Lendway (LDWY) 10-Q 12 Nov 20 2020 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 09, 2020
Document and Entity Information
Entity Registrant Name	INSIGNIA SYSTEMS INC/MN
Entity Central Index Key	0000875355
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	MN
Entity File Number	1-13471
Entity Common Stock, Shares Outstanding		12,235,140
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3

CONDENSED BALANCE SHEETS

CONDENSED BALANCE SHEETS - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Current Assets:
Cash and cash equivalents	$ 7,066,000	$ 7,510,000
Accounts receivable, net	5,538,000	7,559,000
Inventories	140,000	322,000
Income tax receivable	247,000	126,000
Prepaid expenses and other	523,000	375,000
Total Current Assets	13,514,000	15,892,000
Other Assets:
Property and equipment, net	369,000	549,000
Operating lease right-of-use assets	73,000	177,000
Other, net	107,000	372,000
Total Assets	14,063,000	16,990,000
Current Liabilities:
Accounts payable	2,276,000	3,036,000
Accrued liabilities:
Compensation	436,000	539,000
Other	664,000	570,000
Current portion of long-term debt	640,000	0
Current portion of operating lease liabilities	111,000	212,000
Deferred revenue	316,000	140,000
Total Current Liabilities	4,443,000	4,497,000
Long-Term Liabilities:
Accrued income taxes	668,000	643,000
Long-term debt	414,000	0
Operating lease liabilities	0	56,000
Total Long-Term Liabilities	1,082,000	699,000
Commitments and Contingencies
Shareholders' Equity:
Common stock, par value $.01: Authorized shares - 40,000,000 Issued and outstanding shares - 12,235,000 at September 30, 2020 and 12,074,000 at December 31, 2019	122,000	121,000
Additional paid-in capital	16,106,000	15,934,000
Retained earnings (Accumulated deficit)	(7,690,000)	(4,261,000)
Total Shareholders' Equity	8,538,000	11,794,000
Total Liabilities and Shareholders' Equity	$ 14,063,000	$ 16,990,000

CONDENSED BALANCE SHEETS (Paren

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value	$ .01	$ .01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	12,235,000	12,074,000
Common stock, shares outstanding	12,235,000	12,074,000

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total Net Sales	$ 4,491,000	$ 4,654,000	$ 12,561,000	$ 15,636,000
Cost of services	3,764,000	3,514,000	9,953,000	11,532,000
Cost of goods sold	112,000	214,000	492,000	939,000
Impairment loss	0	0	159,000	0
Total Cost of Sales	3,876,000	3,728,000	10,604,000	12,471,000
Gross Profit	615,000	926,000	1,957,000	3,165,000
Operating Expenses:
Selling	585,000	573,000	2,232,000	2,004,000
Marketing	192,000	559,000	800,000	1,809,000
General and administrative	825,000	865,000	2,798,000	2,443,000
Gain on sale of business	(195,000)	0	(195,000)	0
Total Operating Expenses	1,407,000	1,997,000	5,635,000	6,256,000
Operating Loss	(792,000)	(1,071,000)	(3,678,000)	(3,091,000)
Other income	6,000	46,000	46,000	113,000
Loss Before Taxes	(786,000)	(1,025,000)	(3,632,000)	(2,978,000)
Income tax expense (benefit)	8,000	(47,000)	(203,000)	(416,000)
Net Loss	$ (794,000)	$ (978,000)	$ (3,429,000)	$ (2,562,000)
Net loss per share:
Basic	$ (0.07)	$ (0.08)	$ (0.28)	$ (0.22)
Diluted	$ (0.07)	$ (0.08)	$ (0.28)	$ (0.22)
Shares used in calculation of net loss per share:
Basic	12,179,000	11,986,000	12,108,000	11,911,000
Diluted	12,179,000	11,986,000	12,108,000	11,911,000
Services
Total Net Sales	$ 4,373,000	$ 4,400,000	$ 11,983,000	$ 14,474,000
Products
Total Net Sales	$ 118,000	$ 254,000	$ 578,000	$ 1,162,000

