyllis Fattaruso (18)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

R F Lafferty & Co., Inc PSP FBO Martin McNeill (18)

 

 

105,000

(9)

 

 

105,000

(9)

 

 

0

 

 

 

0

 

R F Lafferty & Co., Inc PSP FBO Carol Quinones (18)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

PFSI custodian FBO Barry Forst, IRA (20)

 

 

105,000

(9)

 

 

105,000

(9)

 

 

0

 

 

 

0

 

Sag Hill (21)

 

 

35,000

(4)

 

 

35,000

(4)

 

 

0

 

 

 

0

R F Lafferty & Co., Inc PSP FBO Paul Grass (18)

 

 

105,000

(9)

 

 

105,000

(9)

 

 

0

 

 

 

0

 

 

List Strategies Inc. PSP (22)

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

 

R F Lafferty & Co., Inc PSP FBO Gregory O'Connor (18)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

PFSI custodian FBO Andrew Cohen, Roth IRA (23)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Bard Micro-Cap Value Fund, L.P. Bard Associates, Inc. General Partner (24)

 

 

350,000

(3)

 

 

350,000

(3)

 

 

0

 

 

 

0

 

 

Christina D. Collier Living Trust UAD 12-23-03 Christina D. Collier, Trustee (25)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

William G. Escamilla Trustee William G. Escamilla Rev Trust DTD 07/29/2003 (26)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

Leonard M. Herman Trustee Leonard M. Herman Trust UAD 5/3/1993 (27)

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

William K. Kellog III Trustee William K. Kellogg III 1992 Trust UAD 7/24/1992 (28)

 

 

280,000

(11)

 

 

280,000

(11)

 

 

0

 

 

 

0

 

US Trust Company of Delaware, Trustee William K. Kellogg II 1953 Trust FBO William K. Kellogg III (29)

 

 

280,000

(11)

 

 

280,000

(11)

 

 

0

 

 

 

0

 

Seville Enterprises LP (30) 

 

 

105,000

(9)

 

 

105,000

(9)

 

 

0

 

 

 

0

 

Dale F. Snavely Trust (31) 

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

Rosemary Steinbaum, Trustee Gallo Exemption Trust UAD 12/14/89 FBO Marshall Steinbaum (32)

 

 

70,000

(2) 

 

 

70,000

(2) 

 

 

0

 

 

 

0

 

Rosemary Steinbaum, Trustee Gallo Exemption Trust UAD 12/14/89 FBO Elliot Steinbaum (32)

 

 

70,000

(2) 

 

 

70,000

(2) 

 

 

0

 

 

 

0

 

 

Janet J. Underwood Trust UAD 06/25/2002 (33)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Westlane Equity Income Fund LP (34)

 

 

350,000

(3)

 

 

350,000

(3)

 

 

0

 

 

 

0

 

Adele Hall Sweet 1932 Trust, Frederic Leoplod Trustee (35)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

Model Partners (36)

 

 

175,000

(6)

 

 

175,000

(6)

 

 

0

 

 

 

0

 

Kingsbrook Opportunity Masterfund LP (37)

 

 

630,000

(12)

 

 

630,000

(12)

 

 

0

 

 

 

0

High Capital Funding LLC (38)

 

 

70,000

(2) 

 

 

70,000

(2) 

 

 

 0

 

 

0

 

 

Elser & Company Limited (39)

 

 

280,000

(11)

 

 

280,000

(11)

 

 

0

 

 

 

0

 

 

PFSI custodian FBO Samuel Berkowitz, IRA (40)

 

 

140,000

(5)

 

 

140,000

(5)

 

 

0

 

 

 

0

 

 

Carlisle Investments Inc. (41)

 

 

350,000

(3)

 

 

350,000

(3)

 

 

0

 

 

 

0

 

 

Kamin-Hackel Living Trust (42)

 

 

70,000

(2)

 

 

70,000

(2)

 

 

0

 

 

 

0

 

 

First Tera Byte Fund LP (16)

 

 

280,000

(11)

 

 

280,000

(11)

 

 

0

 

 

 

0

 

 

Sloopboon & Co. (45)

 

 

14,055,000

 

 

 

14,000,000

(13)

 

 

55,000

 

 

 

*

 

R.F. Lafferty & Co., Inc. (18)

 

 

1,680,000

(43)

 

 

1,680,000

(43)

 

 

0

 

 

 

0

 

 

  Hackel Family Trust (18)    

1,000,000  

(46)

1,000,000  

(46)

0  

0  

 

* Less than 1%.


The following is a summary of the material terms of our capital stock.  You are strongly encouraged to read our Certificate of Incorporation, the Certificate of Designations of the Series B Preferred and other documents and agreements, copies of which are filed as exhibits to the registration statement of which this prospectus forms a part and available from us, at no cost, upon request.
 

(1)

Represents the amount of shares that will be held by the selling stockholder after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) no other shares of our common stock are acquired or sold by the selling stockholders prior to completion of this offering. However, the selling stockholder may sell all, some or none of the shares offered pursuant to this prospectus and may sell other shares of our common stock that they may own pursuant to another registration statement under the Securities Act or sell some or all of their shares pursuant to an exemption from the registration provisions of the Securities Act, including under Rule 144. To our knowledge there are currently no agreements, arrangements or understanding with respect to the sale of any of the shares that may be held by the selling stockholder after completion of this offering or otherwise.

(2)           Represents (i) 50,000 shares issued upon conversion of Series A PreferredCapital Stock (ii) 10,000 shares underlying A Warrants, and (iii) 10,000 shares underlying B Warrants.

(3)           Represents (i) 250,000 shares issued upon conversion of Series A Preferred Stock, (ii) 50,000 shares underlying A Warrants, and (iii) 50,000 shares underlying B Warrants.

(4)           Represents (i) 25,000 shares issued upon conversion of Series A Preferred Stock, (ii) 5,000 shares   underlying A Warrants, and (iii) 5,000 shares underlying B Warrants.

(5)           Represents (i) 100,000 shares issued upon conversion of Series A Preferred Stock, (ii) 20,000 shares underlying A Warrants, and (iii) 20,000 shares underlying B Warrants.

(6)           Represents (i) 125,000 shares issued upon conversion of Series A Preferred Stock, (ii) 25,000 shares underlying A Warrants, and (iii) 25,000 shares underlying B Warrants.

(7)           Represents (i) 1,100,000 shares issued upon conversion of Series A Preferred Stock, (ii) 220,000 shares underlying A Warrants, and (iii) 220,000 shares underlying B Warrants.

(8)           Represents (i) 625,000 shares issued upon conversion of Series A Preferred Stock, (ii) 125,000 shares underlying A Warrants, and (iii) 125,000 shares underlying B Warrants.

(9)           Represents (i) 75,000 shares issued upon conversion of Series A Preferred Stock, (ii) 15,000 shares underlying A Warrants, and (iii) 15,000 shares underlying B Warrants.


 

(10)         Represents (i) 350,000 shares issued upon conversion of Series A Preferred Stock, (ii) 70,000 shares underlying A Warrants, and (iii) 70,000 shares underlying B Warrants.

(11)         Represents (i) 200,000 shares issued upon conversion of Series A Preferred Stock, (ii) 40,000 shares underlying A Warrants, and (iii) 40,000 shares underlying B Warrants.

(12)         Represents (i) 450,000 shares issued upon conversion of Series A Preferred Stock, (ii) 90,000 shares underlying A Warrants, and (iii) 90,000 shares underlying B Warrants.

(13)         Represents (i) 10,000,000 shares issued upon conversion of Series A Preferred Stock, (ii) 2,000,000 shares   underlying A Warrants, and (iii) 2,000,000 shares underlying B Warrants.

(14)         Henricus Beekwilder and Beatrys Beekwilder have voting and investment power over the securities held by the selling stockholder.

(15)         Carole Weintraub has voting and investment power over the securities held by the selling stockholder.

(16)         Robert Hackel has voting and investment power over the securities held by the selling stockholder.

(17)         Michael Capolino has voting and investment power over the securities held by the selling stockholder.

(18)         Henry Hackel has voting and investment power over the securities held by the selling stockholder. Henry Hackel is the owner of R.F. Lafferty & Co., Inc. and is the principal of Hackel Family Trust. Henry Hackel indirectly owns an additional 425,750 shares of the Company’s common stock through an IRA, which shares are not included in the selling stockholder’s beneficial ownership.

(19)         Keith F. Goggin has voting and investment power over the securities held by the selling stockholder.

(20)         Barry Forst has voting and investment power over the securities held by the selling stockholder.

(21)         Martin McNeil and Barry Forst have voting and investment power over the securities held by the selling stockholder.

(22)         Joel Cooper has voting and investment power over the securities held by the selling stockholder.

(23)         Andrew Cohen has voting and investment power over the securities held by the selling stockholder.

(24)         Timothy B. Johnson has voting and investment power over the securities held by the selling stockholder.

(25)         Christina D. Collier has voting and investment power over the securities held by the selling stockholder.

(26)         William G. Escamilla has voting and investment power over the securities held by the selling stockholder.

(27)         Leonard M. Herman has voting and investment power over the securities held by the selling stockholder.

(28)         William K. Kellogg has voting and investment power over the securities held by the selling stockholder.

(29)         Debra Patterson has voting and investment power over the securities held by the selling stockholder.

(30)         Marvin J. Pollack has voting and investment power over the securities held by the selling stockholder.

(31)         Dale F. Snavely has voting and investment power over the securities held by the selling stockholder.

(32)         Rosemary Steinbaum has voting and investment power over the securities held by the selling stockholder.

(33)         Henry J. Underwood has voting and investment power over the securities held by the selling stockholder.

(34)         Elliot Sloyer, a director of the Company, has voting and investment power over the securities held by the selling stockholder.

(35)         Frederic Leopold has voting and investment power over the securities held by the selling stockholder.


(36)         Allen Model has voting and investment power over the securities held by the selling stockholder.

(37)         Adam J. Chill has voting and investment power over the securities held by the selling stockholder.

(38)         David A. Rapaport has voting and investment power over the securities held by the selling stockholder.

(39)         Barbara J. Haldi has voting and investment power over the securities held by the selling stockholder.

(40)         Samuel Berkowitz has voting and investment power over the securities held by the selling stockholder.

(41)         Marco Elser, a director of the Company, has voting and investment power over the securities held by the selling stockholder.

(42)         Stanley R. Kamin and Patricia Hackel have voting and investment power over the securities held by the selling stockholder.

(43)         Represents (i) 1,200,000 shares underlying the Placement Agent Warrants, (ii) 240,000 shares underlying A Warrants issuable upon exercise of the Placement Agent Warrants, and (iii) 240,000 shares underlying B Warrants issuable upon exercise of the A Warrants issuable upon exercise of the Placement Agent Warrants.

(44)         The selling stockholder is a director of the Company.

(45)          The selling stockholder holds the securities as nominee for Gabelli Funds, LLC. See "Security Ownership of Certain Beneficial Owners, Directors and Executive Officers."

(46)          Represents shares underlying the HFA Warrants

DESCRIPTION OF SECURITIES

Authorized Capital Stock

We haveare authorized to issue 60,000,00010,000,000 shares of common stock having a par value of $0.001 per share, of which 25,511,923 shares1,700,429 are issued and 1,685,085 are outstanding, and 500,000 shares of preferred stock, par value $0.001 per share, of which 0416,500 shares are designated as “Series A Convertible Preferred Stock” and [●] shares are designated as “Series B Convertible Preferred Stock,” and none of which shares are issued and outstanding as of July 13, 2012.    

Voting.August 5, 2015.

Common Stock
Voting
The shares of common stock are entitled to one vote per share on all matters submitted to stockholders. Holders of common stock do not have preemptive rights or cumulative voting rights.

Dividends and Other Distributions.Distributions
Dividends on the common stock will be paid if and when declared. Stock dividends on and stock splits of common stock will onlyDividends may be payablepaid in cash, in property or made in shares of common stock.  In no event shall dividends and other distributions be paid on any of the common stock, unless the other such class of stock also receives dividends.otherwise provided by applicable law. The Company does not currently pay cash dividends and payment of such dividends is not contemplated in the foreseeable future.

Other Distributions.Distributions
The holders of common stock are entitled to receive the same consideration per share in the event of any liquidation, dissolution or winding-up of the Company.

Mergers and Acquisitions.Acquisitions
The holders of common stock are entitled to receive the same per share consideration, if any, received in a merger or consolidation of the CorporationCompany (whether or not the CorporationCompany is the surviving corporation).

Warrants

Series A WarrantsConvertible Preferred Stock
We have designated 416,500 shares of preferred stock as “Series A Convertible Preferred Stock” (“Series A Preferred”), which has a par value of $1.00 per share and a stated value of $20.00 per share, and such other material terms summarized below.  The complete terms of the Series A Preferred are contained in our Certificate of Incorporation, which is incorporated herein by reference.  No shares of Series A Preferred were issued and outstanding as of August 5, 2015.
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Table of Contents

In connection

Voting
The shares of Series A Preferred are entitled to 50 votes for each share of Series A Preferred on which our stockholders are entitled to vote. The holders of shares of Series A Preferred vote together with the Offering,holders of common stock on all matters and do not vote as defineda separate class.
Distributions
If we declare or make any distribution of assets on our common stock, as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to stockholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)), holders of shares of Series A Preferred will be entitled to receive such distribution with respect to the shares of our common stock issuable upon conversion of such shares of Series A Preferred, as though such holder had been the holder of such underlying shares of common stock on the record date for the distribution.
Liquidation Preference
Upon the liquidation, dissolution or winding up of our business, before the payment or setting apart for payment of any amount for, or the distribution of any assets to, the holders of common stock, the holders of Series A Preferred will be entitled to receive out of the assets of the Company an amount equal to the Stated Value per share of $20.00.
Conversion
Upon filing of an amendment to our Certificate of Incorporation to increase the number of shares of authorized common stock so that there was an adequate amount of shares of authorized common stock for issuance upon conversion of the Series A Preferred, each share of Series A Preferred was automatically converted into 50 shares of common stock on July 2, 2012.
Series B Convertible Preferred Stock
We have designated [●] shares of preferred stock as “Series B Convertible Preferred Stock,” with the material terms summarized below.  The complete terms are contained in the Certificate of Designations of the Series B Preferred, which is filed as an exhibit to the registration statement of which this prospectus is a part.  No shares of Series B Preferred were issued and outstanding as of August 5, 2015.
Ranking
With respect to the payment of dividends and distribution of amounts of our net assets upon a dissolution, liquidation or winding up of Trans-Lux, the Series B Preferred will rank senior to our common stock and any other class or series of our stock over which the Series B Preferred has preference or priority in the payment of dividends or in the distribution of assets on liquidation, as the case may be, to which we refer as “Junior Stock,” equally with any other class or series of our stock that ranks on a par with the Series B Preferred in the payment of dividends or in the distribution of assets on liquidation, as the case may be, to which we refer as “Parity Stock,” and junior, in all matters expressly provided, to any class or series of preferred stock specifically ranking by its terms senior to the Series B Preferred in the payment of dividends or in the distribution of assets on liquidation, as the case may be, to which we refer as “Senior Stock.” We currently do not have any Senior Stock or Parity Stock.  Among other things, no dividends or other distributions may be made in respect of shares of Junior Stock, other than dividends payable solely in common stock with respect to which an adjustment to the Series B Preferred conversion price is made (as described below), unless and until all accrued and unpaid dividends on the Series B Preferred (including any semi-annual dividend for the then-current period, as described below) have been paid or provided for and an equivalent dividend has been paid in respect of each share of Series B Preferred on an as converted to common stock basis.
Dividends
Subject to the prior payment in full of any dividends to which any Senior Stock is entitled by its terms, the holders of the Series B Preferred will be entitled to receive, out of funds legally available therefor, semi-annual dividends payable, at the Company’s election, in cash, shares of common stock, or a combination thereof.  Such dividends will be cumulative and non-compounding and will accrue on a daily basis from the date of issuance of the Series B Preferred at an annual rate equal to 5.0% of the Stated Value per share of $[●] (subject to adjustment).  If we elect to pay this dividend in shares of common stock, such shares will be valued at an amount equal to the volume-weighted 30-day average trading price of the common stock on its principal trading market.
Liquidation Preference
Upon any liquidation, dissolution or winding up (a “Liquidation”), after the satisfaction in full of the debts of the Company issued 4,165,000 one-year Warrants (the “A Warrants”)and the payment of any priority liquidation preference owed to the holders of shares of Senior Stock, the holders of Series B Preferred will be entitled to receive out of the assets of the Company an amount equal to the dividends accrued and unpaid thereon, whether or not declared, without interest, plus a sum in cash or property at its fair market value as determined by our Board equal to the greater of (a) the Stated Value per share and (b) such amount per share as would have been payable had all shares of Series B Preferred been converted into common stock immediately before the Liquidation, before any payment may be made or assets distributed to the holders of Junior Stock. For this purpose a “Liquidation” does not include any consolidation of the Company with, or merger of the Company into, any other entity, any merger of another entity into the Company, any sale or transfer of assets of the Company or any exchange of securities of the Company.
Voting
Except as otherwise expressly required by law, holders of shares of Series B Preferred will be entitled to vote, together with the holders of our common stock and not as a separate class, on all matters submitted to holders of our common stock.  Holders of shares of Series B Preferred will be entitled to [●] votes for each share of Series B Preferred owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited.
Conversion
Optional Conversion by Holder.  Each A Warrant shall entitleshare of Series B Preferred will be convertible at the election of the holder into shares of our common stock by dividing the Stated Value per share by a conversion price, which will initially be $[●].
Mandatory Conversion by Trans-Lux.  At any time after the third anniversary of the initial issue date of the Series B Preferred, the Company will have the right, in its sole discretion, to purchase (a) one sharecause all (but not less than all) outstanding shares of Series B Preferred Stock to be automatically converted into shares of common stock.
Conversion Price Adjustment.  The conversion price and, therefore, the conversion rate, will be adjusted to reflect any dividend or distribution in shares of common stock made on any other class or series of the Company’s capital stock (other than on shares of Series B Preferred) or any subdivision, combination or reclassification of the outstanding shares of common stock (including through a merger of the Company with another entity) so that each holder of shares of Series B Preferred thereafter surrendered for conversion will be entitled to receive the number of shares of common stock that such holder would have owned or have been entitled to receive immediately after such action had such shares of Series B Preferred been converted immediately before such action.
Warrants
Director Warrants
On October 2, 2013, we issued warrants to purchase a total of 42,000 to three of our directors, Salvatore J. Zizza, George W. Schiele and (b) a three-yearJean Firstenberg. The warrants began to vest after one year, have an exercise price of $12.50 per share and will expire on October 2, 2018.  Each of these warrant (the “B Warrants”issuances was approved by stockholders at our 2013 Annual Meeting of Stockholders on October 2, 2013.
Retop Warrants
On June 27, 2014, we issued warrants to purchase 33,333 shares of our common stock to Retop Industrial (Hong Kong) Limited (“Retop”), at an exercise price of $0.20$8.00 per share.  

B Warrants

Inshare, which expire on June 27, 2016.  These warrants were issued in connection with the Offering the Company may issue upour entry into a Securities Purchase Agreement with Retop, pursuant to 4,165,000 three-yearwhich we also issued to Retop 333,333 shares of our common stock, for a total purchase price of $2,000,000.

BFI Warrants (the “B Warrants”) upon the exercise of A Warrants.  Each B Warrant shall entitle the holder
On April 23, 2015, in connection with our entry into a credit agreement with BFI Capital Fund, we issued to BFI Capital Fund a warrant to purchase one share10,000 shares of the Corporation’s common stock at an exercise price of $0.50$12.00 per share.

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  This warrant expires on April 23, 2020.
 
Anti-Takeover Effects of Our Certificate of Incorporation
Our Certificate of Incorporation contains certain provisions that could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us. Such provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock, thus making it less likely that a stockholder will receive a premium on any sale of shares. Our Board is divided into three classes, each of which serves for a staggered three-year term, making it more difficult for a third party to gain control of our Board. Our Certificate of Incorporation also contains a provision that requires a four-fifths vote on any merger, consolidation or sale of assets with or to an “Interested Person” or “Acquiring Person.”
Additionally, we are authorized to issue 500,000 shares of preferred stock, of which 416,500 shares are designated as “Series A Convertible Preferred Stock” and [●] shares are designated as “Series B Convertible Preferred Stock,” and none of which shares are issued and outstanding as of August 5, 2015. The preferred stock may contain such rights, preferences, privileges and restrictions as may be fixed by our Board, which may adversely affect the voting power or other rights of the holders of common stock or delay, defer or prevent a change in control of the Company, or discourage bids for the common stock at a premium over its market price or otherwise adversely affect the market price of the common stock.

Placement

Transfer Agent Warrants

R.F. Laffertyand Registrar

The transfer agent and registrar for the common stock and for the Series B Preferred is Continental Stock Transfer & Co.Trust Company.
OTC Pink
Our common stock trades on OTC Pink under the symbol “TNLX.”
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is the opinion of Olshan Frome Wolosky LLP, our Counsel, and sets forth the expected material U.S. federal income tax consequences, as of the date of this prospectus, to U.S. holders (as defined below) of our common stock of the receipt, sale and exercise (or expiration) of the subscription rights acquired through the rights offering and the receipt, ownership and sale of the Series B Preferred shares received upon exercise of the basic subscription right or, if applicable, the over-subscription right.
This summary does not provide a complete analysis of all potential tax considerations.  It applies to you only if you are a U.S. holder, acquire your subscription rights by distribution from Trans-Lux in the rights offering and hold your subscription rights or Series B Preferred shares issued to you upon exercise of the basic subscription right or, if applicable, the over-subscription right as capital assets within the meaning of section 1221 of the Code.  This section does not apply to you if you are not a U.S. holder or if you are a member of a special class of holders subject to special rules, including, without limitation, financial institutions, regulated investment companies, real estate investment trusts, holders who are dealers in securities or foreign currency, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations, insurance companies, persons liable for alternative minimum tax, holders who hold such stock as part of a hedge, straddle, conversion, constructive sale or other integrated security transaction, holders whose functional currency is not the U.S. dollar, or holders who received our common stock on which the subscription rights are distributed in satisfaction of our indebtedness or as compensation.  Additionally, this discussion does not address U.S. holders who beneficially own our shares through either a “foreign financial institution” (as such term is defined in Section 1471(d) (4) of the Code) or certain other non-U.S. entities specified in Section 1472 of the Code.
This section is based upon the Code, the Treasury regulations promulgated thereunder, legislative history, judicial authority and published rulings, any of which may subsequently be changed, possibly retroactively, or interpreted differently by the IRS, so as to result in U.S. federal income tax consequences different from those discussed below.  The discussion that follows neither binds the IRS nor precludes the IRS from adopting a position contrary to that expressed in this prospectus, and we cannot assure you that such a contrary position could not be asserted successfully by the IRS or adopted by a court if the position was litigated.  We have not sought, and will not seek, a ruling from the IRS regarding the rights offering or the related issuance of the Series B Preferred.  This summary does not deal with any U.S. federal non-income, state, local or foreign tax consequences, estate or gift tax consequences, or alternative minimum tax consequences, nor does it address any tax considerations to persons other than U.S. holders.
You are a U.S. holder if you are a beneficial owner of subscription rights or Series B Preferred and you are:
·An individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence test under section 7701(b) of the Code,
·A corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized, or treated as created or organized, in or under the laws of the United Sates, any state thereof or the District of Columbia,
·An estate whose income is subject to U.S. federal income tax regardless of its source, or
·A trust (a) if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (b) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) receives a distribution of subscription rights or holds the Series B Preferred received upon exercise of the subscription rights or, if applicable, the over-subscription right, the tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership.  Such a partner or partnership is urged to consult its own tax advisor as to the U.S. federal income tax consequences of receiving, selling or exercising the subscription rights and acquiring, holding or disposing of our Series B Preferred shares.
EACH HOLDER OF OUR COMMON STOCK IS URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSIDERATIONS OF THE RECEIPT AND EXERCISE (OR EXPIRATION) OF SUBSCRIPTION RIGHTS AND THE RECEIPT, OWNERSHIP AND DISPOSITION OF THE SERIES B PREFERRED.
Receipt, Exercise and Expiration of the Subscription Rights; Tax Basis and Holding Period of Shares Received upon Exercise of the Subscription Rights
Receipt of the Distribution of Subscription Rights
The U.S. federal income tax consequences of the rights offering will depend on whether the rights offering is considered part of a “disproportionate distribution” within the meaning of Section 305 of the Code.  Your receipt of the distribution of subscription rights in the rights offering will be treated as a nontaxable distribution with respect to your existing common stock for U.S. federal income tax purposes provided that the rights offering is not part of a “disproportionate distribution.”  A “disproportionate distribution” is a distribution or a series of distributions, including deemed distributions, from a corporation that has the effect of the receipt of cash or other property by some stockholders and an increase in the proportionate interest of other stockholders in the corporation’s assets or earnings and profits.  For purposes of the above, “stockholder” includes holders of rights to acquire stock (such as warrants and options) and holders of convertible securities.  The distribution of rights will not result in the receipt by any stockholders of cash or property from the Company.  Further, during the last 36 months, our common stock has been our sole outstanding class of stock, we have not made any distributions of cash or other property on such stock, and we have not had any convertible debt outstanding.  Nor do we currently intend to issue another class of stock (other than the Series B Preferred) or convertible debt or pay any dividends except with respect to the Series B Preferred.  Accordingly, we believe and intend to take the position, and the following discussion assumes (unless explicitly stated otherwise), Inc. (the “Placement Agent”that the subscription rights issued in the rights offering are not part of a “disproportionate distribution” and, thus, we will not treat the distribution of the subscription rights to you as a dividend of our earnings and profits that is taxable to you for U.S. federal income tax purposes.  However, the disproportionate distribution tax rules are complicated, the determination is highly dependent on the existence or non-existence of certain facts and the interpretation of such facts or absence thereof, and, as a result, their application is uncertain.  Further, the determination of whether the distribution of the rights results in the receipt of a dividend depends, in part, on the presence of certain facts and the determination of whether such facts exist cannot be made until the close of our taxable year.  Finally, it is possible that the IRS, which is not bound by our determination, could challenge our position.  For a discussion of the U.S. federal income tax consequences to you if the rights offering were to be considered part of a disproportionate distribution, see “Consequences if the Rights Offering Is Considered Part of a Disproportionate Distribution” below.
EACH HOLDER OF SUBSCRIPTION RIGHTS SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE DISTRIBUTION, EXERCISE (OR EXPIRATION), OR DISPOSITION OF SUBSCRIPTION RIGHTS, INCLUDING WHETHER THE RIGHTS OFFERING WERE TAXABLE AS A “DISPROPORTIONATE DISTRIBUTION” WITHIN THE MEANING OF CODE SECTION 305.
Tax Basis in the Subscription Rights
If the fair market value of the subscription rights distributed to you is less than 15% of the fair market value of your common stock on the date you receive your subscription rights, your subscription rights will be allocated a zero tax basis for U.S. federal income tax purposes, unless you elect to allocate tax basis between your existing common stock and your subscription rights in proportion to their relative fair market values determined on the date you receive your subscription rights.  If you choose to allocate tax basis between your existing common stock and your subscription rights, you must make this election on a statement included with your tax return for the taxable year in which you receive your subscription rights.  Such an election is irrevocable.
If the fair market value of the subscription rights distributed to you is 15% or more of the fair market value of your existing common stock on the date you receive your subscription rights, you must allocate your tax basis in your existing common stock between your existing common stock and your subscription rights in proportion to their relative fair market values determined on the date you receive your subscription rights.
The fair market value of the subscription rights on the date the subscription rights will be distributed is uncertain, and we have not obtained, and do not intend to obtain, an appraisal of that fair market value.  In determining the fair market value of the subscription rights, you should consider all relevant facts and circumstances, including any difference between the subscription price of the subscription rights and the trading price of our common stock on the date that the subscription rights are distributed, the length of the period during which the subscription rights may be exercised and the fact that the subscription rights are non-transferable.
Your holding period in the subscription rights will include your holding period in the shares of common stock with respect to which the subscription rights were distributed.
Exercise and Expiration of the Subscription Rights
You will not recognize any gain or loss upon the exercise of subscription rights distributed to you in the rights offering, and the tax basis of the shares of our Series B Preferred acquired through exercise of the subscription rights will equal the sum of the subscription price for the shares plus your tax basis, if any, in the subscription rights.  The holding period for the shares of Series B Preferred acquired through exercise of the subscription rights will begin on the date the subscription rights are exercised.
If you allow subscription rights received in the rights offering to expire, you will not recognize any gain or loss upon that expiration.  If you have tax basis in the subscription rights and you allow the subscription rights to expire, the tax basis of our common stock owned by you with respect to which such subscription rights were distributed will be restored to the tax basis of such common stock immediately before the receipt of the subscription rights in the rights offering.
If you exercise a subscription right distributed to you in the rights offering after disposing of the share of our common stock with respect to which such subscription right is received, certain aspects of the tax treatment of the exercise of the subscription right are unclear, including (1) the allocation of tax basis between the common stock previously sold and the subscription right, (2) the impact of such allocation on the amount and timing of gain or loss recognized with respect to the common stock previously sold, and (3) the impact of such allocation on the tax basis of Series B Preferred acquired through the exercise of the subscription right. If you exercise a subscription right distributed to you in the rights offering after disposing of the common stock with respect to which the subscription right is received, you should consult your tax advisor as to these uncertainties.
Consequences if the Rights Offering Is Considered Part of a Disproportionate Distribution
If the rights offering is part of a “disproportionate distribution” within the meaning of Section 305 of the Code, the distribution of subscription rights would be treated as a distribution with respect to your underlying common stock equal to the fair market value of the subscription rights you received and would be taxable to you as a dividend to the extent that such fair market value is allocable to our current or accumulated earnings and profits for the taxable year in which the subscription rights are distributed. We cannot determine, before the consummation of the rights offering, the extent to which we will have sufficient current and accumulated earnings and profits to cause any distribution to be treated as a dividend.  Dividends received by corporate holders of our common stock are taxable at ordinary corporate tax rates subject to any applicable dividends-received deduction.  Subject to the discussion of the “unearned income Medicare contribution tax” set forth below (see below, “Additional Medicare Tax on Net Investment Income”), dividends received by noncorporate holders of our common stock are taxed at preferential rates provided that the holder meets applicable holding period and other requirements.  Any such distribution in excess of our current and accumulated earnings and profits would be treated first as a FINRAtax-free return of your basis in our common stock and thereafter as gain from the sale or exchange of your common stock.  Regardless of whether the distribution of subscription rights is treated as a dividend, as a tax-free return of basis or as gain from the sale or exchange of our common stock, your tax basis in the subscription rights you receive will be their fair market value.
If the receipt of subscription rights is taxable to you as described in the previous paragraph and you allow subscription rights received in the rights offering to expire, you will recognize a capital loss equal to your tax basis in the expired subscription rights.  Your ability to use any capital loss is subject to certain limitations.  You will not recognize any gain or loss upon the exercise of the subscription rights, and the tax basis of the shares of Series B Preferred acquired through exercise of the subscription rights will equal the sum of the subscription price for the shares and your tax basis in the subscription rights.  The holding period for the shares of Series B Preferred acquired through exercise of the subscription rights will begin on the date the subscription rights are exercised.
Ownership and Disposition of Series B Preferred
Distributions on Series B Preferred
Cash distributions on Series B Preferred will be dividends for United States federal income tax purposes to the extent of our current or accumulated earnings and profits, as determined for United States federal income tax purposes, and will be taxable as ordinary income, although possibly at reduced rates as discussed below.  To the extent that the amount of any distribution paid with respect to Series B Preferred exceeds our current or accumulated earnings and profits, the excess will be treated first as a nontaxable return of capital to the extent of your adjusted tax basis in the Series B Preferred and then as capital gain.
If we make a distribution on Series B Preferred in the form of additional shares of our common stock, such distribution will be tax-free under Section 305 of the Code.  Such a stock distribution will not be tax-free, however, if one or more of the following exceptions apply: (1) at the election of any holder, the distribution can be paid in cash or other property instead of stock; (2) the result of the distribution is that some stockholders receive cash or other property while other stockholders increase their interest in the earnings or assets of the corporation (a disproportionate distribution, as discussed above); (3) the distribution is a distribution on preferred stock; or (4) the distribution is payable in convertible preferred stock, unless we can establish that the distribution will not have the effect listed in clause (2) above. The exception described in clause (3) above does not apply to “participating preferred stock.”  Participating preferred stock is stock that participates in corporate growth to any significant extent (disregarding conversion privileges).  A right to participate in corporate growth that lacks substance (i.e., as to which it is reasonable to anticipate at the time of the distribution that there is little or no likelihood of participating beyond a fixed preferential return) will not be respected.  Generally, stock which enjoys a priority as to dividends and on liquidation and is entitled to participate, over and above such priority, with another less privileged class of stock in earnings and profits upon liquidation, would be treated as participating preferred stock for purposes of Section 305 of the Code.  Our Series B Preferred has a priority as to dividends and has the right to participate, over and above its preference amount, in any liquidation proceeds along with our common stock on an as-converted basis (see “Description of Capital Stock — Series B Convertible Preferred Stock — Liquidation Preference”).  Based on the foregoing, we currently intend to treat the Series B Preferred as participating preferred stock for purposes of Section 305 of the Code.  There is no assurance, however, that the IRS or the courts will not take a contrary position.  In general, you are bound by our determination, unless you explicitly disclose that you are taking a contrary position in a statement attached to your timely filed tax return for the taxable year in which you acquire the stock.
If our Series B Preferred is treated as participating preferred stock and no other exceptions apply at the time of the stock distribution, such stock distribution will be tax-free to you.  Your tax basis in the shares received will be allocated between the Series B Preferred and the additional common stock distributed based on their relative fair market values on the date of distribution.  Your holding period for such additional common stock will include the period during which the Series B Preferred was held before the stock distribution.
If, contrary to our position, our Series B Preferred is treated as non-participating preferred stock or another exception to tax-free treatment applies, a distribution in the form of additional shares of our common stock will be taxable for United States federal income tax purposes in the same manner as cash distributions described in the first paragraph above.  Such an exception could apply, for example, if cash dividends paid on our common stock were associated with a stock distribution on the Series B Preferred, resulting in a disproportionate distribution.  The amount of such distribution will be equal to the fair market value of the additional common stock on the date of the distribution.  Your tax basis in such additional common stock will equal the fair market value of the additional common stock on the distribution date, and your holding period for such additional common stock will begin on the day following the distribution date.
Distributions on Series B Preferred taxable as dividends received by corporate U.S. holders will be eligible for the dividends received deduction, subject to various conditions and limitations.  Subject to certain exceptions for short-term and hedged positions and provided that certain holding period and other requirements are met, distributions constituting “qualified dividend income” received by non-corporate U.S. holders in respect of Series B Preferred are currently subject to a reduced maximum tax rate of 20% plus the additional Medicare tax on net investment income described below under “— Additional Medicare Tax on Net Investment Income,” if applicable.
You should consult your own tax advisor regarding the availability of the reduced dividend tax rate or the dividends received deduction in light of your particular circumstances.
Conversion of the Preferred Stock into Common Stock
You will not recognize gain or loss on the receipt of common stock upon the conversion of Series B Preferred.  However, if the conversion takes place when there is a dividend arrearage on the Series B Preferred and the fair market value of the common stock exceeds the issue price of the Series B Preferred, the common stock received in respect of such dividend arrearage may be treated as a dividend distribution as described above under “—Distributions on Series B Preferred.”  In addition, if the conversion is pursuant to a plan to periodically increase your proportionate interest in our assets or earnings and profits, a portion of the common stock received may be treated as a dividend distribution as described above under “—Distributions on Series B Preferred.”  Assuming the conversion is not pursuant to any such plan and no dividend arrearage exists, your tax basis in the common stock received upon conversion will equal your tax basis in the Series B Preferred converted.  The holding period of the common stock received upon conversion generally will include the period during which the Series B Preferred converted was held prior to conversion.
Cash received in lieu of a fractional share of common stock upon conversion will be treated as a payment in a taxable exchange for such fractional share, and gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash received and the amount of adjusted tax basis allocable to the fractional share.
Adjustment of the Conversion Price
Under Treasury Regulations promulgated under Section 305 of the Code, an adjustment to the conversion price of convertible preferred stock may result in a constructive stock distribution (includable in income in the manner described above under “—Distributions on Series B Preferred”) with respect to such preferred stock to the extent such adjustment increases the proportionate interest of the holders of such stock in the issuer’s earnings and profits.  For example, an increase in the conversion ratio to reflect a taxable dividend to holders of common stock will give rise to a deemed taxable dividend to the holders of preferred stock to the extent of the issuer’s current or accumulated earnings and profits.  However, adjustments to the conversion price made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing dilution in the interest of a holder of the preferred stock will not be considered to result in a constructive distribution.  The conversion price of Series B Preferred is subject to adjustment under certain circumstances (see “Series B Convertible Preferred Stock – Conversion Price Adjustment”).  Such circumstances should constitute bona fide reasonable anti-dilution provisions and should not result in constructive distributions.  A failure to make an adjustment to the conversion price of the Series B Preferred to reflect a stock dividend or similar event that increases that proportionate interest of the holders of our common stock could in some circumstances give rise to constructive distributions to such holders.  Accordingly, under certain circumstances, you may recognize income in the event of a constructive distribution even though you may not receive any additional cash or property.
Sale or Other Disposition
A sale, exchange, or other disposition of the Series B Preferred (other than a conversion into common stock) will result in gain or loss equal to the difference between the amount realized upon the disposition (not including any proceeds attributable to declared and unpaid dividends, which will be taxable as described above to you if you have not previously included such dividends in income) and your adjusted tax basis in the Series B Preferred.  The gain or loss will be long-term capital gain or loss if you held the Series B Preferred more than one year at the time of sale, exchange, or other disposition.  Under current law, long-term capital gains of individuals, estates, and trusts are subject to a reduced maximum tax rate of 20% plus the additional Medicare tax on net investment income described below under “— Additional Medicare Tax on Net Investment Income,” if applicable.
Additional Medicare Tax on Net Investment Income
An additional 3.8% tax is imposed on the net investment income of certain U.S. citizens and residents, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence test under Code Section 7701(b), and on the undistributed net investment income of certain estates and trusts.  Among other items, net investment income generally includes gross income from dividends and net gain from the disposition of property, such as the subscription rights and the Series B Preferred, less certain deductions.  You should consult your tax advisor with respect to this additional tax.
Information Reporting and Backup Withholding
You may be subject to information reporting and/or backup withholding with respect to dividend payments on or the gross proceeds from the disposition of Series B Preferred acquired through the exercise of subscription rights.  Backup withholding may apply under certain circumstances if you (1) fail to furnish your social security or other taxpayer identification number (“TIN”), (2) furnish an incorrect TIN, (3) fail to report interest or dividends properly, or (4) fail to provide a certified statement, signed under penalty of perjury, that the TIN provided is correct, that you are not subject to backup withholding and that you are a U.S. person.  Backup withholding is not an additional tax.  Any amount withheld from a payment under the backup withholding rules is allowable as a credit against (and may entitle you to a refund with respect to) your U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.  You may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.  Certain persons are exempt from backup withholding, including corporations and financial institutions.  For additional information regarding the backup withholding requirements with respect to any payments relating to Series B Preferred acquired through the exercise of subscription rights, see the instructions to IRS Form W-9 in the materials delivered to you with this prospectus.  You are urged to consult your own tax advisor as to your qualification for exemption from backup withholding and the procedure for obtaining such exemption.
Tax Consequences to the Company
As of December 31, 2014, we had NOLs of approximately $10.4 million for U.S. federal income tax purposes. Under the Code, an “ownership change” with respect to a corporation could limit the amount of pre-ownership change NOLs and certain other tax assets that the corporation may utilize after the ownership change to offset future taxable income, possibly reducing the amount of cash available to the corporation to satisfy its obligations. An ownership change would occur if the aggregate stock ownership of beneficial owners of at least 5% of our stock increases by more than 50 percentage points over the preceding three-year period. Because not all stockholders may exercise their basic subscription rights in full, the purchase of shares of our Series B Preferred and the subsequent conversion of the Series B Preferred into shares of our common stock could result in a shift in this beneficial ownership that could trigger an ownership change with respect to our stock.
If there is an ownership change with respect to our stock, the amount of annual limitation on the utilization of our pre-ownership-change NOLs and certain other tax assets generally would be equal to the value of our stock immediately before the ownership change multiplied by the applicable adjusted federal long-term tax-exempt rate. We have not determined whether the rights offering would constitute an ownership change under the Code. If all stockholders do not exercise their basic subscription rights in full, the rights offering may result in limitations on our ability to utilize our NOLs going forward.
LEGAL MATTERS
The validity of the rights and the shares of Series B Preferred offered by this prospectus have been passed upon for us by Olshan Frome Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, New York 10022.
EXPERTS
The financial statements as of December 31, 2014 and 2013 and for each of the two years in the period ended December 31, 2014 incorporated by reference in this Prospectus and in the Registration Statement have been so incorporated in reliance on the report of BDO USA, LLP, an independent registered broker-dealer, was engagedpublic accounting firm (the report on the financial statements contains an explanatory paragraph regarding the Company’s ability to continue as placement agenta going concern) incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting.
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference information contained in documents we file with it, which means that we can disclose important information to you by referring you to those documents already on file with the SEC that contain that information.  The information incorporated by reference is considered to be part of this prospectus.  The following documents, which have been filed with the SEC pursuant to the Exchange Act, are incorporated by reference:
·our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on April 2, 2015;
·our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 15, 2015;
·our Proxy Statement for our 2015 Annual Meeting of Stockholders, filed with the SEC on May 29, 2015; and
·our Current Report on Form 8-K filed with the SEC on April 29, 2015 and July 6, 2015.
You may request copies of the documents incorporated by reference in this prospectus, at no cost, by writing or telephoning us at:
Trans-Lux Corporation
445 Park Avenue, Suite 2001
New York, NY 10022
(800) 243-5544
Attention: Investor Relations
AVAILABLE INFORMATION
We file periodic reports, proxy statements and other information with the SEC.  Our filings are available to the public over the Internet at the SEC’s web site at www.sec.gov.  You may also read and copy any document we file with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, D.C. 20549.  You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549.  Please call the SEC at 1-800-SEC-0330 for further information on the operation of its Public Reference Room.  In addition, we make available, without charge, on the Investor Relations section of our website, www.Trans-Lux.com, electronic copies of our filings with the SEC, including copies of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these filings, if any. Except as otherwise specified herein, information on our website should not be considered a part of this prospectus, and we do not intend to incorporate into this prospectus any information contained in our website.  We will also provide you with a copy of any or all of the reports or documents that have been incorporated by reference into this prospectus or the registration statement of which it is a part upon written or oral request, and at no cost to you.  If you would like to request any reports or documents from the Company, please contact our Investor Relations Department at Trans-Lux Corporation, 445 Park Avenue, Suite 2001, New York, NY 10022, and (800) 243-5544.
PART II INFORMATION
Item 13.  Other Expenses of Issuance and Distribution.
The following table sets forth the fees and expenses, other than underwriting discounts and commissions, payable in connection with the private placement.  The placement agent was paid fees based upon a maximum of an $8,000,000 raise (and no fees were paid upon the additional $330,000 of gross proceeds raised which brought the total offering to $8,330,000).  Such fees consisted of a cash fee in the amount of $400,000 and warrants(the “Placement Agent Warrants”) to purchase 24 units (the “Placement Agent Units”), each unit consisting of 50,000 shares of common stock and 10,000 A Warrants.  The A Warrants issuable upon exerciseregistration of the Placement Agent Warrants (andsecurities hereunder.  All amounts are estimates except the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent’s Warrants) are substantially the same as the A Warrants (and B Warrants) sold to the investors in the Offering, except that they have the following exercise periods: (i) the A Warrants issuable upon exercise of the Placement Agent Warrants are exercisable for a period of two (2) years from the date of exercise of the Placement Agent Warrants; and (ii) the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants are exercisable for a period equal to the longer of (i) three (3) years from the Closing Date or (ii) one (1) year from the date or exercise of the A Warrants underlying the Placement Agent Warrants.  The Placement Agent Warrants are exercisable at a price of $25,000 per Placement Agent Unit (exercisable in partial Placement Agent Units), and the A Warrants and B Warrants issuable upon exercise of the Placement Agent Warrants have an exercise price of $0.20 in the case of the A Warrants and $0.50 per share in the case of the B Warrants.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