STATEMENTS OF SHAREHOLDERS' EQU

STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Total
Beginning balance, shares at Dec. 31, 2018	11,840,000
Beginning balance at Dec. 31, 2018	$ 118,000	$ 15,442,000	$ 760,000	$ 16,320,000
Issuance of common stock, net, shares	107,000
Issuance of common stock, net	$ 1,000	107,000		108,000
Value of stock-based compensation		138,000		138,000
Net loss			(1,096,000)	(1,096,000)
Ending balance, shares at Mar. 31, 2019	11,947,000
Ending balance at Mar. 31, 2019	$ 119,000	15,687,000	(336,000)	15,470,000
Beginning balance, shares at Dec. 31, 2018	11,840,000
Beginning balance at Dec. 31, 2018	$ 118,000	15,442,000	760,000	16,320,000
Repurchase of common stock upon vesting of restricted stock units, amount				(35,000)
Net loss				(2,562,000)
Ending balance, shares at Sep. 30, 2019	12,074,000
Ending balance at Sep. 30, 2019	$ 121,000	15,890,000	(1,802,000)	14,209,000
Beginning balance, shares at Mar. 31, 2019	11,947,000
Beginning balance at Mar. 31, 2019	$ 119,000	15,687,000	(336,000)	15,470,000
Value of stock-based compensation		139,000		139,000
Repurchase of common stock upon vesting of restricted stock units, shares	98,000
Repurchase of common stock upon vesting of restricted stock units, amount	$ 1,000	(10,000)		(9,000)
Net loss			(488,000)	(488,000)
Ending balance, shares at Jun. 30, 2019	12,045,000
Ending balance at Jun. 30, 2019	$ 120,000	15,816,000	(824,000)	15,112,000
Value of stock-based compensation		101,000		101,000
Repurchase of common stock upon vesting of restricted stock units, shares	29,000
Repurchase of common stock upon vesting of restricted stock units, amount	$ 1,000	(27,000)		(26,000)
Net loss			(978,000)	(978,000)
Ending balance, shares at Sep. 30, 2019	12,074,000
Ending balance at Sep. 30, 2019	$ 121,000	15,890,000	(1,802,000)	14,209,000
Beginning balance, shares at Dec. 31, 2019	12,074,000
Beginning balance at Dec. 31, 2019	$ 121,000	15,934,000	(4,261,000)	11,794,000
Issuance of common stock, net, shares	33,000
Issuance of common stock, net		20,000		20,000
Value of stock-based compensation		49,000		49,000
Net loss			(863,000)	(863,000)
Ending balance, shares at Mar. 31, 2020	12,107,000
Ending balance at Mar. 31, 2020	$ 121,000	16,003,000	(5,124,000)	11,000,000
Beginning balance, shares at Dec. 31, 2019	12,074,000
Beginning balance at Dec. 31, 2019	$ 121,000	15,934,000	(4,261,000)	11,794,000
Repurchase of common stock upon vesting of restricted stock units, amount				(1,000)
Net loss				(3,429,000)
Ending balance, shares at Sep. 30, 2020	12,235,000
Ending balance at Sep. 30, 2020	$ 122,000	16,106,000	(7,690,000)	8,538,000
Beginning balance, shares at Mar. 31, 2020	12,107,000
Beginning balance at Mar. 31, 2020	$ 121,000	16,003,000	(5,124,000)	11,000,000
Value of stock-based compensation		59,000		59,000
Repurchase of common stock upon vesting of restricted stock units, shares	29,000
Repurchase of common stock upon vesting of restricted stock units, amount	$ 0			0
Net loss			(1,772,000)	(1,772,000)
Ending balance, shares at Jun. 30, 2020	12,136,000
Ending balance at Jun. 30, 2020	$ 121,000	16,062,000	(6,896,000)	9,287,000
Value of stock-based compensation		37,000		37,000
Repurchase of common stock upon vesting of restricted stock units, shares	88,000
Repurchase of common stock upon vesting of restricted stock units, amount	$ 1,000	(2,000)		(1,000)
Common stock issued for accrued liabilities, shares	11,000
Common stock issued for accrued liabilities, amount	$ 0	9,000		9,000
Net loss			(794,000)	(794,000)
Ending balance, shares at Sep. 30, 2020	12,235,000
Ending balance at Sep. 30, 2020	$ 122,000	$ 16,106,000	$ (7,690,000)	$ 8,538,000

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating Activities:
Net loss	$ (3,429,000)	$ (2,562,000)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	386,000	1,192,000
Impairment loss	159,000	0
Gain on sale of business	(195,000)	0
Changes in allowance for doubtful accounts	11,000	1,000
Deferred income tax benefit	0	(443,000)
Stock-based compensation expense	145,000	378,000
Changes in operating assets and liabilities:
Accounts receivable	2,085,000	2,324,000
Inventories	80,000	10,000
Income tax receivable	(121,000)	(2,000)
Prepaid expenses and other	(148,000)	(17,000)
Accounts payable	(768,000)	(1,039,000)
Accrued liabilities	(53,000)	(2,031,000)
Income tax payable	25,000	23,000
Deferred revenue	176,000	88,000
Net cash provided by (used in) operating activities	(1,647,000)	(2,078,000)
Investing Activities:
Purchases of property and equipment	(56,000)	(361,000)
Purchase of investments	0	(4,981,000)
Proceeds from sale of custom print business	200,000	0
Proceeds from sale of held to maturity investments	0	4,981,000
Net cash used in investing activities	144,000	(361,000)
Financing Activities:
Cash dividends paid ($0.70 per share)	(14,000)	(14,000)
Proceeds from issuance of common stock	20,000	108,000
Repurchase of common stock upon vesting of restricted stock awards	(1,000)	(35,000)
Proceeds from PPP loan	1,054,000	0
Net cash provided by financing activities	1,059,000	59,000
Increase (decrease) in cash and cash equivalents	(444,000)	(2,380,000)
Cash and cash equivalents at beginning of period	7,510,000	10,160,000
Cash and cash equivalents at end of period	7,066,000	7,780,000
Supplemental disclosures for cash flow information:
Cash paid during the period for income taxes	(107,000)	6,000
Non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable	22,000	0
Common stock issued for accrued liabilities	9,000	0
Receivable recorded from sale of custom print business	$ 100,000	$ 0

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Description of Business . Sale of our Custom Print Business. Basis of Presentation . Inventories . September 30, December 31, 2020 2019 Raw materials $ 32,000 $ 47,000 Work-in-process 8,000 16,000 Finished goods 100,000 259,000 $ 140,000 $ 322,000 Property and Equipment . September 30, December 31, 2020 2019 Property and Equipment: Production tooling, machinery and equipment $ 3,392,000 $ 3,685,000 Office furniture and fixtures 425,000 393,000 Computer equipment and software 1,469,000 1,426,000 5,286,000 5,504,000 Accumulated depreciation and amortization (4,917,000 ) (4,955,000 ) Net Property and Equipment $ 369,000 $ 549,000 Depreciation expense was approximately $85,000 and $255,000 in the three and nine months ended September 30, 2020, respectively, and was $300,000 and $740,000 in the three and nine months ended September 30, 2019, respectively. Stock-Based Compensation During the nine months ended September 30, 2020 and 2019, no equity awards were issued by the Company. In June 2019, non-employee members of the Board of Directors received restricted stock grants totaling 70,755 shares pursuant to the 2018 Equity Incentive Plan (the “2018 Plan”). The shares underlying the awards were assigned a value of $1.06 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $75,000. The awards granted to directors in 2019 vested in full on the day immediately preceding the date of the 2020 annual shareholder meeting, July 29, 2020. In July 2020, the Company issued 11,053 shares of common stock in settlement of $9,000 of total deferred fees as a result of a non-employee director’s departure from the Board. In June 2019, the Company issued 8,370 shares of common stock in settlement of $9,000 of total deferred fees as a result of a non-employee director’s departure from the Board. The Company’s non-employee directors are eligible to participate in a director deferred compensation plan, which allows a director to make voluntary deferrals of up to 100% of their annual cash retainers relating to Board and committee service. The Company estimated the fair value of stock-based awards granted during the nine months ended September 30, 2020 under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 year, expected volatility of 58.5%, dividend yield of 0% and risk-free interest rate of 1.56%. Total stock-based compensation expense recorded for the three and nine months ended September 30, 2020 was $37,000 and $145,000, respectively, and for the three and nine months ended September 30, 2019 was $101,000 and $378,000, respectively. Net Loss per Share . Due to the net loss incurred during the three and nine months ended September 30, 2020 and 2019 all outstanding stock options were anti-dilutive for that period. Weighted average common shares outstanding for the three and nine months ended September 30, 2020 and 2019 were as follows: Three Months Ended Nine Months Ended September 30 September 30 2020 2019 2020 2019 Denominator for basic net loss per share - weighted average shares 12,179,000 11,986,000 12,108,000 11,911,000 Effect of dilutive securities: Stock options and restricted stock units — — — — Denominator for diluted net loss per share - weighted average shares 12,179,000 11,986,000 12,108,000 11,911,000