SEC registration fee.

SEC registration fees $1,208.48
Legal fees and expenses $ *
Printing expenses $ *
Accounting fees and expenses $ *
Subscription agent fees and expenses $ *
Miscellaneous expenses $ *
Total $ *

*           To be provided by amendment.

Item 14.  Indemnification of Directors and Officers

Officers.

Section 145 of the Delaware General Corporation Law (“DGCL”) provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the Company, will be, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.

The Company's Certificate of Incorporation provides that directors of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, relating to prohibited dividends or distributions or the repurchase or redemption of stock, or (iv) for any transaction from which the director derives an improper personal benefit. The Company's By-laws also contain provisions to indemnify the directors, officers, employees or other agents to the fullest extent permitted by the Delaware General Corporation Law.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons of the Company, pursuant to the foregoing provisions, or otherwise, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

PLAN OF DISTRIBUTION

This prospectus includes an aggregate of 31,835,000 shares of common stock offered by the selling stockholders.  To our knowledge, at the time of the purchase of the securities to be resold, none of the selling stockholders had any agreement or understanding, directly or indirectly, with any person to distribute the securities.


Each selling stockholder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the over-the-counter market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling shares:

·

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

·

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

·

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·

an exchange distribution in accordance with the rules of the applicable exchange;

·

privately negotiated transactions;

·

settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

·

broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

·

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

·

a combination of any such methods of sale; or

·

any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933, as amended. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

We are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933, as amended.

Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, they will be subject to the prospectus delivery requirements of the Securities Act of 1933, as amended, including Rule 172 thereunder. In addition, anysecurities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act of 1933, as amended may be sold under Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.


Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act of 1933, as amended).

 LEGAL MATTERS

Sichenzia Ross Friedman Ference LLP, New York, New York, will pass upon the validity of the shares of our common stock to be sold in this offering.

EXPERTS

The financial statements as of December 31, 2011 and 2010, and for each of the two years in the period ended December 31, 2011 included in this Registration Statement have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, appearing elsewhere herein, given on the authority of said firm as experts in accounting and auditing.

 WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and the shares of common stock that we are offering in this prospectus.

We are subject to the informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected at public reference facilities of the SEC at 100 F Street, N.E., Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC’s Internet website at http://www.sec.gov.  The contents of this websites are not incorporated into this filing by reference. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.


Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Trans-Lux Corporation

Norwalk, Connecticut

We have audited the accompanying consolidated balance sheets of Trans-Lux Corporation as of December 31, 2011 and 2010 and the related consolidated statements of operations, comprehensive loss, statements of redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2011.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Trans-Lux Corporation at December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2011,  in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

Melville, NY

April 16, 2012

42

TRANS-LUX CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

In thousands, except share data

 

December 31

2011

 

 

2010

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

1,109

 

$

398

Receivables, less allowance of $884 - 2011 and $1,326 - 2010

 

 

 

2,060

 

 

2,970

Unbilled receivables

 

 

 

63

 

 

11

Inventories

 

 

 

2,875

 

 

4,852

Prepaids and other

 

 

 

729

 

 

532

Total current assets

 

 

 

6,836

 

 

8,763

Rental equipment

 

 

 

43,252

 

 

50,229

Less accumulated depreciation

 

 

 

27,060

 

 

30,173

 

 

 

 

16,192

 

 

20,056

Property, plant and equipment

 

 

 

4,381

 

 

6,840

Less accumulated depreciation

 

 

 

2,316

 

 

4,571

 

 

 

 

2,065

 

 

2,269

Asset held for sale

 

 

 

696

 

 

920

Goodwill

 

 

 

744

 

 

810

Other assets

 

 

 

926

 

 

624

TOTAL ASSETS

 

 

$

27,459

 

$

33,442

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

 

$

1,589

 

$

$   2,459

Accrued liabilities

 

 

 

6,719

 

 

7,555

Current portion of long-term debt

 

 

 

4,444

 

 

16,378

Warrant liabilities

 

 

 

5,408

 

 

-

Total current liabilities

 

 

 

18,160

 

 

26,392

Long-term debt:

 

 

 

 

 

 

 

Notes payable

 

 

 

512

 

 

2,335

Deferred pension liability and other

 

 

 

4,930

 

 

4,685

Total liabilities

 

 

 

23,602

 

 

33,412

Redeemable convertible preferred stock:

 

 

 

 

 

 

 

Preferred - $1 par value - 500,000 authorized, 416,500 Series A convertible preferred shares issued in 2011

 

 

 

6,138

 

 

-

Stockholders' equity (deficit):

 

 

 

 

 

 

 

Common - $1 par value - 5,500,000 shares authorized, 5,070,424 common shares issued in 2011 and 2,826,424 common shares issued in 2010

 

5,071

 

 

2,827

Additional paid-in-capital

 

 

 

12,620

 

 

14,279

Accumulated deficit

 

 

 

(13,443)

 

 

(12,025)

Accumulated other comprehensive loss

 

 

 

(3,466)

 

 

(1,988)

Treasury stock - at cost – 383,596 common shares in 2011 and 2010

 

 

 

(3,063)

 

 

(3,063)

Total stockholders' equity (deficit)

 

 

 

(2,281)

 

 

30

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 

 

 

$

27,459

 

$

33,442

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 



Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands, except per share data

 

Years ended December 31

2011

 

 

2010

Revenues:

 

 

 

 

 

 

 

Digital display sales

 

 

$

15,990

 

$

15,515

Digital display lease and maintenance

 

 

 

7,767

 

 

8,561

Real estate rentals

 

 

 

92

 

 

231

Total revenues

 

 

 

23,849

 

 

24,307

Cost of revenues:

 

 

 

 

 

 

 

Cost of digital display sales

 

 

 

13,977

 

 

12,912

Cost of digital display lease and maintenance

 

 

 

6,589

 

 

7,304

Cost of real estate rentals

 

 

 

66

 

 

56

Total cost of revenues

 

 

 

20,632

 

 

20,272

Gross profit from operations

 

 

 

3,217

 

 

4,035

General and administrative expenses

 

 

 

(7,948)

 

 

(8,483)

Restructuring costs

 

 

 

(164)

 

 

(1,078)

Goodwill impairment

 

 

 

(66)

 

 

-

Operating loss

 

 

 

(4,961)

 

 

(5,526)

Interest expense, net

 

 

 

(1,382)

 

 

(1,591)

Gain on debt extinguishment

 

 

 

8,796

 

 

-

Change in warrant liabilities

 

 

 

(3,655)

 

 

-

Loss from continuing operations before income taxes

 

 

 

(1,202)

 

 

(7,117)

Income tax benefit

 

 

 

8

 

 

19

Loss from continuing operations

 

 

 

(1,194)

 

 

(7,098)

(Loss) income from discontinued operations

 

 

 

(224)

 

 

62

Net loss

 

 

 

(1,418)

 

 

(7,036)

Loss per share continuing operations - basic and diluted

 

 

$

(0.44)

 

$

(2.91)

(Loss) earnings per share discontinued operations - basic and diluted

 

 

 

(0.08)

 

 

0.02

Total loss per share - basic and diluted

 

 

$

(0.52)

 

$

(2.89)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted

 

 

 

2,738

 

 

2,437

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 


Consolidated Statements of Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inthousands    

 

Years ended December 31

2011

 

 

2010

 

 

 

 

 

 

 

 

Net loss

 

 

$

(1,418)

 

$

(7,036)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

Unrealized foreign currency translation (loss) gain

 

 

 

(82)

 

 

184

Change in unrecognized pension costs

 

 

 

(1,396)

 

 

(433)

Total other comprehensive loss, net of tax

 

 

 

(1,478)

 

 

(249)

Comprehensive loss

 

 

$

(2,896)

 

$

(7,285)

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

 

 

 

 

 

 

 

44

Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

Years ended December 31

2011

 

 

2010

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

 

 

$

(1,418)

 

$

(7,036)

(Loss) income from discontinued operations

 

 

 

(224)

 

 

62

Loss from continuing operations

 

 

 

(1,194)

 

 

(7,098)

Adjustment to reconcile loss from continuing operations

 

 

 

 

 

 

 

to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

4,615

 

 

5,303

Stock compensation expense

 

 

 

24

 

 

22

Gain on debt extinguishment

 

 

 

(8,796)

 

 

-

Change in warrant liabilities

 

 

 

3,655

 

 

-

Non-cash restructuring costs

 

 

 

-

 

 

480

Write-off of engineering software, net

 

 

 

-

 

 

456

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

  Receivables

 

 

 

858

 

 

(1,209)

  Inventories

 

 

 

1,977

 

 

297

  Prepaids and other assets

 

 

 

(508)

 

 

248

  Accounts payable and accrued liabilities

 

 

 

(1,081)

 

 

2,821

  Deferred pension liability and other

 

 

 

(83)

 

 

400

Net cash (used in) provided by operating activities of continuing operations

 

 

 

(533)

 

 

1,720

Cash flows from investing activities

 

 

 

 

 

 

 

Equipment manufactured for rental

 

 

 

(408)

 

 

(1,264)

Purchases of property, plant and equipment

 

 

 

(64)

 

 

(161)

Net cash used in investing activities of continuing operations

 

 

 

(472)

 

 

(1,425)

Cash flows from financing activities

 

 

 

 

 

 

 

Payments of long-term debt

 

 

 

(6,784)

 

 

(1,300)

Proceeds from long-term debt

 

 

 

650

 

 

830

Net proceeds from issuance of preferred stock and warrants

 

 

 

7,850

 

 

-

Net cash provided by (used in) financing activities of continuing operations

 

 

 

1,716

 

 

(470)

Cash flows from discontinued operations

 

 

 

 

 

 

 

Cash provided by operating activities of discontinued operations

 

 

 

-

 

 

32

Net cash provided by discontinued operations

 

 

 

-

 

 

32

Net increase (decrease) in cash and cash equivalents

 

 

 

711

 

 

(143)

Cash and cash equivalents at beginning of year

 

 

 

398

 

 

541

Cash and cash equivalents at end of year

 

 

$

1,109

 

$

398

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Interest paid

 

 

$

 460

 

$

538

Supplemental non-cash financing activities:

 

 

 

 

 

 

 

Exchange of 8¼% Notes for Common Stock

 

 

 

561

 

 

-

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

45


Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total  

 

 

 

 

 

 

 

Accumulated

 

Stock-

 

 

 

 

 

Add'l

 

Other

 

holders

In thousands, except share data

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

   Treasury

Equity

For the two years ended December 31, 2011

Shares

Amt

Shares

Amt

Capital

Deficit

Loss

    Stock

(Deficit)

Balance January 1, 2010

-

$        -

2,826,424

$2,827

$14,657

$  (4,989)

($1,739)

($3,463)

$    7,293

Net loss

-

-

-

-

-

(7,036)

-

-

(7,036)

Issuance of restricted Common Stock (50,000 shares)

-

-

-

-

(400)

-

-

400

-

Stock compensation expense

-

-

-

-

22

-

-

-

22

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

  Unrealized foreign currency translation gain

-

-

-

-

-

-

184

-

184

  Change in unrecognized pension costs

-

-

-

-

-

-

(433)

-

(433)

Balance December 31, 2010

-

-

2,826,424

2,827

14,279

(12,025)

(1,988)

(3,063)

30

Net loss

-

-

-

-

-

(1,418)

-

-

(1,418)

Issuance of Common Stock (2,244,000 shares)

-

-

2,244,000

2,244

(1,683)

-

-

-

561

Issuance of  Series A Convertible Preferred Stock (416,500 shares)

416,500

6,138

-

-

-

-

-

-

-

Stock compensation expense

-

-

-

-

24

-

-

-

24

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

  Unrealized foreign currency translation loss

-

-

-

-

-

-

(82)

-

(82)

  Change in unrecognized pension costs

-

-

-

-

-

-

(1,396)

-

(1,396)

Balance December 31, 2011

416,500

$6,138

5,070,424

$5,071

$12,620

($13,443)

($3,466)

($3,063)

($2,281)

 

 

 

 

 

 

 

 

 

 

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

46

Notes To Consolidated Financial Statements

1.  Summary of Significant Accounting Policies

Trans-Lux Corporation is a leading designer and manufacturer of digital signage displays, LED lighting solutions and owner/operator of a rental property.

Principles of consolidation:  The consolidated financial statements include the accounts of Trans-Lux Corporation, a Delaware corporation, and all wholly-owned subsidiaries (the “Company”).  Intercompany balances and transactions have been eliminated in consolidation.

Use of estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary.  Estimates are used when accounting for such items as costs of long-term sales contracts, allowance for uncollectible accounts, inventory valuation allowances, depreciation and amortization, intangible assets, income taxes, warranty obligation, benefit plans, contingencies and litigation.

Cash and cash equivalents:  The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounts receivable:  Receivables are carried at net realizable value.  Credit is extended based on an evaluation of each customer’s financial condition; collateral is generally not required.  Reserves for uncollectible accounts receivable are provided based on historical experience and current trends.  The Company evaluates the adequacy of these reserves regularly.

The following is a summary of the allowance for uncollectible accounts at December 31:

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

2011

 

 

2010

Balance at beginning of year

$

1,326

 

$

1,393

   Provisions

 

434

 

 

92

   Deductions

 

(876)

 

 

(159)

Balance at end of year

$

884

 

$

1,326


Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers, the relatively small account balances within the majority of the Company’s customer base and their dispersion across different businesses.

Inventories:  Inventories are stated at the lower of cost (first-in, first-out method) or market value.  Valuation allowances for slow moving and obsolete inventories are provided based on historical experience and demand for servicing of the displays.  The Company evaluates the adequacy of these valuation allowances regularly.

47

Rental equipment and property, plant and equipment:  Rental equipment and property, plant and equipment are stated at cost and depreciated over their respective useful lives using the straight-line method.  Leaseholds and improvements are amortized over the lesser of the useful lives or term of the lease.

The estimated useful lives are as follows:

Years

Rental equipment

5 - 15

Buildings and improvements

10 - 40

Machinery, fixtures and equipment

3 - 15

Leaseholds and improvements

5


When rental equipment and property, plant and equipment are fully depreciated, retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the accounts.

Asset held for sale: Asset held for sale consists of land located in Silver City, New Mexico.

Goodwill and intangibles:  Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired.  Identifiable intangible assets are recorded at cost and amortized over their estimated useful life on a straight line basis and deferred financing costs are amortized over the life of the related debt of one to two years.  The goodwill of $744,000 relates to the Digital display sales segment.

The Company annually evaluates the value of its goodwill on October 1 and determines if it is impaired by comparing the carrying value of goodwill to its estimated fair value.  Changes in the assumptions used could materially impact the fair value estimates.  Assumptions critical to our fair value estimates are: (i) discount rate used to derive the present value factors used in determining the fair value of the reporting unit, (ii) projected average revenue growth rates used in the reporting unit models and (iii) projected long-term growth rates used in the derivation of terminal year values.  These and other assumptions are impacted by economic conditions and expectations of management and will change in the future based on period-specific facts and circumstances.  The Company uses the income and the market approach when testing for goodwill impairment. 

The Company weighs these approaches by using a 67% factor for the income approach and a 33% factor for the market approach.  Together these two factors estimate the fair value of the reporting unit.  The Company’s goodwill relates to our catalog sports reporting unit.  The Company uses a discounted cash flow model to determine the fair value under the income approach which contemplates an overall weighted average revenue growth rate of 3.0%.  If the Company were to reduce its revenue projections on the reporting unit by 1.3% within the income approach, the fair value of the reporting unit would be below carrying value.  The gross profit margins used are consistent with historical margins achieved by the Company during previous years.  If there is a margin decline of 0.5% or more, the model would yield results of a fair value less than carrying amount.  The Company uses a market multiple approach based on revenue to determine the fair value under the market approach which includes a selection of and market price of a group of comparable companies and the performance of the guidelines of the comparable companies and of the reporting unit. The impairment test for goodwill is a two-step process.  The first step of the goodwill impairment test compares the fair value of the reporting unit with its carrying amount.  If the carrying amount of the reporting unit exceeds its fair value, a second step is performed to calculate the implied fair value of the goodwill of the reporting unit by deducting the fair value of all of the individual assets and liabilities of the reporting unit from the respective fair values of the reporting unit as a whole.  To the extent the calculated implied fair value of the goodwill is less than the recorded goodwill, an impairment charge is recorded for the difference. Fair value is determined using cash flow and other valuation models (generally Level 3 inputs in the fair value hierarchy).  During 2011, the Company wrote off the goodwill associated with the older LED technology and recorded a goodwill impairment charge of $66,000.  There was no impairment of goodwill in 2010. 

The Company also evaluates the value of its other intangible assets by comparing the carrying value with estimated future cash flows when indicators of possible impairment exist.  There were no impairments of other intangibles in 2011 or 2010.

Impairment or disposal of long-lived assets:  The Company evaluates whether there has been an impairment in its long-lived assets if certain circumstances indicate that a possible impairment may exist.  An impairment in value may exist when the carrying value of a long-lived asset exceeds its undiscounted cash flows.  If it is determined that an impairment in value has occurred, the carrying value is written down to its fair value.  There were no impairments of long-lived assets in 2011 or 2010.

Revenue recognition:  Revenues from equipment lease and maintenance contracts are recognized during the term of the respective agreements, which generally run for periods of one month to 10 years.  At December 31, 2011, the future minimum lease payments due to the Company under operating leases that expire at varying dates through 2019 for its rental equipment and maintenance contracts, assuming no renewals of existing leases or any new leases, aggregating $12,563,000 was as follows:  $6,010,000 – 2012, $3,721,000 – 2013, $1,485,000 – 2014, $832,000 – 2015, $394,000 – 2016 and $121,000 thereafter.  The Company recognizes revenues on long-term equipment sales contracts, which require more than three months to complete, using the percentage of completion method.  The Company records unbilled receivables representing amounts due under these long-term equipment sales contracts, which have not been billed to the customer.  Income is recognized based on the percentage of incurred costs to the estimated total costs for each contract.  The determination of the estimated total costs is susceptible to change on these sales contracts.  Revenues on equipment sales with long-term receivables are recorded on the installment basis.  At December 31, 2011, the future accounts receivables due to the Company under installment sales agreements aggregated $328,000 through 2018.  Revenues on equipment sales, other than long-term equipment sales contracts, are recognized upon shipment when title and risk of loss passes to the customer.  Real estate rentals revenue is recognized monthly on a straight-line basis during the term of the respective lease agreements.

Warranty obligations: The Company provides for the estimated cost of product warranties at the time revenue is recognized.  While the Company engages in product quality programs and processes, including evaluating the quality of the component suppliers, the warranty obligation is affected by product failure rates.  Should actual product failure rates differ from the Company’s estimates, revisions to increase or decrease the estimated warranty liability may be required.

48

Taxes on income:  Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates expected to be in effect when such temporary differences are expected to reverse and for operating loss carryforwards.  The temporary differences are primarily attributable to operating loss carryforwards and depreciation.  The Company records a valuation allowance against net deferred income tax assets if, based upon the available evidence, it is more-likely-than-not that the deferred income tax assets will not be realized.

The Company considers whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.  Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statements.  The Company’s policy is to classify interest and penalties related to uncertain tax positions in income tax expense.  To date, there have been no interest or penalties charged to the Company in relation to the underpayment of income taxes.

The Company’s determinations regarding uncertain income tax positions may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof.

Foreign currency:  The functional currency of the Company’s Canadian business operation is the Canadian dollar.  The assets and liabilities of such operation are translated into U.S. dollars at the year-end rate of exchange, and the operating and cash flow statements are converted at the average annual rate of exchange.  The resulting translation adjustment is recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets and as a separate item in the Consolidated Statements of Comprehensive Loss.  Gains and losses related to the settling of transactions not denominated in the functional currency are recorded as a component of General and administrative expenses in the Consolidated Statements of Operations.

Share-based compensation plans:  The Company measures share-based payments to employees and directors at the grant date fair value of the instrument.  The fair value is estimated on the date of grant using the Black-Scholes valuation model, which requires various assumptions including estimating stock price volatility, expected life of the stock option and risk free interest rate.For details on the accounting effect of share-based compensation, see Note 16 – Share-Based Compensation.

Consideration of Subsequent Events:  The Company evaluated events and transactions occurring after December 31, 2011 through the date these consolidated financial statements were issued, to identify subsequent events which may need to be recognized or non-recognizable events which would need to be disclosed.  No recognizable events or transactions were identified; see Note 20 – Subsequent Events for non-recognizable events or transactions identified for disclosure.

Recent accounting pronouncement: In June 2011, FASB issued new authoritative guidance on the presentation of comprehensive income. The new guidance requires an entity to present the components of net income and other comprehensive income either in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in shareholders’ equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years beginning after December 15, 2011. In December 2011, FASB amended this guidance to postpone a requirement to present items that are reclassified from other comprehensive income to net income on the face of the financial statement where the components of net income and other comprehensive income are presented and reinstate previous guidance related to such reclassifications. The deferral did not affect the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The Company elected for early adoption of the requirements to present a separate, consecutive comprehensive income statement in 2011. Adoption of the new guidance did not have an impact on the Company’s consolidated financial statements, as the guidance impacted presentation only.

In September 2011, FASB issued ASU 2011-08, “Intangibles - Goodwill and Other (Topic 350): Testing Goodwill Impairment” (“ASU 2011-08”).  ASU 2011-08 is intended to simplify goodwill impairment testing by permitting assessment of qualitative factors to determine whether events and circumstances lead to the conclusion that it is necessary to perform the traditional two-step impairment test.  Under this update, we are not required to calculate the fair value of our reporting units unless we conclude that it is more-likely-than-not (likelihood of more than 50%) that the carrying value of our reporting units is greater than the fair value of such units based on our assessment of events and circumstances.  This update is effective for fiscal years beginning after December 15, 2011, with early adoption permitted.  We plan to adopt the provisions of this update at the beginning of our 2012 fourth quarter, which has historically been the time at which we assessed the potential impairment of our goodwill and other indefinite lived intangible assets.  The adoption of ASU 2011-08 is not expected to have a material impact on the Company’s consolidated financial statements.

Reclassifications: Certain reclassifications of prior years’ amounts have been made to conform to the current year’s presentation.

49

2.  Plan of Restructuring

The Company’s Board of Directors approved a comprehensive restructuring plan which included offers to the holders of the 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) to receive $225, without accrued interest, plus 250 shares of the Company’s Common Stock for each $1,000 Note exchanged and to the holders of the 9½% Subordinated debentures due 2012 (the “Debentures”) to receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lender under the Credit Agreement, among other senior claims.

$8,976,000 principal amount of the Notes and $718,000 principal amount of the Debentures were exchanged.  The Company issued 2,244,000 shares of Common Stock in exchange for the Notes, which have not been registered under the Securities Exchange Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  The Company recorded an $8.8 million gain ($3.21 per share, basic and diluted) on debt extinguishment of principal and accrued interest on the Notes and Debentures that were exchanged.

As part of the restructuring plan, on November 14, 2011 the Company completed the sale of an aggregate of $8.3 million of securities (the “Offering”) consisting of 416,500 shares of the Company’s Series A Convertible Preferred Stock, par value $1.00 per share (the “Preferred Stock”) having a stated value of $20.00 per share and convertible into 50 shares of the Company’s Common Stock, par value $1.00 per share (or an aggregate of 20,825,000 shares of Common Stock) and 4,165,000 one-year warrants (the “A Warrants”).  These securities were issued at a purchase price of $20,000 per unit (the “Unit”).  Each Unit consisted of 1,000 shares of Preferred Stock, which are convertible into 50,000 shares of Common Stock and 10,000 A Warrants.  Each A Warrant entitles the holder to purchase one share of the Company’s Common Stock and a three-year warrant (the “B Warrants”), at an exercise price of $1.00 per share (subject to adjustment to $0.20 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10)  Each B Warrant shall entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $1.00 per share (subject to adjustment to $0.50 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).

R.F. Lafferty & Co., Inc., (the “Placement Agent”) a FINRA registered broker-dealer, was engaged as placement agent in connection with the Offering.  The Placement Agent was paid fees based upon a maximum of an $8,000,000 raise.  Such fees consisted of a cash fee in the amount of $200,000, a one year note for $200,000 at a 4.00% rate of interest and three-year warrants to purchase 24 Units (the “Placement Agent Warrants”).  The A Warrants issuable upon exercise of the Placement Agent Warrants and the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants shall be substantially the same as the A Warrants and B Warrants sold in the Offering, except that they have the following exercise periods: (i) the A Warrants issuable upon exercise of the Placement Agent Warrants shall be exercisable for a period of two years from the date of exercise of the Placement Agent Warrants; and (ii) the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants shall be exercisable for a period equal to the longer of three years from the Closing Date or one year from the date or exercise of the A Warrants underlying the Placement Agent Warrants.  The Placement Agent Warrants are exercisable at a price of $0.50, and the A Warrants and B Warrants issuable upon exercise of the Placement Agent Warrants will be exercisable at a price of $1.00 per share (subject to adjustment to $0.20 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10) in the case of the A Warrants and $1.00 per share (subject to adjustment to $0.50 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10) in the case of the B Warrants, on the same terms as provided in the A Warrants and B Warrants sold in the Offering.

The net proceeds of the Offering were used to fund the restructuring of the Company’s outstanding debt, which included: (1) a cash settlement to holders of the Notes in the amount of $2,019,600; (2) a cash settlement to holders of the Debentures in the amount of $71,800; (3) payment of the Company’s outstanding term loan with the senior lender in the amount of $320,833 and (4) payment of $1.0 million on the Company’s outstanding revolving loan with the senior lender under the Credit Agreement.  The net proceeds of the Offering remaining after payment to holders of the Notes, the Debentures and the senior lender were used to pay the remaining $3.0 million outstanding under the revolving loan with the senior lender under the Credit Agreement and for working capital.  

The investors, who own a substantial number of warrants to purchase our Common Stock will have substantial influence over the vote on key matters requiring stockholder approval. As of December 31, 2011, the investors have 8,330,000 warrants to purchase shares of our Common Stock issued in connection with the their investment in the Series A Convertible Preferred Stock, which does not include the 2,680,000 warrants held by the Placement Agent and the subscriber in connection with the $650,000 of 4.00% secured notes.

In the second quarter of 2010, the Company began its restructuring plan by reducing operating costs.  The 2010 actions included the elimination of approximately 50 positions from our operations and the closing of our Stratford, Connecticut manufacturing facility.  The 2010 results included a restructuring charge of $1.1 million consisting of employee severance pay, facility closing costs representing primarily lease termination and asset write-off costs, and other fees directly related to the restructuring plan.

The 2011 actions include the elimination of approximately 30 additional positions.  The 2011 results include an additional restructuring charge of $164,000 consisting of employee severance pay and other fees directly related to the restructuring plan.  The costs associated with the restructuring are included in a separate line item, Restructuring costs, in the Consolidated Statements of Operations.  We expect that the majority of these costs will be paid over the next 12 months.

50

The following table shows the amounts expensed and paid for restructuring costs that were incurred during 2011 and the remaining accrued balance of restructuring costs as of December 31, 2011, which is included in Accrued liabilities in the Consolidated Balance Sheets.

 

 

 

 

 

 

 

 

 

In thousands

 

Balance December 31, 2010

Provision

 

Payments and Other Adjustments

Balance December 31, 2011

Severance costs(1)

$

-

$

$  83

$

$  40

$

43

Facility closing costs(2)

 

215

 

(30)

 

185

 

-

Other fees

 

94

 

111

 

175

 

30

 

$

309

$

164

$

400

$

73

(1)   Represents salaries for employees separated from the Company.

 

 

 

 

 

 

 

 

(2)    Represents costs associated with the closing of the Stratford, Connecticut facility (primarily lease termination costs) and leasehold improvement and equipment write-offs.

The following table shows by reportable segment, the restructuring costs incurred during 2011 and the remaining accrued balance of restructuring costs as of December 31, 2011.

 

 

 

 

 

 

 

 

 

In thousands

 

Balance December 31, 2010

Provision

 

Payments and Other Adjustments

Balance December 31, 2011

Digital display sales

$

 -

$

25

$

25

$

-

Digital display lease and maintenance

 

309

 

139

 

375

 

73

 

$

309

$

164

$

400

$

73


51

3.  Discontinued Operations

On July 15, 2008, substantially all of the assets of the Entertainment Division were sold for a purchase price of $24.5 million, of which $7.4 million was paid in cash, $0.4 million in escrow and $16.7 million of debt was assumed by the purchaser, including $0.3 million of debt of the joint venture, MetroLux Theatres.  Of the $0.4 million cash in escrow, $0.1 million was released to the buyer and $0.3 million was released to the Company.  The escrow settlement resulted in a $62,000 gain in 2010, which is in a separate line item, Income from discontinued operations, in the Consolidated Statements of Operations.  During 2011, the Company recorded a $224,000 write-down on the land held for sale located in Silver City, New Mexico.  The Company accounted for sale of the assets of the Entertainment Division as discontinued operations.

4.  Fair Value

The Company carries its money market funds and cash surrender value of life insurance related to its deferred compensation arrangements at fair value.  The fair value of these instruments is determined using a three-tier fair value hierarchy.  Based on this hierarchy, the Company determined the fair value of its money market funds using quoted market prices, a Level 1 or an observable input, and the cash surrender value of life insurance, a Level 2 based on observable inputs primarily from the counter party.  The Company’s money market funds and the cash surrender value of life insurance had carrying amounts of $261,000 and $70,000 at December 31, 2011, respectively, and $5,000 and $71,000 at December 31, 2010, respectively.  The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short maturities of these items.  The fair value of the Company’s 8¼% Limited convertible senior subordinated notes due 2012  and 9½% Subordinated debentures due 2012 using observable inputs, was $259,000 and $34,000 at December 31, 2011, respectively, and $1.2 million and $0.1 million at December 31, 2010, respectively.  The fair value of the Company’s remaining long-term debt approximates its carrying value of $3.5 million and $7.5 million at December 31, 2011 and 2010, respectively.

5.  Inventories

Inventories consist of the following:

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

2010

Raw materials

 

$

1,826

$

3,948

Work-in-progress

 

 

449

 

152

Finished goods

 

 

600

 

752

 

 

$

2,875

$

4,852


6.  Rental Equipment

Rental equipment consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

 

2010

Rental equipment

 

$

43,252

 

$

50,229

Less accumulated depreciation

 

 

27,060

 

 

30,173

Net rental equipment

 

$

16,192

 

$

20,056

 

7.  Property, Plant and Equipment

Property, plant and equipment consists of the following:

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

2010

Land, buildings and improvements

 

$

2,638

$

2,843

Machinery, fixtures and equipment

 

 

1,714

 

3,885

Leaseholds and improvements

 

 

29

 

112

 

 

 

4,381

 

6,840

Less accumulated depreciation

 

 

2,316

 

4,571

Net property, plant and equipment

 

$

2,065

$

2,269


Land, buildings and equipment having a net book value of $2.1 million and $2.3 million at December 31, 2011 and 2010, respectively, are pledged as collateral under various mortgage and other financing agreements.

8.  Other Assets

Other assets consist of the following:

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

2010

Spare parts

 

$

175

$

295

Deferred financing costs, net of accumulated amortization of $92-2011 and $495-2010

 

 

21

 

201

Prepaids

 

 

70

 

76

Deposits and other

 

 

660

 

52

 

 

$

926

$

624


Deferred financing costs relate to the issuance of the Notes, Debentures, mortgages and other financing agreements and are being amortized over the terms of the respective agreements.

53



9. Taxes on Income

The components of income tax (expense) benefit are as follows:

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

2010

Current:

 

 

 

 

 

   Federal

 

$

56

$

51

   State and local

 

 

-

 

-

   Foreign

 

 

(48)

 

(32)

 

 

 

8

 

19

Deferred:

 

 

 

 

 

   Federal

 

 

-

 

-

   State and local

 

 

-

 

-

 

 

 

-

 

-

Income taxbenefit  

 

$

8

$

19


Loss from continuing operations before income taxes from the United States operations is $1.4 million and $6.9 million for the years ended December 31, 2011 and 2010, respectively.  Income (loss) from continuing operations before income taxes from Canada operations is $0.2 million and ($0.2) million for the years ended December 31, 2011 and 2010, respectively.

Income tax benefits for continuing operations differed from the expected federal statutory rate of 34.0% as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

2010

 

Statutory federal income tax benefit rate

 

34.0

%

 

34.0

%

State income taxes, net of federal benefit

 

4.1

 

 

3.8

 

Federal tax credit refund

 

(4.0)

 

 

(0.7)

 

Foreign income taxed at different rates

 

0.3

 

 

(1.5)

 

Deferred tax asset valuation allowance

 

(31.6)

 

 

(35.2)

 

Other

 

(2.2)

 

 

(0.1)

 

Effective income tax rate

 

0.6

%

 

0.3

%

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company’s deferred income tax assets and liabilities are as follows:

In thousands

 

 

2011

 

 

2010

Deferred income tax asset :

 

 

 

 

 

 

   Tax credit carryforwards

 

$

926

 

$

983

   Operating loss carryforwards

 

 

10,240

 

 

11,200

   Net pension costs

 

 

3,364

 

 

2,550

   Warrant liabilities

 

 

1,462

 

 

-

   Accruals

 

 

351

 

 

307

   Allowance for bad debts

 

 

313

 

 

434

   Other

 

 

411

 

 

211

   Valuation allowance

 

 

(11,945)

 

 

(10,524)

 

 

 

5,122

 

 

5,161

Deferred income tax liability:

 

 

 

 

 

 

   Depreciation

 

 

4,113

 

 

4,765

   Other

 

 

1,009

 

 

396

 

 

 

5,122

 

 

5,161

Net deferred income taxes

 

$

-

 

$

  -


Tax credit carryforwards primarily relate to federal alternative minimum taxes of $0.9 million paid by the Company, which may be carried forward indefinitely and applied against regular federal taxes.  Operating tax loss carryforwards primarily relate to U.S. federal net operating loss carryforwards of approximately $25.6 million, which begin to expire in 2019. The Company’s restructuring plan, see Note 2 – Plan of Restructuring for further details, could result in an ownership change as defined by section 382 of the Internal Revenue Code, which establishes an annual limit on the deductibility of pre-ownership change net operating loss and credit carryforwards.  Management is undergoing a section 382 evaluation to determine if there has been ownership change.