Investments

Investments	9 Months Ended
	Sep. 30, 2020
Investments [Abstract]
Investments	As of September 30, 2020, the Company did not have any investments. During 2019, the Company had invested its excess cash in debt securities, with an average maturity of approximately six months, and the debt securities were classified as held to maturity within current assets in accordance with Accounting Standards Codification (“ASC”) 320-10, “Investments – Debt and Equity Securities.”

Revenue Recognition

Revenue Recognition	9 Months Ended
	Sep. 30, 2020
Revenue Recognition [Abstract]
Revenue Recognition	Revenue from Contracts with Customers Performance Obligations Taxes collected from customers and remitted to governmental authorities are excluded from revenue on the net basis of accounting. The Company includes shipping and handling fees in revenues. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. The majority of the Company’s accounts receivable is due from companies in the CPG industry. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are due within 30-150 days and are stated at amounts due from customers, net of an allowance for doubtful accounts. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The following is a description of the Company’s performance obligations included in its primary revenue streams and the timing or method of revenue recognition for each: In-Store Signage Solution Services. Each of the individual activities under the Company’s services, including production activities, are inputs to an integrated sign display service. Customers receive and consume the benefits from the promotional displays over the duration of the contracted display cycle. Additionally, the display of the signs does not have an alternative use to the Company and the Company has an enforceable right to payment for services performed to date. As a result, the Company recognizes the transaction price for its Point-Of-Purchase Services (POPS®) service performance obligations as revenue over time. Given the nature of the Company’s performance obligations is to provide a display service over the duration of a specified period or periods, the Company recognizes revenue on a straight-line basis over the display service period as it best reflects the timing of transfer of its POPS services . Other Service Revenues Products . Disaggregation of Revenue In the following table, revenue is disaggregated by major revenue stream and timing of revenue recognition. Three months ended September 30, 2020 Nine months ended September 30, 2020 Services Revenues Products Revenue Total Revenue Services Revenues Products Revenue Total Revenue Timing of revenue recognition: Products and services transferred over time $ 2,031,000 $ - $ 2,031,000 $ 7,392,000 $ - $ 7,392,000 Products and services transferred at a point in time 2,342,000 118,000 2,460,000 4,591,000 578,000 5,169,000 Total $ 4,373,000 $ 118,000 $ 4,491,000 $ 11,983,000 $ 578,000 $ 12,561,000 Three months ended September 30, 2019 Nine months ended September 30, 2019 Services Revenues Products Revenue Total Revenue Services Revenues Products Revenue Total Revenue Timing of revenue recognition: Products and services transferred over time $ 3,401,000 $ - $ 3,401,000 $ 11,099,000 $ - $ 11,099,000 Products and services transferred at a point in time 999,000 254,000 1,253,000 3,375,000 1,162,000 4,537,000 Total $ 4,400,000 $ 254,000 $ 4,654,000 $ 14,474,000 $ 1,162,000 $ 15,636,000 Contract Costs Sales commissions that are paid to internal or external sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. The Company is applying the practical expedient in ASC 340-40-25-4 that allows the incremental costs of obtaining a contract to be recorded as an expense when incurred when the amortization period of the asset that would have otherwise been recognized is one year or less. These costs are included in selling expenses. Deferred Revenue Significant changes in deferred revenue during the period are as follows: Balance at December 31, 2019 $ 140,000 Reclassification of beginning deferred revenue to revenue, as a result of performance obligations satisfied (140,000 ) Cash received in advance and not recognized as revenue 316,000 Balance at September 30, 2020 $ 316,000 Transaction Price Allocated to Remaining Performance Obligations The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, which reflect the majority of its performance obligations. This practical expedient is being applied to arrangements for certain incomplete services and unshipped custom signage materials. At September 30, 2020 there were no contracts with an expected duration of greater than one year.