A valuation allowance has been established for the amount of deferred income tax assets as management has concluded that it is more-likely-than-not that the benefits from such assets will not be realized.

The Company’s policy is to classify interest and penalties related to uncertain tax positions in income tax expense.  The Company does not have any material uncertain tax positions in 2011 and 2010.

The Company is subject to U.S. federal income tax as well as income tax in multiple state and local jurisdictions and Canadian federal and provincial income tax.  Currently, no federal or state or provincial income tax returns are under examination.  The tax years 2007 through 2010 remain open to examination by the major taxing jurisdictions and the 2006 tax year remains open to examination by some state and local taxing jurisdictions to which the Company is subject.

54

10.  Accrued Liabilities

Accrued liabilities consist of the following:

 

 

 

 

 

 

 

 

 

 

 

  In thousands

 

2011   

 

 

2010  

  Deferred revenues

$

 1,258

 

$

1,979

Current portion of pension liability (see Note 15)

 

1,152

 

 

84

Compensation and employee benefits

 

1,051

 

 

1,188

Taxes payable

 

738

 

 

561

Interest payable

 

315

 

 

1,259

Warranty obligations

 

274

 

 

291

Restructuring costs

 

73

 

 

309

Other

 

1,858

 

 

1,884

 

$

6,719

 

$

7,555

Warranty obligations: The Company provides for the estimated cost of product warranties at the time revenue is recognized.  While the Company engages in product quality programs and processes, including evaluating the quality of the component suppliers, the warranty obligation is affected by product failure rates.  Should actual product failure rates differ from the Company’s estimates, revisions to increase or decrease the estimated warranty liability may be required.  A summary of the warranty liabilities for each of the two years ended December 31, 2011 is as follows:

In thousands

 

 

2011

 

 

2010

Balance at beginning of year

 

$

291

 

$

389

   Provisions

 

 

125

 

 

16

   Deductions

 

 

(142)

 

 

(114)

Balance at end of year

 

$

274

 

$

291

11.  Warrant Liabilities

As part of the Company’s restructuring plan, see Note 2 – Plan of Restructuring for further details, the Company issued 4,165,000 one-year warrants (the “A Warrants”).  Each A Warrant entitles the holder to purchase one share of the Company’s Common Stock and a three-year warrant (the “B Warrants”), at an exercise price of $1.00 per share (subject to adjustment to $0.20 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).  Each B Warrant shall entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $1.00 per share (subject to adjustment to $0.50 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).  The aggregate number of A Warrants and B Warrants the holders are entitled to is 8,330,000.

In connection with the Offering, the Company issued 1,200,000 warrants (the “Placement Agent Warrants”), 240,000 A Warrants issuable upon exercise of the Placement Agent Warrants, and 240,000 B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants.  The aggregate number of Placement Agent Warrants, A Warrants and B Warrants the Placement Agent is entitled to is 1,680,000.


In connection with a private placement of $650,000 of 4.00% notes, see Note 12  Long Term Debt, the Company issued 1,000,000 warrants to the subscriber.

All the warrants include a potential adjustment of the strike price if the Company sells or grants any option or warrant at a price per share less than the strike price of the warrants.  Therefore, the warrants are not considered indexed to the Company’s Common Stock and are accounted for on a liability basis.  The Company recorded a $3.7 million non-cash expense in 2011 related to changes in the value of the warrants issued in the Offering, the Placement Agent and the subscriber in connection with the $650,000 of 4.00% secured notes, which is included in a separate line item, Change in warrant liabilities, in the Consolidated Statements of Operations.

55


12.  Long-Term Debt

Long-term debt consists of the following :

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

 

2010

8¼% Limited convertible senior subordinated notes due 2012

 

$

1,153

 

$

10,129

9½% Subordinated debentures due 2012

 

 

339

 

 

1,057

Term loan  bank secured, due in monthly installments through 2011

 

 

-

 

 

971

Revolving loan  bank secured

 

 

500

 

 

4,100

Real estate mortgages secured, due in monthly installments through 2012

 

 

2,964

 

 

2,444

Other

 

 

-

 

 

12

 

 

 

4,956

 

 

18,713

Less portion due within one year

 

 

4,444

 

 

16,378

Long-term debt

 

$

512

 

$

2,335




Payments of long-term debt due for the next five years are :

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

2012

2013

2014

2015

2016

 

 

$4,444

$57

$61

$394

$ -

As of December 31, 2011, the Company has $1.2 million of 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) which are no longer convertible into common shares; interest is payable semi-annually and the Notes may be redeemed, in whole or in part, at par.  The Company had not remitted the March 1, 2010 and 2011 and September 1, 2010 and 2011 semi-annual interest payments of $417,800 each and the March 1, 2012 semi-annual interest and principal payment of $1.4 million to the trustee.  The non-payments constitute an event of default under the Indenture governing the Notes and 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.  When such notice is received by the Company, no payment shall be made by the Company to the holders or trustee until the earlier of such non-payment event of default is cured or waived or 179 days since receipt by the trustee of notice of such event, unless the holder of Senior Indebtedness has accelerated the due date thereof.  If the holder of Senior Indebtedness accelerates the due date at any time, then no payment may be made until the default is cured or waived.  At December 31, 2011, the total amount outstanding under the Notes is classified as Current portion of long-term debt in the Consolidated Balance Sheets.  As part of the Company’s restructuring plan, see Note 2 – Plan of Restructuring, the Company offered the holders of the Notes to receive $225, without accrued interest, plus 250 shares of the Company’s Common Stock for each $1,000 Note exchanged.  The offer expired on October 31, 2011.  $8,976,000 principal amount of the Notes were exchanged, leaving $1.2 million outstanding.

As of December 31, 2011, the Company has $0.3 million of 9½% Subordinated debentures due 2012 (the “Debentures”) which are due in annual sinking fund payments of $105,700 beginning in 2009, which payments have not been remitted by the Company, with the remainder due in 2012; interest is payable semi-annually and the Debentures may be redeemed, in whole or in part, at par.  The Company has not remitted the June 1, 2010 and 2011 and December 1, 2010 and 2011 semi-annual interest payments of $50,200 each to the trustee.  The non-payments constitute an event of default under the Indenture governing the Debentures and 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.  During the continuation of any event which, with notice or lapse of time or both, would constitute a default under any agreement under which Senior Indebtedness is issued, if the effect of such default is to cause or permit the holder of Senior Indebtedness to become due prior to its stated maturity, no payment (including any required sinking fund payments) of principal, premium or interest shall be made on the Debentures unless and until such default shall have been remedied, if written notice of such default has been given to the trustee by the Company or the holder of Senior Indebtedness.  The failure to make the sinking fund and interest payments are events of default under the Credit Agreement since it involves indebtedness over $500,000 and no payment can be made to such trustee or the holders at this time as such defaults have not been waived.


At December 31, 2011, the total amount outstanding under the Debentures is classified as Current portion of long-term debt in the Consolidated Balance Sheets.  As part of the Company’s restructuring plan, see Note 2 Plan of Restructuring, the Company offered the holders of the Debentures to receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The offer expired on October 31, 2011.  $718,000 principal amount of the Debentures were exchanged, leaving $339,000 outstanding.  The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lender under the Credit Agreement, among other senior claims.

As part of the Company’s restructuring plan, the Company recorded an $8.8 million gain ($3.21 per share, basic and diluted) on debt extinguishment of principal and accrued interest on the Notes and Debentures that were exchanged.

The Company has a bank Credit Agreement, as amended, which provides for a revolving loan of up to $3.0 million, based on eligible accounts receivable and inventory, at a variable rate of interest of Prime plus 2.00%, (5.25% at December 31, 2011), which matures November 1, 2012.  As part of the Company’s restructuring plan, see Note 2  Plan of Restructuring, the Company paid $1.3 million of the outstanding term and revolving loan. The senior lender modified the Credit Agreement to reduce the availability under the revolving loan from $5.0 million to $3.0 million. As of December 31, 2011, the Company has drawn $0.5 million against the revolving loan facility, of which $2.5 million was available for additional borrowing.  The Credit Agreement requires an annual facility fee on the unused commitment of 0.25%, and requires compliance with certain financial covenants, as defined in the Credit Agreement, which include a senior debt coverage ratio of not less than 1.00 to 1.00, a loan-to-value ratio of not more than 50% and a $1.0 million quarterly cap on capital expenditures.  As of December 31, 2011, the Company was in compliance with the foregoing financial covenants, but was not in compliance with the minimum tangible net worth ratio of not less than $11.5 million ($3.9 million at December 31, 2011), which the senior lender waived.  In addition, the senior lender has waived the defaults on the Notes and the Debentures, but in the event that the holders of the Notes or the Debentures or trustees declare a default and begin to exercise any of their rights or remedies in connection with the non-payment defaults, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  In addition, the senior lender has waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  The amounts outstanding under the Credit Agreement are collateralized by all of the Display division assets.

On June 17, 2011, the Company entered into a subscription agreement for a private placement consisting of $650,000 of 4.00% secured notes of the Company pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.  In connection with the purchase of these notes, the subscriber received a five-year warrant to purchase 1,000,000 shares of Common Stock of the Company at an exercise price of $1.00 per share (subject to adjustment to $0.01 per share).  The financing is collateralized by the land held for sale located in Silver City, New Mexico.

On March 1, 2010, the Company refinanced it existing mortgage on its facility located in Des Moines, Iowa.  The refinancing was for $650,000 at a fixed rate of interest of 6.50% payable in monthly installments, which matures March 1, 2015 and requires a compensating balance of $200,000.  The Company used proceeds of $390,000 to settle the prior debt and used the $260,000 balance for working capital needs.

The Company has a $1.8 million mortgage on its real estate rental property located in Santa Fe, New Mexico at a variable rate of interest of Prime, with a floor of 6.75%, which was the interest rate in effect at December 31, 2011, payable in monthly installments, which matures December 12, 2012.

On February 25, 2010, the Company took out a mortgage on the land held for sale located in Silver City, New Mexico and repaid it on August 27, 2010.  The financing was for $100,000 at a fixed rate of interest of 7.80%, payable in monthly interest only payments, which was due to mature on February 25, 2012.

56

13.  Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

The Company’s Board of Directors approved a comprehensive restructuring plan, see Note 2 – Plan of Restructuring for further details.

During 2011 and 2010, the Board of Directors did not declare any quarterly cash dividends on the Company’s Common Stock.

Shares of Common Stock reserved for future issuance in connection with convertible securities and stock option plans were 16,039,000 and 26,000 at December 31, 2011 and 2010, respectively. 


As part of the Company’s restructuring plan, on November 14, 2011 the Company completed the sale of an aggregate of $8.3 million of Series A Convertible Preferred Stock, see Note 2 – Plan of Restructuring for further details.

On February 16, 2010, the Board granted Mr. J.M. Allain, the Company’s new President and Chief Executive Officer,50,000 shares of restricted Common Stock from treasury shares which vested 50% after one year and the remaining 50% after two years.  The Company recorded stock compensation expense over the vesting period of $24,000 and $21,000 for the years ended December 31, 2011 and 2010, respectively.

Accumulated other comprehensive loss is comprised of $4,368,000 and $2,971,000 of unrecognized pension costs at December 31, 2011 and 2010, respectively and $901,000 and $983,000 of unrealized foreign currency translation gain at December 31, 2011 and 2010, respectively.

14.  Engineering Development

Engineering development expense was $187,000 and $670,000 for the years ended 2011 and 2010, respectively, which are included in General and administrative expenses in the Consolidated Statements of Operations.  The 2010 engineering development expense included a $456,000 charge to write-off engineering software in the second quarter of 2010.

15.  Pension Plan

All eligible salaried employees of Trans-Lux Corporation and certain of its subsidiaries are covered by a non-contributory defined benefit pension plan.  Pension benefits vest after five years of service and are based on years of service and final average salary.  The Company’s general funding policy is to contribute at least the required minimum amounts sufficient to satisfy regulatory funding standards, but not more than the maximum tax-deductible amount.  As of December 31, 2003, the benefit service under the pension plan had been frozen and, accordingly, there is no service cost for each of the two years ended December 31, 2011.  On April 30, 2009, the compensation increments were frozen, and accordingly, no additional benefits are being accrued under the plan.  For 2011 and 2010, the accrued benefit obligation of the plan exceeded the fair value of plan assets, due primarily to the plan’s investment performance.  The Company’s pension obligations for this plan exceeded plan assets by $5.9 million at December 31, 2011.

The Company employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk.  The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run.  Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial condition.  The portfolio contains a diversified blend of equity and fixed income investments.  Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews.

At December 31, 2011 and 2010, the Company’s pension plan weighted average asset allocations by asset category are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

2010

 

Guaranteed investment contracts

 

 

38.3

%

 

36.1

%

Equity and index funds

 

 

60.9

 

 

63.2

 

Bonds

 

 

-   

 

 

0.4

 

Money market funds

 

 

0.8

 

 

0.3

 

 

 

 

100.0

%

 

100.0

%

At December 31, 2010, bonds include $18,000 of the Company’s Debentures.

The pension plan asset information included below is presented at fair value.  ASC 820 establishes a framework for measuring fair value and required disclosures about assets and liabilities measured at fair value. The fair value of these assets are determined using a three-tier fair value hierarchy.  Based on this hierarchy, the Company determined the fair value of its money market funds and mutual stock funds using quoted market prices, a Level 1 or an observable input, the guaranteed investment contracts and equity and index funds, a Level 2 based on observable inputs and quoted prices in markets that are not active.  The Company does not have any Level 3 pension assets, in which such valuation would be based on unobservable measurements and management’s estimates.

The following table presents the pension plan assets by level within the fair value hierarchy as of December 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

Level 1

 

Level 2

 

Level 3

 

Total

Guaranteed investment contracts

$

-

$

2,053

$

  -

$

2,053

Mutual stock funds

 

925

 

-

 

-

 

925

Equity and index funds

 

-

 

2,342

 

-

 

2,342

Money market funds

 

41

 

-

 

-

 

41

 

$

966

$

4,395

$

-

$

5,361

 

 

 

 

 

 

 

 

 

57

The funded status of the plan as of December 31, 2011 and 2010 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

 

 

2010

 

Change in benefit obligation:

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of year

 

$

9,912

 

 

$

9,252

 

Interest cost

 

 

548

 

 

 

539

 

Actuarial loss

 

 

1,193

 

 

 

662

 

Benefits paid

 

 

(377)

 

 

 

(541)

 

Projected benefit obligation at end of year

 

 

11,276

 

 

 

9,912

 

 

 

 

 

 

 

 

 

 

Change in plan assets:

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

 

5,287

 

 

 

5,441

 

Actual return on plan assets

 

 

(153)

 

 

 

340

 

Company contributions

 

 

604

 

 

 

47

 

Benefits paid

 

 

(377)

 

 

 

(541)

 

Fair value of plan assets at end of year

 

 

5,361

 

 

 

5,287

 

 

 

 

 

 

 

 

 

 

Funded status (underfunded)

 

$

(5,915)

 

 

$

(4,625)

 

 

 

 

 

 

 

 

 

 

Amounts recognized in other accumulated comprehensive loss:

 

 

 

 

 

 

 

 

Net actuarial loss

 

$

5,852

 

 

$

4,456

 

Weighted average assumptions as of December 31:

 

 

 

 

 

 

 

 

Discount rate:

 

 

 

 

 

 

 

 

Components of cost

 

 

4.80

%

 

 

5.75

%

Benefit obligations

 

 

5.75

%

 

 

6.00

%

Expected return on plan assets

 

 

8.00

%

 

 

8.00

%

Rate of compensation increase

 

 

N/A

 

 

 

N/A

 

The Company determines the long-term rate of return for plan assets by studying historical markets and the long-term relationships between equity securities and fixed income securities, with the widely-accepted capital market principal that assets with higher volatility generate higher returns over the long run.  The 8.0% expected long-term rate of return on plan assets is determined based on long-term historical performance of plan assets, current asset allocation and projected long-term rates of return.

In 2012, the Company expects to amortize $484,000 of actuarial losses to pension expense.  The accumulated benefit obligation at December 31, 2011 and 2010 was $11.3 million and $9.9 million, respectively.  The minimum required contribution for 2012 is expected to be $1.2 million, which is included in Accrued liabilities in the Consolidated Balance Sheets.  The long-term pension liability is $4.8 million and is included in Deferred pension liability and other in the Consolidated Balance Sheets.  In March 2011 and 2010, the Company submitted to the Internal Revenue Service requests for waivers of the minimum funding standard for its defined benefit plan.  The waiver requests were submitted as a result of the economic climate and the business hardship that the Company was experiencing.  The waivers, if granted, will defer payment of $559,000 and $285,000 of the minimum funding standard for the 2010 and 2009 plan years, respectively.  If the waivers are not granted, the Pension Benefit Guaranty Corporation and the Internal Revenue Service have various enforcement remedies they can implement to protect the participant’s benefits; such as termination of the plan and require the Company to make the unpaid contributions.  The senior lender has waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  At this time, the Company is expecting to make its required contributions for the 2012 plan year; however there is no assurance that the Company will be able to make all payments.

58

Expected projected benefit payments due for the next five years are:

 

 

 

 

 

 

 

 

 

 

 

In thousands

2012

2013

2014

2015

2016

 

$893

$613

$435

$637

$667

The following table presents the components of the net periodic pension cost for the two years ended December 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

 

2010

Interest cost

 

$

548

 

$

539

Expected return on plan assets

 

 

(396)

 

 

(416)

Amortization of net actuarial loss

 

 

347

 

 

306

Net periodic pension cost

 

$

499

 

$

429

The following table presents the change in unrecognized pension costs recorded in other comprehensive loss as of December 31, 2011 and 2010:

 

 

 

 

 

 

In thousands

 

 

2011

 

 

2010

Balance at beginning of year

 

$

4,456

 

$

4,023

Net actuarial loss

 

 

1,743

 

 

738

Recognized loss

 

 

(347)

 

 

(305)

Balance at end of year

 

$

5,852

 

$

4,456


In addition, the Company provided unfunded supplemental retirement benefits for the retired, former Chief Executive Officer.  During 2009 the Company accrued $0.5 million for such benefits, which has not yet been paid.  The Company does not offer any post-retirement benefits other than the pension and supplemental retirement benefits described herein.

59



16.  Share-Based Compensation

The Company accounts for all share-based payments to employees and directors, including grants of employee stock options, at fair value and expenses the benefit in the Consolidated Statements of Operations over the service period (generally the vesting period). The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes pricing valuation model, which requires various assumptions including estimating stock price volatility, expected life of the stock option and risk free interest rate.  The Company applies an estimated forfeiture rate in calculating the period expense.  The Company has not experienced any forfeitures that would need to be taken into consideration in its calculations.

The Company has three stock option plans.  Under the 1995 Stock Option Plan, 125,000 shares of Common Stock were authorized for grant to key employees.  Under the Non-Employee Director Stock Option Plan, 30,000 shares of Common Stock were authorized for grant.  Under the Non-Statutory Stock Option Agreement, 10,000 shares of Common Stock were authorized and issued to the former Chairman of the Board.

Changes in the stock option plans are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Shares

 

   

Weighted Average

 

 

  Authorized

 Granted

  Available

 

Exercise Price

Balance January 1, 2010

 

39,000

26,000 

13,000

 

$

4.57

Expired

 

-

(3,000) 

3,000

 

 

5.03

Granted

 

-

- 

-

 

 

-

Balance December 31, 2010

 

39,000

23,000 

16,000

 

 

4.51

Expired

 

(10,000)

(11,000) 

1,000

 

 

3.97

Granted

 

-

- 

-

 

 

-

Balance December 31, 2011

 

29,000

12,000 

17,000

   

 

4.99

Under the 1995 Stock Option Plan, option prices must be at least 100% of the market value of the Common Stock at time of grant.  No option may be exercised prior to one year after date of grant.  Exercise periods are for ten years from date of grant and terminate at a stipulated period of time after an employee’s termination of employment.  At December 31, 2011, options for 7,500 shares with exercise prices ranging from $6.10 to $7.00 per share were outstanding, all of which were exercisable.  During 2011 and 2010, no options were exercised, granted or expired.  No additional options can be granted under the 1995 Plan.

Under the Non-Employee Director Stock Option Plan, option prices must be at least 100% of the market value of the Common Stock at time of grant.  No option may be exercised prior to one year after date of grant and the optionee must be a director of the Company at time of exercise, except in certain cases as permitted by the Compensation Committee.  Exercise periods are for six years from date of grant and terminate at a stipulated period of time after an optionee ceases to be a director.  At December 31, 2011, options for 4,500 shares with exercise prices ranging from $0.65 to $5.95 per share were outstanding, all of which were exercisable.  During 2011, no options were granted and options for 1,000 shares expired; no options were exercised.  During 2010, no options were granted and options for 3,000 shares expired; no options were exercised.

Under the Non-Statutory Stock Option Agreement for the former Chairman of the Board, the option price must be at least 100% of the market value of the Common Stock at time of grant and the exercise period is for 10 years from date of grant.  At December 31, 2011, no options were outstanding.  During 2011, the option for 10,000 shares expired and no options were exercised or granted.  During 2010, no options were exercised, granted or expired.

The following table summarize information about stock options outstanding and exercisable at December 31, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

Range of Exercise Prices

 

Number Outstanding and Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Aggregate Intrinsic Value

$0.65 - $1.99

 

3,000

 

3.6

 

$0.92

 

-

2.00 - 5.99

 

1,500

 

1.9

 

4.55

 

-

6.00 - 6.99

 

2,500

 

0.5

 

6.1

 

-

7.00 - 7.99

 

5,000

 

2.3

 

7

 

-

 

 

12,000

 

2.2

 

4.99

 

-


All outstanding option prices are over the current market price. As of December 31, 2011, there was no unrecognized compensation cost related to non-vested options granted under the Plans.

No options were granted in 2011 and 2010.  The fair value of options granted under the Company’s stock option plans will be estimated on dates of grant using the Black-Scholes model using the weighted average assumptions for dividend yield, expected volatility, risk free interest rate and expected lives of options granted.


17.  Loss Per Common Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period.  Diluted loss per common share is computed by dividing net loss 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. At December 31, 2011, outstanding warrants convertible into 11,010,000 shares of Common Stock were excluded from the calculation of diluted earnings per share because their impact would have been anti-dilutive.  At December 31, 2011 and 2010, there were outstanding stock options to purchase 12,000 and 23,000 shares of Common Stock, respectively, which were also excluded from the calculation of diluted loss per share because their impact would have been anti-dilutive.

18.  Commitments and Contingencies

Commitments:  The Company has an employment agreement with its Chief Executive Officer, which expires in February 2015.  The aggregate commitment for future salaries, excluding bonuses, was approximately $0.9 million.  Contractual salaries expense was $255,000 and $939,000 for the years ended December 31, 2011 and 2010, respectively.

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 that it believes individually and in the aggregate will not have a material adverse effect on the consolidated financial position or operations of the Company.

Operating leases:  Certain premises are occupied under operating leases that expire at varying dates through 2013.  Certain of these leases provide for the payment of real estate taxes and other occupancy costs.  Future minimum lease payments due under operating leases at December 31, 2011 aggregating $333,000 are as follows: $262,000 - 2012, $71,000 - 2013, $0 – 2014 through 2016.  Rent expense was $290,000 and $395,000 for the years ended December 31, 2011 and 2010, respectively.

19.  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 maker in deciding how to allocate resources and in assessing performance.

The Company evaluates segment performance and allocates resources based upon operating income.  The Company’s operations are managed in three reportable business segments.  The Digital Display Division comprises two operating segments: Digital display sales and Digital display lease and maintenance.  Both design and produce large-scale, multi-color, real-time digital displays and LED lighting, which has a line of energy-saving lighting solutions that provide facilities and public infrastructure with “green” lighting solutions that emit less heat, save energy and enable creative designs.  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 display sales segment sells equipment and the Digital display lease and maintenance segment leases and maintains equipment.  The Real estate rentals segment owns and operates an income-producing property.  Segment operating (loss) income is shown after cost of revenues and sales, general and administrative expenses directly associated with the segment.  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% for 2011 and 11% for 2010 of the Company’s revenues and are presented in the following table.  The 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.

Information about the Company’s continuing operations in its three business segments for the two years ended December 31, 2011 and as of December 31, 2011 and 2010 is as follows:

 

 

 

 

 

 

 

 

 

 

In thousands

 

 

2011

 

 

2010

Revenues:

 

 

 

 

 

 

   Digital display sales

 

$

15,990

 

$

15,515

   Digital display lease & maintenance

 

 

7,767

 

 

8,561

   Real estate rentals

 

 

92

 

 

231

Total revenues

 

$

23,849

 

$

24,307

   Operating (loss) income:

 

 

 

 

 

 

   Digital display sales

 

 

(3,003)

 

$

(2,529)

   Digital display lease & maintenance

 

 

215

 

 

83

   Real estate rentals

 

 

(39)

 

 

165

Corporate general and administrative expenses

 

 

(2,134)

 

 

(3,245)

Total operating loss

 

 

(4,961)

 

 

(5,526)

Interest expense, net

 

 

(1,382)

 

 

(1,591)

Gain on debt extinguishment

 

 

8,796

 

 

-

Change in warrant liabilities

 

 

(3,655)

 

 

-

Loss from continuing operations before income taxes

 

 

(1,202)

 

 

(7,117)

Income tax benefit

 

 

8

 

 

19

Net loss from continuing operations

 

$

(1,194)

 

$

(7,098)

61

In thousands

 

 

 

2011

 

 

2010

Assets:

 

 

 

 

 

 

 

   Digital display sales

 

 

$

7,460

 

$

8,875

   Digital display lease & maintenance

 

 

 

17,386

 

 

22,394

   Real estate rentals

 

 

 

802

 

 

849

Discontinued operations

 

 

 

702

 

 

926

Total identifiable assets

 

 

 

26,350

 

 

33,044

General corporate

 

 

 

1,109

 

 

398

Total assets

 

 

$

27,459

 

$

33,442

Depreciation and amortization:

 

 

 

 

 

 

 

   Digital display sales

 

 

$

179

 

 

187

   Digital display lease & maintenance

 

 

 

4,302

 

 

4,945

   Real estate rentals

 

 

 

68

 

 

43

   General corporate

 

 

 

66

 

 

128

Total depreciation and amortization

 

 

$

4,615

 

$

5,303

Capital expenditures:

 

 

 

 

 

 

 

   Digital display sales

 

 

 

37

 

 

85

   Digital display lease & maintenance

 

 

 

430

 

 

1,329

   Real estate rentals

 

 

 

-

 

 

-

General corporate

 

 

 

5

 

 

11

Total capital expenditures

 

 

$

472

 

$

1,425

Geographic revenues:

 

 

 

 

 

 

 

   United States

 

 

$

21,630

 

$

21,578

   Canada

 

 

 

1,619

 

 

1,769

   Elsewhere

 

 

 

600

 

 

960

Total revenues

 

 

 

23,849

 

 

24,307


20.  Subsequent Events

The Company has not remitted the March 1, 2012 semi-annual interest payment and principal payment on the Notes to the trustee.  See Note 12 – Long-Term Debt.

62

TRANS-LUX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

March 31

 

December 31

In thousands, except share data

 

2012

 

2011

 

 

(unaudited)

 

(see Note 1)

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

    690

 

$

  1,109

Receivables, less allowance of $923 - 2012 and $884 - 2011

 

 

2,409

 

 

2,060

Unbilled receivables

 

 

65

 

 

63

Inventories

 

 

2,874

 

 

2,875

Prepaids and other

 

 

838

 

 

729

Total current assets

 

 

6,876

 

 

6,836

Rental equipment

 

 

43,491

 

 

43,252

Less accumulated depreciation

 

 

28,001

 

 

27,060

 

 

 

15,490

 

 

16,192

Property, plant and equipment

 

 

4,429

 

 

4,381

Less accumulated depreciation

 

 

2,376

 

 

2,316

 

 

 

2,053

 

 

2,065

Asset held for sale

 

 

689

 

 

696

Goodwill

 

 

744

 

 

744

Other assets

 

 

873

 

 

926

TOTAL ASSETS

 

$

26,725

 

$

27,459

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

   1,503

 

$

1,589

Accrued liabilities

 

 

8,041

 

 

6,719

Current portion of long-term debt

 

 

4,044

 

 

4,444

Warrant liabilities

 

 

5,300

 

 

5,408

Total current liabilities

 

 

18,888

 

 

18,160

Long-term debt:

 

 

 

 

 

 

Notes payable

 

 

499

 

 

512

Deferred pension liability and other

 

 

5,068

 

 

4,930

Total liabilities

 

 

24,455

 

 

23,602

Redeemable convertible preferred stock:

 

 

 

 

 

 

Preferred - $1 par value – 500,000 shares authorized, 416,500 Series A convertible preferred shares issued in 2012 and 2011

 

 

6,138

 

 

6,138

Stockholders' equity (deficit):

 

 

 

 

 

 

Common Stock - $1 par value - 5,500,000 shares authorized, 5,070,424 shares issued in 2012 and 2011

 

 

5,071

 

 

5,071

Additional paid-in-capital

 

 

12,624

 

 

12,620

Accumulated deficit

 

 

(15,113)

 

 

(13,443)

Accumulated other comprehensive loss

 

 

(3,387)

 

 

(3,466)

Less treasury stock - at cost - 383,596 common shares in 2012 and 2011

 

 

(3,063)

 

 

(3,063)

Total stockholders' deficit

 

 

(3,868)

 

 

(2,281)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

$

26,725

 

$

27,459

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

 

 

 

 

 

 

63

TRANS-LUX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

Three Months Ended

 

March 31

In thousands, except per share data

2012

 

2011

Revenues:

 

 

 

 

 

Digital display sales

$

  3,837

 

$

 2,848

Digital display lease and maintenance

 

1,768

 

 

2,046

Real estate rentals

 

18

 

 

23

Total revenues

 

5,623

 

 

4,917

Cost of revenues:

 

 

 

 

 

Cost of digital display sales

 

3,190

 

 

2,335

Cost of digital display lease and maintenance

 

1,461

 

 

1,632

Cost of real estate rentals

 

16

 

 

17

Total cost of revenues

 

4,667

 

 

3,984

Gross profit from operations

 

956

 

 

933

General and administrative expenses

 

(2,601)

 

 

(2,165)

Restructuring costs

 

(10)

 

 

(70)

Operating loss

 

(1,655)

 

 

(1,302)

Interest expense, net

 

(113)

 

 

(361)

Gain on debt extinguishment

 

4

 

 

-

Change in warrant liabilities

 

108

 

 

-

Loss from continuing operations before income taxes

 

(1,656)

 

 

(1,663)

Income tax expense

 

(7)

 

 

(7)

Loss from continuing operations

 

(1,663)

 

 

(1,670)

Loss from discontinued operations

 

(7)

 

 

-

Net loss

$

(1,670)

 

$

(1,670)

Loss per share continuing operations – basic and diluted

$

   (0.35)

 

$

  (0.68)

Loss per share discontinued operations – basic and diluted

 

-

 

 

-

Total loss per share - basic and diluted

$

   (0.35)

 

$

(0.68)

Weighted average common shares outstanding - basic and diluted

 

4,687

 

 

2,443

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)

 

Three Months Ended

 

March 31

In thousands

2012

 

 

2011

Net loss

$

(1,670)

 

$

(1,670)

Other comprehensive income:

 

 

 

 

 

Unrealized foreign currency translation gain

 

79

 

 

99

Total other comprehensive income, net of tax

 

79

 

 

99

Comprehensive loss

$

(1,591)

 

$

(1,571)

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

 

 

 

 

 

64

TRANS-LUX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

Three Months Ended

 

March 31

In thousands

 

2012

 

 

2011

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(1,670)

 

$

(1,670)

Loss from discontinued operations

 

7

 

 

-

Loss from continuing operations

 

(1,663)

 

 

(1,670)

Adjustment to reconcile net loss from continuing operations to netcash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

1,031

 

 

1,147

Stock compensation expense

 

4

 

 

6

Gain on debt extinguishment

 

(4)

 

 

-

Change in warrant liabilities

 

(108)

 

 

-

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables

 

(351)

 

 

586

Inventories

 

1

 

 

564

Prepaids and other assets

 

(86)

 

 

(85)

Accounts payable and accrued liabilities

 

1,335

 

 

(14)

Deferred pension liability and other

 

138

 

 

114

Net cash provided by operating activities

 

297

 

 

648

Cash flows from investing activities

 

 

 

 

 

Equipment manufactured for rental

 

(239)

 

 

(218)

Purchases of property, plant and equipment

 

(48)

 

 

(17)

Net cash used in investing activities

 

(287)

 

 

(235)

Cash flows from financing activities

 

 

 

 

 

Payments of long-term debt

 

(429)

 

 

(377)

Net cash used in financing activities

 

(429)

 

 

(377)

Cash flows from discontinued operations

 

 

 

 

 

Cash provided by operating activities of discontinued operations

 

-

 

 

1

Net (decrease) increase in cash and cash equivalents

 

(419)

 

 

37

Cash and cash equivalents at beginning of year

 

1,109

 

 

398

Cash and cash equivalents at end of period

$

   690

 

$

   435

Supplemental disclosure of cash flow information:

 

 

 

 

 

Interest paid

$

   51

 

$

   125

Income taxes paid

 

-

 

 

-

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

 

 

 

 

 



 65

Note 1–  Basis of Presentation

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 and therefore do not include all information and footnote disclosures required under accounting principles generally accepted in the United States of America.  It is suggested that the March 31, 2012 condensed consolidated financial statements 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, 2011.  The Condensed Consolidated Balance Sheet at December 31, 2011 is derived from the December 31, 2011 audited financial statements.

There have been no material changes in our significant accounting policies during the three months ended March 31, 2012 as compared to the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2011.  The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that there were no subsequent events to recognize or disclose in these financial statements.

Recent Accounting Pronouncements: In June 2011, the Financial Accounting Standards Board (“FASB”) issued new authoritative guidance on the presentation of comprehensive income.  The new guidance requires an entity to present the components of net income and other comprehensive income either in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements.  The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in shareholders’ equity.  While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance.  This new guidance is effective for fiscal years beginning after December 15, 2011.  In December 2011, FASB amended this guidance to postpone a requirement to present items that are reclassified from other comprehensive income to net income on the face of the financial statement where the components of net income and other comprehensive income are presented and reinstate previous guidance related to such reclassifications.  The deferral did not affect the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements.  The Company elected early adoption of the requirements to present a separate, consecutive comprehensive income statement in 2011.  Adoption of the new guidance did not have an impact on the Company’s condensed consolidated financial statements, as the guidance impacted presentation only.

In September 2011, FASB issued ASU 2011-08, “Intangibles - Goodwill and Other (Topic 350): Testing Goodwill Impairment” (“ASU 2011-08”).  ASU 2011-08 is intended to simplify goodwill impairment testing by permitting assessment of qualitative factors to determine whether events and circumstances lead to the conclusion that it is necessary to perform the traditional two-step impairment test.  Under this update, we are not required to calculate the fair value of our reporting units unless we conclude that it is more-likely-than-not (likelihood of more than 50%) that the carrying value of our reporting units is greater than the fair value of such units based on our assessment of events and circumstances.  This update is effective for fiscal years beginning after December 15, 2011, with early adoption permitted.  We plan to adopt the provisions of this update at the beginning of our 2012 fourth quarter, which has historically been the time at which we assessed the potential impairment of our goodwill and other indefinite lived intangible assets.  The adoption of ASU 2011-08 is not expected to have a material impact on the Company’s condensed consolidated financial statements.

Reclassifications: Certain reclassifications of prior years amounts have been made to conform to the current year presentation.

66



Note 2 - Plan of Restructuring

The Company’s Board of Directors approved a comprehensive restructuring plan which included offers to the holders of the 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) to receive $225, without accrued interest, plus 250 shares of the Company’s Common Stock for each $1,000 Note exchanged and to the holders of the 9½% Subordinated debentures due 2012 (the “Debentures”) to receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lender under the Credit Agreement, among other senior claims.  $8,976,000 principal amount of the Notes and $718,000 principal amount of the Debentures were exchanged.  The Company issued 2,244,000 shares of Common Stock in exchange for the Notes, which have not been registered under the Securities Exchange Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

As part of the restructuring plan, on November 14, 2011 the Company completed the sale of an aggregate of $8.3 million of securities (the “Offering”) consisting of 416,500 shares of the Company’s Series A Convertible Preferred Stock, par value $1.00 per share (the “Preferred Stock”) having a stated value of $20.00 per share and convertible into 50 shares of the Company’s Common Stock, par value $1.00 per share (or an aggregate of 20,825,000 shares of Common Stock) and 4,165,000 one-year warrants (the “A Warrants”).  These securities were issued at a purchase price of $20,000 per unit (the “Unit”).  Each Unit consists of 1,000 shares of Preferred Stock, which are convertible into 50,000 shares of Common Stock and 10,000 A Warrants.  Each A Warrant entitles the holder to purchase one share of the Company’s Common Stock and a three-year warrant (the “B Warrants”), at an exercise price of $1.00 per share (subject to adjustment to $0.20 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).  Each B Warrant shall entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $1.00 per share (subject to adjustment to $0.50 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).

R.F. Lafferty & Co., Inc. (the “Placement Agent”), a FINRA registered broker-dealer, was engaged as Placement Agent in connection with the Offering.  The Placement Agent was paid fees based upon a maximum of an $8,000,000 raise.  Such fees consisted of a cash fee in the amount of $200,000, a one-year note for $200,000 at a 4.00% rate of interest and three-year warrants to purchase 24 Units (the “Placement Agent Warrants”).  The A Warrants issuable upon exercise of the Placement Agent Warrants and the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants shall be substantially the same as the A Warrants and B Warrants sold in the Offering, except that they have the following exercise periods: (i) the A Warrants issuable upon exercise of the Placement Agent Warrants shall be exercisable for a period of two years from the date of exercise of the Placement Agent Warrants; and (ii) the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants shall be exercisable for a period equal to the longer of three years from the closing date of the restructuring transaction or one year from the date of exercise of the A Warrants underlying the Placement Agent Warrants.  The Placement Agent Warrants are exercisable at a price of $0.50 per share, and the A Warrants and B Warrants issuable upon exercise of the Placement Agent Warrants will be exercisable at a price of $1.00 per share (subject to adjustment to $0.20 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10) in the case of the A Warrants and $1.00 per share (subject to adjustment to $0.50 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10) in the case of the B Warrants, on the same terms as provided in the A Warrants and B Warrants sold in the Offering.