Selling Arrangement

Selling Arrangement	9 Months Ended
	Sep. 30, 2020
Selling Arrangement
Selling Arrangement

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statements and tax basis of assets and liabilities given the provisions of enacted tax laws. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustment to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria. At September 30, 2020 and December 31, 2019, the Company had a valuation allowance of approximately $1,471,000 and $848,000, respectively, against its entire deferred tax asset because the Company does not believe it is more likely than not that it will realize its deferred tax asset. As of September 30, 2020, and December 31, 2019, the Company had unrecognized tax benefits totaling $668,000 and $643,000, respectively, including interest, which relates to state nexus issues. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $668,000. Due to the current statute of limitations regarding the unrecognized tax benefits, the unrecognized tax benefits and associated interest are not expected to change significantly in 2020. In March 2020, Congress passed the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The CARES Act, among other provisions, allows for companies to carry back federal net operating losses (“NOLs”) generated in 2018, 2019 and 2020 for up to five years for refunds of federal taxes paid. This provision created an opportunity for the Company to utilize NOLs not previously expected to be utilized. Thus, the Company has reversed approximately $215,000 of its valuation allowance against the NOLs in its deferred tax assets which the Company will carry back for a refund of federal taxes paid. As the Company expects to receive the tax refund from the ability to carry back the NOLs within the next 12 months, this discrete benefit has been recorded within income taxes receivable on the balance sheet. In addition, to the $215,000 recognized, an additional $17,000 was also included as a discrete tax benefit for the quarter and included in income taxes receivable related to the NOL carry back due to differences in the federal tax rate utilized for the deferred tax asset compared to the rates in effect for the years in which the NOL is being carried back.

Concentrations

Concentrations	9 Months Ended
	Sep. 30, 2020
Risks and Uncertainties [Abstract]
Concentrations	Although there are a number of customers that the Company sells to, the loss of a major customer could adversely affect operating results. Additionally, the loss of a major retailer from the Company’s retail network could further adversely affect operating results.

Legal Proceedings

Legal Proceedings	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
Legal Proceedings	In August 2019, News America filed an answer and counterclaim. In October 2019, News America moved for a judgment on the pleadings. Management believes that the counterclaim is without merit, and the Company filed a response brief on November 11, 2019. The Company also moved to dismiss the counterclaim against us. The court heard oral arguments from both parties on January 14, 2020, subsequently denied both motions. On July 10, 2020 the parties cross-moved for summary judgment on the counterclaim. Briefing on the motions is complete, and a decision on the motions for summary judgement on the counterclaim is pending from the Court. Discovery is underway and trial has been scheduled for December 2021. Due to the early nature of these proceedings, the Company is unable to determine the likelihood of an unfavorable outcome or estimate any potential resulting liability at this time.