The net proceeds of the Offering were used to fund the restructuring of the Company’s outstanding debt, which included: (1) a cash settlement to holders of the Notes in the amount of $2,019,600; (2) a cash settlement to holders of the Debentures in the amount of $71,800; (3) a payment on the Company’s outstanding term loan with the senior lender in the amount of $320,833 and (4) a payment of $1.0 million on the Company’s outstanding revolving loan with the senior lender under the Credit Agreement.  The net proceeds of the Offering remaining after the payments to the holders of the Notes and the Debentures and to the senior lender were used to pay the remaining $3.0 million outstanding under the revolving loan with the senior lender under the Credit Agreement and for working capital.

The investors, who own a substantial number of warrants to purchase our Common Stock will have substantial influence over the vote on key matters requiring stockholder approval. As of March 31, 2012, the investors have 8,330,000 warrants to purchase shares of our Common Stock issued in connection with the their investment in the Preferred Stock, which does not include the 2,680,000 warrants held by the Placement Agent and the subscriber in connection with the $650,000 of 4.00% secured notes.

The Company began its restructuring plan in 2010 by reducing operating costs.  The actions included the elimination of approximately 80 positions from our operations and the closing of our Stratford, Connecticut manufacturing facility.  Total restructuring costs to date have been $1.3 million consisting of employee severance pay, facility closing costs representing primarily lease termination and asset write-off costs, and other fees directly related to the restructuring plan.  The March 31, 2012 results include an additional restructuring charge of $10,000 consisting of other fees directly related to the restructuring plan.  The costs associated with the restructuring are included in a separate line item, Restructuring costs, in the Condensed Consolidated Statements of Operations.  We expect that the majority of these costs will be paid over the next 12 months.

The following table shows the amounts expensed and paid for restructuring costs that were incurred during the three months ended March 31, 2012 and the remaining accrued balance of restructuring costs as of March 31, 2012, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

 

 

 

 

Payments and

 

 

Balance

 

 

December 31, 2011

 

 

Provision

 

 

Other Adjustments

 

 

March 31, 2012

Severance costs(1)

$

43

 

$

  -

 

$

24

 

$

19

Other fees

 

30

 

 

10

 

 

-

 

 

40

 

$

73

 

$

10

 

$

24

 

$

59


(1) Represents salaries for employees separated from the Company.

All of the restructuring costs incurred during the three months ended March 31, 2012 and the remaining accrued balance of restructuring costs as of March 31, 2012 relate to the Company’s Digital display lease and maintenance segment.

67

Note 3 – Fair Value

The Company carries its money market funds and cash surrender value of life insurance related to its deferred compensation arrangements at fair value.  The fair value of these instruments is determined using a three-tier fair value hierarchy.  Based on this hierarchy, the Company determined the fair value of its money market funds using quoted market prices, a Level 1 or an observable input, and the cash surrender value of life insurance, a Level 2 based on observable inputs primarily from the counter party.  The Company’s money market funds and the cash surrender value of life insurance had carrying amounts of $10,000 and $70,000 at March 31, 2012, respectively, and $261,000 and $70,000 at December 31, 2011, respectively.  The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short maturities of these items.  The fair value of the Company’s Notes and Debentures, using observable inputs, was $259,000 and $33,000 at March 31, 2012, respectively, and $259,000 and $34,000 at December 31, 2011, respectively.  The fair value of the Company’s remaining long-term debt approximates its carrying value of $3.1 million and $3.5 million at March 31, 2012 and December 31, 2011, respectively.

Note 4 – Inventories

Inventories are stated at the lower of cost or market and consist of the following:

thousands

 

March 31

 

 

December 31

 

 

2012

 

 

2011

Raw materials

$

1,654

 

$

1,826

Work-in-progress

 

481

 

 

449

Finished goods

 

739

 

 

600

 

$

2,874

 

$

2,875

Note 5 – Warrant Liabilities

As part of the Company’s restructuring plan, see Note 2 – Plan of Restructuring, the Company issued 4,165,000 one-year warrants (the “A Warrants”).  Each A Warrant entitles the holder to purchase one share of the Company’s Common Stock and a three-year warrant (the “B Warrants”), at an exercise price of $1.00 per share (subject to adjustment to $0.20 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).  Each B Warrant shall entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $1.00 per share (subject to adjustment to $0.50 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).  The aggregate number of A Warrants and B Warrants the holders are entitled to is 8,330,000.

In connection with the Offering, the Company issued 1,200,000 warrants (the “Placement Agent Warrants”), 240,000 A Warrants issuable upon exercise of the Placement Agent Warrants, and 240,000 B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants.  The aggregate number of Placement Agent Warrants, A Warrants and B Warrants the Placement Agent is entitled to is 1,680,000.

In connection with a private placement of $650,000 of 4.00% notes, see Note 6 – Long-Term Debt, the Company issued 1,000,000 five-year warrants to the subscriber.  Each warrant entitles the subscriber to purchase one share of the Company’s Common Stock at an exercise price of $1.00 per share (subject to adjustment to $0.10 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).

All the warrants include a potential adjustment of the strike price if the Company sells or grants any option or warrant at a price per share less than the strike price of the warrants.  Therefore, the warrants are not considered indexed to the Company’s Common Stock and are accounted for on a liability basis.  The Company recorded a $0.1 million non-cash gain in 2012 related to changes in the value of the warrants issued in the Offering, to the Placement Agent and to the subscriber in connection with the $650,000 of 4.00% secured notes, which is included in a separate line item, Change in warrant liabilities, in the Condensed Consolidated Statements of Operations.

68

Note 6 – Long-Term Debt

As of March 31, 2012, the Company has $1.2 million of 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) which are no longer convertible into common shares; interest is payable semi-annually and the Notes may be redeemed, in whole or in part, at par.  The Company had not remitted the March 1, 2010 and 2011 and September 1, 2010 and 2011 semi-annual interest payments of $417,800 each and the March 1, 2012 semi-annual interest and principal payment of $1.4 million to the trustee.  The non-payments constitute an event of default under the Indenture governing the Notes and 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.  When such notice is received by the Company, no payment shall be made by the Company to the holders or trustee until the earlier of such non-payment event of default is cured or waived or 179 days since receipt by the trustee of notice of such event, unless the holder of Senior Indebtedness has accelerated the due date thereof.  If the holder of Senior Indebtedness accelerates the due date at any time, then no payment may be made until the default is cured or waived.  At March 31, 2012, the total amount outstanding under the Notes is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets.  As part of the Company’s restructuring plan, see Note 2 – Plan of Restructuring, the Company offered the holders of the Notes to receive $225, without accrued interest, plus 250 shares of the Company’s Common Stock for each $1,000 Note exchanged.  The offer expired on October 31, 2011.  $9.0 million principal amount of the Notes were exchanged, leaving $1.2 million outstanding.  The Company continues to consider further exchanges of the Notes on the same terms as previously offered and subsequent to the end of the quarter, $27,000 principal amount of the Notes were exchanged.

As of March 31, 2012, the Company has $0.3 million of 9½% Subordinated debentures due 2012 (the “Debentures”) which were due in annual sinking fund payments of $105,700 beginning in 2009, which payments have not been remitted by the Company, with the remainder due in 2012; interest is payable semi-annually and the Debentures may be redeemed, in whole or in part, at par.  The Company has not remitted the June 1, 2010 and 2011 and December 1, 2010 and 2011 semi-annual interest payments of $50,200 each to the trustee.  The non-payments constitute an event of default under the Indenture governing the Debentures and 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.  During the continuation of any event which, with notice or lapse of time or both, would constitute a default under any agreement under which Senior Indebtedness is issued, if the effect of such default is to cause or permit the holder of Senior Indebtedness to become due prior to its stated maturity, no payment (including any required sinking fund payments) of principal, premium or interest shall be made on the Debentures unless and until such default shall have been remedied, if written notice of such default has been given to the trustee by the Company or the holder of Senior Indebtedness.  The failure to make the sinking fund and interest payments are events of default under the Credit Agreement and no payment can be made to such trustee or the holders at this time as such defaults have not been waived.  At March 31, 2012, the total amount outstanding under the Debentures is classified as Current portion of long-term debt in the Condensed Consolidated Balance Sheets.  As part of the Company’s restructuring plan, see Note 2 – Plan of Restructuring, the Company offered the holders of the Debentures to receive $100, without accrued interest, for each $1,000 Debenture exchanged.  The offer expired on October 31, 2011.  $0.7 million principal amount of the Debentures were exchanged, leaving $0.3 million outstanding.  The Company continues to consider further exchanges of the Debentures on the same terms as previously offered and $5,000 principal amount of the Debentures were exchanged. The Debentures are subordinate to the claims of the holders of the Notes and the Company’s senior lender under the Credit Agreement, among other senior claims.

As part of the Company’s restructuring plan, the Company recorded a $4,000 and $8.8 million gain on debt extinguishment of principal and accrued interest on the Notes and Debentures that were exchanged in the first quarter of 2012 and in the fourth quarter of 2011, respectively.

The Company has a bank Credit Agreement, as amended, which provides for a revolving loan of up to $1.0 million, based on eligible accounts receivable and inventory, at a variable rate of interest of Prime plus 2.00%, (5.25% at March 31, 2012), which matures November 1, 2012.  Subsequent to the end of the quarter, the senior lender reduced the revolving loan from $3.0 million to $1.0 million.As of March 31, 2012, the Company has drawn $0.1 million against the revolving loan facility, of which $0.9 million was available for additional borrowing.  The Credit Agreement requires an annual facility fee on the unused commitment of 0.25%, and requires compliance with certain financial covenants, as defined in the Credit Agreement, which include a minimum tangible net worth ratio of not less than $6.5 million, a loan-to-value ratio of not more than 50% and a $1.0 million quarterly cap on capital expenditures.  As of March 31, 2012, the Company was in compliance with the foregoing financial covenants, but was not in compliance with the senior debt coverage ratio of not less than 1.75 to 1.00 (-6.7 to 1.00  at March 31, 2012), which the senior lender waived subsequent to the end of the quarter.  In addition, the senior lender has waived the defaults on the Notes and the Debentures, but in the event that the holders of the Notes or the Debentures or trustees declare a default and begin to exercise any of their rights or remedies in connection with the non-payment defaults, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  The senior lender has also waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  The amounts outstanding under the Credit Agreement are collateralized by all of the Digital Display Division assets.

On June 17, 2011, the Company entered into a subscription agreement for a private placement consisting of $650,000 of 4.00% secured notes of the Company pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.  In connection with the purchase of these notes, the subscriber received a five-year warrant to purchase 1,000,000 shares of Common Stock of the Company at an exercise price of $1.00 per share (subject to adjustment to $0.10 per share at such time as the Certificate of Incorporation of the Company is amended to reduce the par value of the Common Stock to an amount equal to or less than $0.10).  The financing is collateralized by the land held for sale located in Silver City, New Mexico.  Subsequent to the end of the quarter, the land has been sold and the notes have been satisfied.

The Company has a $552,000 mortgage on its facility located in Des Moines, Iowa at a fixed rate of interest of 6.50% payable in monthly installments, which matures March 1, 2015 and requires a compensating balance of $200,000.

The Company has a $1.8 million mortgage on its real estate rental property located in Santa Fe, New Mexico at a variable rate of interest of Prime, with a floor of 6.75%, which was the interest rate in effect at March 31, 2012, payable in monthly installments, which matures December 12, 2012.


69



Note 7 – 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 have been frozen and, accordingly, no additional benefits are being accrued under the plan.

The following table presents the components of net periodic pension cost:

 

 

Three months ended March 31

In thousands

 

2012

 

 

2011

Interest cost

$

130

 

$

137

Expected return on plan assets

 

(110)

 

 

(99)

Amortization of net actuarial loss

 

121

 

 

87

Net periodic pension cost

$

141

 

$

125


As of March 31, 2012, the Company has recorded a current pension liability of $1.0 million, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets, and a long-term pension liability of $4.9 million, which is included in Deferred pension liability and other in the Condensed Consolidated Balance Sheets.  The minimum required contribution for 2012 is expected to be $1.2 million.

The pension plan asset information included below is presented at fair value.  ASC 820 establishes a framework for measuring fair value and required disclosures about assets and liabilities measured at fair value. The fair values of these assets are determined using a three-tier fair value hierarchy.  Based on this hierarchy, the Company determined the fair value of its money market funds and mutual stock funds using quoted market prices, a Level 1 or an observable input, and the guaranteed investment contracts and equity and index funds, a Level 2 based on observable inputs and quoted prices in markets that are not active.  The Company does not have any Level 3 pension assets, in which such valuation would be based on unobservable measurements and management’s estimates.

The following table presents the pension plan assets by level within the fair value hierarchy as of March 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

thousands

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Guaranteed investment contracts

$

     -

 

$

2,009

 

$

-

 

$

2,009

Mutual stock funds

 

1,062

 

 

-

 

 

-

 

 

1,062

Equity and index funds

 

-

 

 

2,700

 

 

-

 

 

2,700

Money market funds

 

41

 

 

-

 

 

-

 

 

41

Total pension plan assets

$

1,103

 

$

4,709

 

$

-

 

$

5,812

In March 2011 and 2010, the Company submitted to the Internal Revenue Service requests for waivers of the minimum funding standard for its defined benefit plan.  The waiver requests were submitted as a result of the economic climate and the business hardship that the Company was experiencing.  The waivers, if granted, will defer payment of $559,000 and $285,000 of the minimum funding standard for the 2010 and 2009 plan years, respectively.  If the waivers are not granted, the Pension Benefit Guaranty Corporation and the Internal Revenue Service have various enforcement remedies they can implement to protect the participant’s benefits, such as termination of the plan and require the Company to remit the unpaid contributions.  The senior lender has waived the default of non-payment of certain pension plan contributions, but in the event that any government agency takes any enforcement action or otherwise exercises any rights or remedies it may have, this shall constitute a separate and distinct event of default and the senior lender may exercise any and all rights or remedies it may have.  At this time, the Company is expecting to make its required contributions for the 2011 and 2012 plan years; however there is no assurance that the Company will be able to make all payments.  In the event the Company requests waivers to defer payments in an amount greater than or equal to $1.0 million, the Pension Benefit Guaranty Corporation may place a lien on the Company’s assets for the amount owed.

70



Note 8 – Share-Based Compensation

The Company accounts for all share-based payments to employees and directors, including grants of employee stock options, at fair value and expenses the benefit in the Condensed Consolidated Statements of Operations over the service period (generally the vesting period).  The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes pricing valuation model, which requires various assumptions including estimating stock price volatility, expected life of the stock option and risk free interest rate.  The Company applies an estimated forfeiture rate in calculating the period expense.  The Company has not experienced any forfeitures that would need to be taken into consideration in its calculations.

The Company did not issue any stock options during the three months ended March 31, 2012 and 2011.  There are no unrecognized compensation costs related to unvested stock options granted under the Company’s stock option plans.

The following table summarizes the activity of the Company's stock options for the three months ended March 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

 

Exercise

 

Contractual

 

Intrinsic

 

Options

 

Price ($)

 

Term (Yrs)

 

Value ($)

Outstanding at beginning of year

12,000

 

4.99

 

 

 

 

Granted

-

 

-

 

 

 

 

Exercised

-

 

-

 

 

 

 

Terminated

2,500

 

2.17

 

 

 

 

Outstanding at end of period

9,500

 

5.73

 

1.7

 

 

Vested and expected to vest at end of period

9,500

 

5.73

 

1.7

 

-

Exercisable at end of period

9,500

 

5.73

 

1.7

 

-

On February 16, 2010, the Board granted Mr. Jean-Marc (J.M.) Allain, the Company’s President and Chief Executive Officer,50,000 shares of restricted Common Stock from treasury shares which vested 50% after one year and the remaining 50% after two years.  The Company has recorded stock compensation expense over the vesting period and recorded $4,000 of stock compensation expense for the period ended March 31, 2012.


Note 9–  Loss Per Common Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period.  Diluted loss per common share is computed by dividing net loss 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.  At March 31, 2012, outstanding warrants convertible into 11,010,000 shares of Common Stock were excluded from the calculation of diluted earnings per share because their impact would have been anti-dilutive.  At March 31, 2012 and 2011, there were outstanding stock options to purchase 9,500 and 23,000 shares of Common Stock, respectively, which were excluded from the calculation of diluted loss per share because their impact would have been anti-dilutive.


Note 10–  Legal Proceedings and Claims

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 that management believes individually and in the aggregate will not have a material adverse effect on the consolidated financial position or operations of the Company.

Note 11–  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 maker in deciding how to allocate resources and in assessing performance.

The Company evaluates segment performance and allocates resources based upon operating income. The Company’s operations are managed in three reportable business segments.  The Digital Display Division comprises two operating segments: Digital display sales and Digital display lease and maintenance.  Both design and produce large-scale, multi-color, real-time digital displays and LED lighting, which has a line of energy-saving lighting solutions that provide facilities and public infrastructure with “green” lighting solutions that emit less heat, save energy and enable creative designs.  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 display sales segment sells equipment and the Digital display lease and maintenance segment leases and maintains equipment.  The Real estate rentals segment owns and operates an income-producing property.  Segment operating (loss) income is shown after cost of revenues and sales, and general and administrative expenses directly associated with the segment.  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 and therefore are not separately disclosed.  The 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.

Information about the Company’s continuing operations in its three business segments for the three months ended March 31, 2012 and 2011 is as follows:

 

 

 

 

 

 

In thousands

 

2012

 

 

2011

Revenues:

 

 

 

 

 

Digital display sales

$

3,837

 

$

2,848

Digital display lease and maintenance

 

1,768

 

 

2,046

Real estate rentals

 

18

 

 

23

Total revenues

$

5,623

 

$

4,917

Operating (loss) income:

 

 

 

 

 

Digital display sales

$

(1,141)

 

$

(744)

Digital display lease and maintenance

 

216

 

 

180

Real estate rentals

 

(12)

 

 

3

Corporate general and administrative expenses

 

(718)

 

 

(741)

Total operating loss

 

(1,655)

 

 

(1,302)

Interest expense, net

 

(113)

 

 

(361)

Gain on debt extinguishment

 

4

 

 

-

Change in warrant liabilities

 

108

 

 

-

Loss from continuing operations before income taxes

 

(1,656)

 

 

(1,663)

Income tax expense

 

(7)

 

 

(7)

Loss from continuing operations

$

(1,663)

 

$

(1,670)

72

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuances and Distribution.

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions. None of the following expenses are payable by the selling stockholder. All of the amounts shown are estimates, except for the SEC registration fee.

SEC registration fee

 

$

1,167

 

Legal fees and expenses

 

$

35,000

 

Accounting fees and expenses

 

$

10,000

 

Miscellaneous

 

$

5,000

 

 

 

 

 

 

TOTAL

 

$

51,167

 

Item 14.  Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law (“DGCL”) provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the Company , may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.  In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.