Loans

Loans	9 Months Ended
	Sep. 30, 2020
Loans Payable [Abstract]
Loans	In accordance with the requirements of the CARES Act, the Company expects to use the proceeds from the loan exclusively for qualified expenses under the PPP, including payroll costs, rent and utility costs, as further detailed in the CARES Act and applicable guidance issued by the SBA. Interest is accruing on the outstanding balance of the Note at a rate of 1.00% per annum. However, the Company expects to apply for forgiveness of up to all amounts due under the Note, in an amount equal to the sum of qualified expenses under the PPP during the twenty-four weeks following disbursement. Notwithstanding the Company’s eligibility to apply for forgiveness, no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under the Note. Subject to any forgiveness granted under the PPP, the Note is scheduled to mature on April 22, 2022 and requires 18 equal monthly payments of principal and interest. The Note may be prepaid at any time prior to maturity with no prepayment penalties. The Note provides for customary events of default, including, among others, those relating to failure to make payments, bankruptcy, breaches of representations, significant changes in ownership, and material adverse effects. The Company’s obligations under the Note are not secured by any collateral.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Description of Business	Insignia Systems, Inc. (the “Company”) is a leading provider of in-store and digital advertising solutions to consumer-packaged goods (“CPG”) manufacturers, retailers, shopper marketing agencies and brokerages. The Company operates in a single reportable segment. The Company’s leadership and employees have extensive industry knowledge with direct experience in both CPG manufacturers and retailers. The Company provides marketing solutions to CPG manufacturers spanning from some of the largest multinationals to new and emerging brands.
Sale of our Custom Print Business	In August 2020 we sold our custom print business to an existing strategic partner. This divestiture has allowed us to focus on our core business, selling product solutions to CPGs. The custom print business was not material to our operations as a whole and did not represent a strategic shift and therefore is not presented as a discontinued operation. The sale price was $300,000 resulting in a gain on the sale of $195,000. We received $200,000 of cash and recorded a short-term receivable of $75,000 and a long-term receivable of $25,000. In addition to the initial sale price, we are eligible to receive up to $100,000 in additional payments to the extent net sales by the custom print business during the first year after closing exceeds a threshold amount. Due to the contingent nature of the earn-out no gain has been recognized as part of the recorded gain.
Basis of Presentation	The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. They do not include all information and footnotes required by U.S. GAAP for complete financial statements. However, except as described herein, there has been no material change in the information disclosed in the notes to financial statements included in the Company’s financial statements as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
Inventories	Inventories are primarily comprised of sign cards and hardware. Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method, and consisted of the following as of the dates indicated: September 30, December 31, 2020 2019 Raw materials $ 32,000 $ 47,000 Work-in-process 8,000 16,000 Finished goods 100,000 259,000 $ 140,000 $ 322,000
Property and Equipment	September 30, December 31, 2020 2019 Property and Equipment: Production tooling, machinery and equipment $ 3,392,000 $ 3,685,000 Office furniture and fixtures 425,000 393,000 Computer equipment and software 1,469,000 1,426,000 5,286,000 5,504,000 Accumulated depreciation and amortization (4,917,000 ) (4,955,000 ) Net Property and Equipment $ 369,000 $ 549,000 Depreciation expense was approximately $85,000 and $255,000 in the three and nine months ended September 30, 2020, respectively, and was $300,000 and $740,000 in the three and nine months ended September 30, 2019, respectively.
Stock-Based Compensation	The Company measures and recognizes compensation expense for all stock-based payments at fair value. Restricted stock units and awards are valued at the closing market price of the Company’s stock as of the date of the grant. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. During the nine months ended September 30, 2020 and 2019, no equity awards were issued by the Company. In June 2019, non-employee members of the Board of Directors received restricted stock grants totaling 70,755 shares pursuant to the 2018 Equity Incentive Plan (the “2018 Plan”). The shares underlying the awards were assigned a value of $1.06 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $75,000. The awards granted to directors in 2019 vested in full on the day immediately preceding the date of the 2020 annual shareholder meeting, July 29, 2020. In July 2020, the Company issued 11,053 shares of common stock in settlement of $9,000 of total deferred fees as a result of a non-employee director’s departure from the Board. In June 2019, the Company issued 8,370 shares of common stock in settlement of $9,000 of total deferred fees as a result of a non-employee director’s departure from the Board. The Company’s non-employee directors are eligible to participate in a director deferred compensation plan, which allows a director to make voluntary deferrals of up to 100% of their annual cash retainers relating to Board and committee service. The Company estimated the fair value of stock-based awards granted during the nine months ended September 30, 2020 under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 year, expected volatility of 58.5%, dividend yield of 0% and risk-free interest rate of 1.56%. Total stock-based compensation expense recorded for the three and nine months ended September 30, 2020 was $37,000 and $145,000, respectively, and for the three and nine months ended September 30, 2019 was $101,000 and $378,000, respectively.
Net Loss per Share	Basic net loss per share is computed by dividing net loss by the weighted average shares outstanding and excludes any potential dilutive effects of stock options and restricted stock units and awards. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period. Due to the net loss incurred during the three and nine months ended September 30, 2020 and 2019 all outstanding stock options were anti-dilutive for that period. Weighted average common shares outstanding for the three and nine months ended September 30, 2020 and 2019 were as follows: Three Months Ended Nine Months Ended September 30 September 30 2020 2019 2020 2019 Denominator for basic net loss per share - weighted average shares 12,179,000 11,986,000 12,108,000 11,911,000 Effect of dilutive securities: Stock options and restricted stock units — — — — Denominator for diluted net loss per share - weighted average shares 12,179,000 11,986,000 12,108,000 11,911,000

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Schedule of Inventories	September 30, December 31, 2020 2019 Raw materials $ 32,000 $ 47,000 Work-in-process 8,000 16,000 Finished goods 100,000 259,000 $ 140,000 $ 322,000
Schedule of Property and Equipment	September 30, December 31, 2020 2019 Property and Equipment: Production tooling, machinery and equipment $ 3,392,000 $ 3,685,000 Office furniture and fixtures 425,000 393,000 Computer equipment and software 1,469,000 1,426,000 5,286,000 5,504,000 Accumulated depreciation and amortization (4,917,000 ) (4,955,000 ) Net Property and Equipment $ 369,000 $ 549,000
Schedule of Weighted Average Common Shares Outstanding	Three Months Ended Nine Months Ended September 30 September 30 2020 2019 2020 2019 Denominator for basic net loss per share - weighted average shares 12,179,000 11,986,000 12,108,000 11,911,000 Effect of dilutive securities: Stock options and restricted stock units — — — — Denominator for diluted net loss per share - weighted average shares 12,179,000 11,986,000 12,108,000 11,911,000

Revenue Recognition (Tables)

Revenue Recognition (Tables)	9 Months Ended
	Sep. 30, 2020
Revenue Recognition [Abstract]
Disaggregation of Revenue	Three months ended September 30, 2020 Nine months ended September 30, 2020 Services Revenues Products Revenue Total Revenue Services Revenues Products Revenue Total Revenue Timing of revenue recognition: Products and services transferred over time $ 2,031,000 $ - $ 2,031,000 $ 7,392,000 $ - $ 7,392,000 Products and services transferred at a point in time 2,342,000 118,000 2,460,000 4,591,000 578,000 5,169,000 Total $ 4,373,000 $ 118,000 $ 4,491,000 $ 11,983,000 $ 578,000 $ 12,561,000 Three months ended September 30, 2019 Nine months ended September 30, 2019 Services Revenues Products Revenue Total Revenue Services Revenues Products Revenue Total Revenue Timing of revenue recognition: Products and services transferred over time $ 3,401,000 $ - $ 3,401,000 $ 11,099,000 $ - $ 11,099,000 Products and services transferred at a point in time 999,000 254,000 1,253,000 3,375,000 1,162,000 4,537,000 Total $ 4,400,000 $ 254,000 $ 4,654,000 $ 14,474,000 $ 1,162,000 $ 15,636,000
Schedule of Changes in Deferred Revenue	Balance at December 31, 2019 $ 140,000 Reclassification of beginning deferred revenue to revenue, as a result of performance obligations satisfied (140,000 ) Cash received in advance and not recognized as revenue 316,000 Balance at September 30, 2020 $ 316,000

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Inventories
Raw materials	$ 32,000	$ 47,000
Work-in-process	8,000	16,000
Finished goods	100,000	259,000
Inventories	$ 140,000	$ 322,000