The Company's Amended and Restated Certificate of Incorporation provides that directors of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i)(a) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii)(b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii)(c) under Section 174 of the Delaware General Corporation Law,DGCL, relating to prohibited dividends or distributions or the repurchase or redemption of stock, or (iv)(d) for any transaction from which the director derives an improper personal benefit. The Company'sCompany’s Amended and Restated By-laws also contain provisions to indemnify the directors, officers, employees or other agents to the fullest extent permitted by the Delaware General Corporation Law.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons of the Company, pursuant to the foregoing provisions, or otherwise, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

73

DGCL.
 

Item 15.  Recent Sales of Unregistered Securities.

On November 14, 2011

In the Company completed the sale of an aggregate of $8.3 million of securities (the “Offering”) consisting of (i) 416,500 shares of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) having a stated value of $20.00 per share and convertible into fifty (50) shares of the Company’s common stock (or an aggregate of 20,825,000 shares of common stock), and (ii) 4,165,000 one-year warrants (the “A Warrants”).  These securities werepast three years, we have issued at a purchase price of $20,000 per unit (the “Unit”).  Each Unit consisted of 1,000 shares of Series A Preferred Stock (convertible into 50,000 shares of common stock) and 10,000 A Warrants.  Each A Warrant entitles the holder to purchase (a) one share of the Company’s common stock and (b) a three-year warrant (the “B Warrants”), at an exercise price of $0.20 per share.  Each B Warrant shall entitle the holder to purchase one share of the Company’s common stock at an exercise price of $0.50 per share.

R.F. Lafferty & Co., Inc. (the “Placement Agent”), a FINRA registered broker-dealer, was engaged as placement agent in connection with the private placement.  The placement agent was paid fees based upon a maximum of an $8,000,000 raise (and no fees were paid upon the additional $330,000 of gross proceeds raised which brought the total offering to $8,330,000).  Such fees consisted of a cash fee in the amount of $400,000 and warrants (the “Placement Agent Warrants”) to purchase 24 units (the “Placement Agent Units”), each unit consisting of 50,000 shares of common stock and 10,000 A Warrants.  The A Warrants issuable upon exercise of the Placement Agent Warrants (and the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent’s Warrants) are substantially the same as the A Warrants (and B Warrants) sold to the investors in the Offering, except that they have the following exercise periods: (i) the A Warrants issuable upon exercise of the Placement Agent Warrants are exercisable for a period of two (2) years from the date of exercise of the Placement Agent Warrants; and (ii) the B Warrants issuable upon exercise of the A Warrants underlying the Placement Agent Warrants are exercisable for a period equal to the longer of (i) three (3) years from the Closing Date or (ii) one (1) year from the date or exercise of the A Warrants underlying the Placement Agent Warrants.  The Placement Agent Warrants are exercisable at a price of $25,000 per Placement Agent Unit (exercisable in partial Placement Agent Units), and the A Warrants and B Warrants issuable upon exercise of the Placement Agent Warrants have an exercise price of$0.20 per share in the case of the A Warrants and $0.50 per share in the case of the B Warrants.

The securities sold in the private placementthat were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws:

On June 11, 2013, we issued one-year warrants to purchase 7,200 shares of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.  The investors all had prior investment experience, including experience investing in non-listed and non-registeredour common stock to AXIS Capital, Inc. (“AXIS Capital”) at an exercise price of $12.50 per share.  These warrants were issued in connection with our entry into a master agreement for sale and that he or she understood the highly speculative natureassignment of any investmentleases with AXIS Capital, as a result of which we received net proceeds of approximately $887,000.  These warrants expired unexercised on June 11, 2014.
On October 2, 2013, we issued warrants to purchase a total of 42,000 to three of our directors, Salvatore J. Zizza, George W. Schiele and Jean Firstenberg.  The warrants began to vest after one year, have an exercise price of $12.50 per share and will expire on October 2, 2018.  Each of these warrant issuances was approved by stockholders at our 2013 Annual Meeting of Stockholders on October 2, 2013.
On December 2, 2013, we issued a promissory note to Carlisle Investments, Inc. (“Carlisle”) in the stock offered as a prerequisite to the offerees’ participation in the Offering.  The securities shall not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.

In addition to the foregoing, as of November 14, 2011, the Company issued to holders of the Company’s Notes $225 plus 250 shares of the Company’s common stock for each $1,000 Note exchanged.  Pursuant to this transaction, $8,976,000 principal amount of $1,000,000 in exchange for a loan of $1,000,000.  The note bore interest at the Notes were exchanged for an aggregaterate of $2,019,60010% per annum and had a maturity date of June 1, 2014, with a bullet payment of all principal and accrued interest due at such time.  The note was amended and restated on May 29, 2014 to extend the maturity date to July 1, 2014, and was terminated on June 20, 2014 in cash and 2,244,000connection with the purchase of shares of the Company’sour common stock.

stock by Carlisle on such date discussed below.

On June 17, 2011,4, 2014, we issued a promissory note to George W. Schiele in the Company entered into a subscription agreementprincipal amount of $200,000 in exchange for a private placement for which R. F. Lafferty & Co., Inc. acted asloan of $200,000.  The note bore interest at the placement agent, consistingrate of $650,00010% per annum and had a maturity date of 4.00% secured notesJuly 1, 2014, with a bullet payment of all principal and accrued interest due at such time.  The note was terminated on June 20, 2014 in connection with the purchase of shares of our common stock by Mr. Schiele on such date discussed below.

On June 18, 2014, we issued 50,000 shares of our common stock to David Pavlik, President of Trans-Lux Energy Corporation, a subsidiary of the Company, pursuant to Section 4(2)the terms of a Restricted Stock Agreement dated as of May 27, 2014.

On June 20, 2014, we entered into a Securities Purchase Agreement with Carlisle, pursuant to which Carlisle purchased 166,666 shares of our common stock for a purchase price of $1,000,000.  On August 27, 2014, we entered into a First Amendment to Securities Purchase Agreement providing for the issuance of additional shares of our common stock as discussed below.

On June 20, 2014, we entered into a Securities Act, and Rule 506 promulgated thereunder.  InPurchase Agreement with Mr. Schiele, pursuant to which he purchased 33,333 shares of our common stock for a purchase price of $200,000.  On August 27, 2014, we entered into a First Amendment to Securities Purchase Agreement providing for a cash payment to Mr. Schiele of $876.71 in order to compensate him for the interest which had accrued on the promissory note dated December 2, 2013, which was terminated on June 20, 2014 in connection with the purchase of these notes, the subscriber receivedshares of our common stock by Mr. Schiele on such date.

On June 27, 2014, we entered into a five-year warrant (the “Warrant”Securities Purchase Agreement with Retop Industrial (Hong Kong) Limited (“Retop”), pursuant to which we issued to Retop 333,333 shares of our common stock and warrants to purchase 1,000,00033,333 shares of our common stock of the Company at an exercise price of $1.00 (which was reduce to $0.20$8.00 per share, for a purchase price of $2,000,000.  The warrants expire on JulyJune 27, 2016.

On August 27, 2014, we issued to Carlisle 9,178 shares of our common stock in connection with our entry into a First Amendment to Securities Purchase Agreement with Carlisle, in order to compensate Carlisle for the interest which had accrued on the promissory note dated December 2, 2012, upon filing2013, which was terminated on June 20, 2014 in connection with the purchase of shares of our common stock by Carlisle on such date.

On August 27, 2014, we entered into that certain Securities Purchase Agreement with Alan K. Greene, pursuant to which Mr. Greene purchased 8,333 shares of our common stock for a purchase price of $50,000.

On August 27, 2014, we entered into that certain Securities Purchase Agreement with Alberto Shaio, pursuant to which Mr. Shaio purchased 8,333 shares of our common stock for a purchase price of $50,000.

On April 23, 2015, we entered into that certain credit agreement with BFI Capital Fund II, LLC (“BFI Capital Fund”), pursuant to which we may borrow up to $1,500,000 at an interest rate of 12% percent per annum.  The maturity date of the Company’s Amendedloan is May 1, 2016, which may be extended at our option for an additional six months if we are not in default at the time of extension and Restated Certificatehave paid BFI an extension fee of Incorporation).  No underwriting discounts or commissions were paid.

On February 16, 20101% of the Company granted its new President and Chief Executive Officer, Jean-Marc Allain, 50,000then principal balance of the loan.  In connection with the loan, we issued to BFI Capital Fund a warrant to purchase 10,000 shares of our common stock pursuant toat an exercise price of $12.00 per share.  This warrant expires on April 23, 2020.


These issuances and sales were completed in accordance with the exemption underprovided by Section 4(2)4(a)(2) of the Securities Act of 1933 for transactions not involving a public offering.

74

Act.

Item 16.  Exhibits and Financial Statement Schedules.

 (a)           Exhibits.

The exhibits required to thebe filed as part of this registration statement are listed in the Exhibit Index to this registration statementexhibit index attached hereto and are incorporated herein by reference herein.

(b)           Financial Statement Schedules.

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

reference.

Item 17.  Undertakings.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

75

i. If the registrant is relying on Rule 430B:

A. Each prospectus filed by the registrant pursuant to Rule 424(b)(3)shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

B. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.  Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed

incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser, with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

ii. If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(c) The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof.  If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering.
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

76

 
(i) The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Norwalk, StateNew York, state of Connecticut,New York on the 26th day of July, 2012.

August 7, 2015.

TRANS-LUX CORPORATION

By:

/s/ J.M. Allain

By:

Name:

/s/ Robert J. M. Allain

Conologue

Name:

Robert J. Conologue
Title:

Title:Senior Vice President and Chief ExecutiveFinancial Officer


By:

/s/ Todd Dupee
Name:

Todd Dupee
Title:Vice President and Controller

Each person whose signature appears below constitutes and appoints J.M. Allain and Angela D. Toppi his true and lawful attorneys-in-fact and agent with full powers of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, any Amendments thereto and any Registration Statement of the same offering which is effective upon filing pursuant to Rule 462(b) under the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent, each acting alone, full powers and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorney-in-fact and agent, acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

indicated:

SIGNATURE

/s/ J.M. Allain

TITLE

July 26, 2012

DATE

*

J.M. Allain  

President, Chief Executive Officer,  and Director

(principal executive officer)

Chairman of the Board

August 7, 2015
George W. Schiele

     
*
Vice Chairman of the BoardAugust 7, 2015
Salvatore J. Zizza   

/s/ Angela D. Toppi

July 26, 2012

Angela D. Toppi

Executive Vice President, Assistant Secretary, and Chief Financial Officer

(principal financial and accounting officer)

     
*
 Director, President and Chief ExecutiveAugust 7, 2015
J.M. AllainOfficer (Principal Executive Officer)  

/s/ Marco M. Elser

July 26, 2012

Marco M. Elser

Director

     
*
DirectorAugust 7, 2015
Marco Elser   

77

/s/ Jean Fistenberg

July 26, 2012

Jean Firstenberg

Director

     
*
DirectorAugust 7, 2015
Alan K. Greene   

/s/ Richard Nummi

July 26, 2012

Richard Nummi

Director

     
*
 Director, Senior Vice President andAugust 7, 2015
Alberto ShaioChief Operating Officer  

/s/ George W. Schiele

July 26, 2012

George W. Schiele

Director

     
*DirectorAugust 7, 2015
Yaozhong Shi   

/s/ Elliot Sloyer

July 26, 2012

Elliot Sloyer

Director

     
/s/ Robert J. Conologue Senior Vice President andAugust 7, 2015
Robert J. ConologueChief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)  


*By:

/s/ SalvatoreRobert J. Zizza

July 26, 2012

Salvatore J. Zizza

Director

Conologue
 Robert J. Conologue
 Attorney-in-fact



EXHIBIT INDEX


Exhibit No.

Description

3.1

Amended and Restated Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 of a Current Report on Form 8-K filed with the SEC on July 2, 2012).

3.2

Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.13.2 of a Current Report on Form 8-K filed May 4,with the SEC on March 9, 2012).

4.1

3.3*

Form of Certificate of Designations of Series B Convertible Preferred Stock.
4.1
Indenture dated as of December 1, 1994 (incorporated(form of said indenture is incorporated by reference to Exhibit 6 of Schedule 13E-4 Amendment No. 2 dated December 23, 1994).

4.2

Form of

Indenture dated as of March 1, 2004 (incorporated(form of said indenture is incorporated by reference to Exhibit 12(d) of Schedule TO dated March 2, 2004).

4.4

4.3*

Form of Class A WarrantSubscription Rights Certificate.
4.4+
Form of Certificate for Series B Convertible Preferred Stock.
4.5
Warrants issued to Retop Industrial (Hong Kong) Limited, (incorporated by reference to Exhibit 3.3 to4.01 of Current Report on Form 10-Q for8-K filed with the period ended September 30, 2011)SEC on June 27, 2014).

4.5

5.1+

Opinion of Olshan Frome Wolosky LLP.
8.1*
Opinion of Olshan Frome Wolosky LLP as to certain tax matters.
10.1
Form of Class B Warrant (incorporatedIndemnity Agreement - Directors (form of said agreement is incorporated by reference to Exhibit 3.4 to10.1 of Form 10-Q forS-2 filed with the period ended September 30, 2011)SEC on November 4, 1996).

5.1

10.2

Opinion of Sichenzia Ross Friedman Ference LLP (filed herewith).

10.1

Form of Indemnity Agreement –- Officers (incorporated(form of said agreement is incorporated by reference to Exhibit 10.2 of Registration No. 333-15481)Form S-2 filed with the SEC on November 4, 1996).

10.2

10.3

Form of Indemnity Agreement – Directors (incorporated by reference to Exhibit 10.1 of Registration No. 333-15481).

10.3

Amended and Restated Pension Plan dated January 1, 2011, (incorporated by reference to Exhibit 10.3 toof Form 10-K for the year ended December 31, 2010).

10.4

Supplemental Executive Retirement Plan with Michael R. Mulcahy dated January 1, 2009 (incorporated by reference to Exhibit 10.1 of a Current Report on Form 8-K filed with the SEC on January 6, 2009).

10.5

1989 Non-Employee Director Stock Option Plan, as amended (incorporated by reference to Exhibit 10.4(a) of Form 10-K for the year ended December 31, 1999).

10.6

1995 Stock Option Plan, as amended (incorporated by reference to Proxy Statement dated April 7, 2000).

10.7

Amended and Restated Commercial Loan and Security

Employment Agreement with People's BankJean-Marc Allain dated December 23, 2004 (incorporated by reference to Exhibit 10(a) of Form 8-K filed December 28, 2004). Amendment No. 1 dated as of December 31, 2005 (incorporated by reference to Exhibit 10.2 of Form 10-Q for the quarter ended March 31, 2006). Letter amendments dated as of September 30, 2006 and December 31, 2006February 15, 2015 (incorporated by reference to Exhibit 10.5 of Form 10-K for the year ended December 31, 2006)2014). Amendment No. 5
10.6
Employment Agreement with David Pavlik dated August 9, 2007May 27, 2014 (incorporated by reference to Exhibit 10.14.02 of Form 10-Q for the quarter ended June 30, 2007). Amendment No. 9 dated July 15, 2008 (incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 2008). Amendment No. 13 dated September 4, 2009 and Amendment No. 14 dated April 2, 2010, (incorporated by reference to Exhibit 10.6 of Form 10-K for the year ended December 31, 2009). Amendment No. 15 dated as of August 1, 2010 (incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended June 30, 2010) Amendment No. 16 dated May 1, 2011 2010 (incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended March 31, 2011), Amendment No. 18 to the Amended and Restated Commercial Loan and Security Agreement with People’s United Bank dated as of November 1, 2011 (incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter ended September 30, 2011).  Amendment No. 19 dated as of December 31, 2011 (incorporated by reference to Exhibit 10.6 to Form 10-K for the year ended December 31, 2011).

10.8

Employment Agreement with Jean-Marc Allain dated February 16, 2012 (incorporated by reference to Exhibit 10.2 ofa Current Report on Form 8-K filed March 12, 2012)with the SEC on June 3, 2014).

10.9

10.7

Restricted Stock Agreement with Jean-Marc Allain dated February 16, 2010 (incorporated by reference to Exhibit 10.2 of Form 8-K filed February 19, 2010).

10.10

Form of Subscription Agreement dated as of September 28, 2011 (incorporated by reference to the Exhibit 3.1 of Form 10-Q for the period ended September 30, 2011).

10.11

Subscription Agreement, dated June 17, 2011, between the Company and Henry Hackel (incorporated by reference to Exhibit 10.1 to Form 8-K filed June 23, 2011).

10.12

Common Stock Purchase Warrant, dated June 17, 2011 (incorporated by reference to Exhibit 10.2 to Form 8-K filed June 23, 2011).

10.13

Trans-Lux Corporation 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 of a Current Report on Form 8-K filed with the SEC on July 2, 2012).

21

10.8

Master Agreement for Sale and Assignment of Leases with AXIS Capital, Inc. (incorporated by reference to Exhibit 4.01 of a Current Report on Form 8-K filed with the SEC on June 14, 2013).
10.9
Securities Purchase Agreement with Carlisle Investments Inc. (incorporated by reference to Exhibit 4.01 of a Current Report on Form 8-K filed with the SEC on June 23, 2014) and the amendment thereto (incorporated by reference to Exhibit 4.01 of a Current Report on Form 8-K filed with the SEC on September 2, 2014).
10.10
Securities Purchase Agreement with George W. Schiele (incorporated by reference to Exhibit 4.02 of a Current Report on Form 8-K filed with the SEC on June 23, 2014) and the amendment thereto (incorporated by reference to Exhibit 4.02 of a Current Report on Form 8-K filed with the SEC on September 2, 2014).
10.11
Securities Purchase Agreement with Retop Industrial (Hong Kong) Limited (incorporated by reference to Exhibit 99.1 of a Current Report on Form 8-K filed with the SEC on June 30, 2014).
10.12
Securities Purchase Agreement with Alan K. Greene (incorporated by reference to Exhibit 4.03 of a Current Report on Form 8-K filed with the SEC on September 2, 2014).
10.13
Securities Purchase Agreement with Alberto Shaio (incorporated by reference to Exhibit 4.04 of a Current Report on Form 8-K filed with the SEC on September 2, 2014).
10.14
Credit Agreement with BFI Capital Fund II, LLC, dated as of April 23, 2015 (incorporated by reference to Exhibit 99.1 of a Current Report on Current Report on Form 8-K filed with the SEC on April 29, 2015).
21
List of Subsidiaries (incorporated by reference to Exhibit 21 of Annual Report on Form 10-K for the year ended December 31, 2011)2014).

23.1

23.1**

Consent of BDO USA, LLP (filed herewith).

LLP.

23.2

23.2+

Consent of Sichenzia Ross Friedman FerenceOlshan Frome Wolosky LLP (included in Exhibit 5.1).

24.1*
Powers of Attorney.

101.INS

99.1*

XBRL Instance Document

Form of Instructions for Use of Subscription Rights Certificates.

101.SCH

99.2*

XBRL Extension Taxonomy Extension Schema Document

Form of Letter to Registered Holders of Common Shares.

101.CAL

99.3*

XBRL Taxonomy Extension Calculation Linkbase Document

Form of Letter to Brokers and Other Nominee Holders.

101.DEF

99.4*

XBRL Taxonomy Extension Definition Linkbase Document

Form of Letter to Clients of Brokers and Other Nominee Holders.

101.LAB

99.5*

XBRL Taxonomy Extension Labels Linkbase Document

Form of Beneficial Owner Election Form.

101.PRE

99.6*

XBRL Taxonomy Extension Presentation Linkbase Document

Form of Nominee Holder Certification.
99.7*Form of Notice of Guaranteed Delivery.

79

___________
*Previously filed.
+To be filed by amendment.
**Filed herewith.