Summary of Significant Accoun_5

Summary of Significant Accounting Policies (Details 1) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Gross property and equipment	$ 5,286,000	$ 5,504,000
Accumulated depreciation and amortization	(4,917,000)	(4,955,000)
Net property and equipment	369,000	549,000
Production Tooling, Machinery and Equipment
Gross property and equipment	3,392,000	3,685,000
Office Furniture and Fixtures
Gross property and equipment	425,000	393,000
Computer Equipment and Software
Gross property and equipment	$ 1,469,000	$ 1,426,000

Summary of Significant Accoun_6

Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Accounting Policies [Abstract]
Denominator for basic net loss per share - weighted average shares	12,179,000	11,986,000	12,108,000	11,911,000
Effect of dilutive securities: Stock options and restricted stock units and awards	$ 0	$ 0	$ 0	$ 0
Denominator for diluted net loss per share - weighted average shares	12,179,000	11,986,000	12,108,000	11,911,000

Summary of Significant Accoun_7

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Accounting Policies [Abstract]
Depreciation expense	$ 85,000	$ 255,000	$ 300,000	$ 740,000
Stock option awards granted			0	0
Stock-based awards granted, estimated life			1 year
Stock-based awards granted, expected volatility			58.50%
Stock-based awards granted, dividend yield			0.00%
Stock-based awards granted, risk-free interest rate			1.56%
Stock-based compensation expense	$ 37,000	$ 145,000	$ 101,000	$ 378,000

Revenue Recognition (Details)

Revenue Recognition (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total Net Sales	$ 4,491,000	$ 4,654,000	$ 12,561,000	$ 15,636,000
Products and Services Transferred Over Time
Total Net Sales	2,031,000	3,401,000	7,392,000	11,099,000
Products and Services Transferred at a Point in Time
Total Net Sales	246,000	1,253,000	5,169,000	4,537,000
Services
Total Net Sales	4,373,000	4,400,000	11,983,000	14,474,000
Services | Products and Services Transferred Over Time
Total Net Sales	2,031,000	3,401,000	7,392,000	11,099,000
Services | Products and Services Transferred at a Point in Time
Total Net Sales	2,342,000	999,000	4,591,000	3,375,000
Products
Total Net Sales	118,000	254,000	578,000	1,162,000
Products | Products and Services Transferred Over Time
Total Net Sales	0	0	0	0
Products | Products and Services Transferred at a Point in Time
Total Net Sales	$ 118,000	$ 254,000	$ 578,000	$ 1,162,000

Revenue Recognition (Details 1)

Revenue Recognition (Details 1)	9 Months Ended
	Sep. 30, 2020USD ($)
Revenue Recognition [Abstract]
Deferred revenue, beginning	$ 140,000
Reclassification of beginning deferred revenue to revenue, as a result of performance obligations satisfied	(140,000)
Cash received in advance and not recognized as revenue	316,000
Deferred revenue, ending	$ 316,000

Selling Arrangement (Details Na

Selling Arrangement (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Selling Arrangement
Amortization expense	$ 34,000	$ 150,000	$ 131,000	$ 450,000
Amortization expense for the remainder of 2020	$ 32,000		$ 32,000

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Income tax benefit (expense)	$ 8,000	$ (47,000)	$ (203,000)	$ (416,000)
Income tax rate, percentage	1.00%	4.60%	(5.60%)	14.00%
Deferred tax asset valuation allowance	$ 1,471,000		$ 1,471,000
Unrecognized tax benefits	$ 668,000		$ 668,000		$ 643,000

Concentrations (Details Narrati

Concentrations (Details Narrative)	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Total Net Sales | Customer One
Customer's concentration risk percentage	13.00%	15.00%
Total Net Sales | Customer Two
Customer's concentration risk percentage	11.00%	12.00%
Accounts Receivable | Customer One
Customer's concentration risk percentage	19.00%		17.00%
Accounts Receivable | Customer Two
Customer's concentration risk percentage	13.00%		12.00%
Accounts Receivable | Customer Three
Customer's concentration risk percentage			12.00%
Accounts Receivable | Customer Four
Customer's concentration risk percentage			10.00%