# Bloomia Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2013

- Company: [Bloomia Holdings, Inc.](/companies/tulp.md) (CIK 875355)
- Form: 10-Q
- Filed: 2013-11-06
- Accepted by EDGAR: Nov 6, 2013, 21:24 ET
- Period: 2013-09-30
- Accession: 0001104659-13-081713
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/875355/000110465913081713/a13-19830_110q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/875355/000110465913081713/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2013-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2013-07-01 to 2013-09-30 | $7.3m | us-gaap:SalesRevenueNet |
| Revenue | 9 months, 2013-01-01 to 2013-09-30 | $20.8m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2013-07-01 to 2013-09-30 | $4.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2013-01-01 to 2013-09-30 | $11.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2013-07-01 to 2013-09-30 | $3.3m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2013-01-01 to 2013-09-30 | $9.4m | us-gaap:GrossProfit |
| Operating income | 3 months, 2013-07-01 to 2013-09-30 | $544.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2013-01-01 to 2013-09-30 | $1.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2013-07-01 to 2013-09-30 | $196.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2013-01-01 to 2013-09-30 | $771.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2013-07-01 to 2013-09-30 | $354.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2013-01-01 to 2013-09-30 | $938.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2013-07-01 to 2013-09-30 | $0.03 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2013-01-01 to 2013-09-30 | $0.07 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2013-07-01 to 2013-09-30 | $0.03 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2013-01-01 to 2013-09-30 | $0.07 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2013-07-01 to 2013-09-30 | 13,370,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2013-01-01 to 2013-09-30 | 13,581,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2013-01-01 to 2013-09-30 | $2.9m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 9 months, 2013-01-01 to 2013-09-30 | $231.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2013-01-01 to 2013-09-30 | $2.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2013-09-30 | $20.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2013-09-30 | $27.0m | us-gaap:AssetsCurrent |
| Total assets | at 2013-09-30 | $31.9m | us-gaap:Assets |
| Current liabilities | at 2013-09-30 | $5.5m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2013-09-30 | $25.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 22,859 characters.

The following discussion should be read in conjunction with the Company’s financial statements and related notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q and the “Risk Factors” described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, our Current Reports on Form 8-K and our other SEC filings.

### Company Overview

Insignia Systems, Inc. (referred to in this Quarterly Report on Form 10-Q as “we,” “us,” “our” and the “Company”) markets in-store advertising products, programs and services to consumer packaged goods manufactures (customers) and retailers. The Company has been in business since 1990. Since 1998, the Company has been focusing on providing in-store advertising services through the Insignia Point-Of-Purchase Services (POPS) in-store advertising program. Insignia POPS® includes the Insignia POPS program.

Insignia’s POPS program is a national, account-specific, in-store, shelf-edge advertising program that we believe delivers significant sales increases. Funded by consumer packaged goods manufacturers, the program allows manufactures to deliver vital product information to consumers at the point-of-purchase. The brand information is combined with each retailer’s store-specific prices and is displayed on the retailer’s unique sign format. We believe that combining manufacturer and retailer information produces a complete “call to action” that gets consumers the information they want and need to make purchasing decisions, while building store and brand equity.

For retailers, Insignia’s POPS program is a source of incremental revenue and is an in-store advertising program that delivers a complete “call to action” on a product-specific and store-specific basis. For consumer packaged goods manufacturers, Insignia’s POPS program provides access to what we believe is the optimum retail advertising site for their products – the retail shelf-edge. In addition, we believe manufacturers benefit from significant sales increases, short lead times, micro-marketing capabilities, such as store-specific and multiple language options, and a wide variety of program features and enhancements that provide unique advertising advantages.

The Company’s internet address is www.insigniasystems.com. The Company has made all of the reports it files with the SEC available free of charge on its web site. The Company’s web site is not incorporated by reference into this Report on Form 10-Q. Copies of reports can also be obtained free of charge by requesting them from Insignia Systems, Inc., 8799 Brooklyn Boulevard, Minneapolis, Minnesota 55445; Attention: CFO; telephone 763-392-6200.

### 2013 Business Overview

#### Summary of Financial Results

For the quarter ended September 30, 2013, the Company generated revenues of $7,320,000, as compared with revenues of $6,074,000 for the quarter ended September 30, 2012. For the nine months ended September 30, 2013, the Company generated revenues of $20,849,000, as compared with revenues of $14,844,000 in the nine months ended September 30, 2012. Net income for the quarter ended September 30, 2013 was $354,000, as compared to net income of $380,000 for the quarter ended September 30, 2012. The net income for the nine months ended September 30, 2013 was $938,000, compared to a net loss for the nine months ended September 30, 2012 of $(1,693,000).

At September 30, 2013, our cash and cash equivalents balance was $20,735,000, as compared to $20,271,000 at December 31, 2012. We have no debt and believe we have adequate liquidity to fund operations for at least the next twelve months. The Company used approximately $2.2 million of its cash and cash equivalents to repurchase 929,051 common shares at $2.35 per share in a modified Dutch auction tender offer (“Tender Offer”) that expired on August 15, 2013. The $2.2 million used to repurchase shares in the Tender Offer did not include fees and expenses related to the Tender Offer.

The Company enacted a plan to restructure its operations in March 2012, including workforce reductions, salary adjustments and other cost-saving initiatives (“2012 RIF”). As part of this restructuring plan, approximately 29% of the Company’s workforce was reduced. A restructuring charge of $373,000 was recorded during the quarter ended March 31, 2012.

### Results of Operations

The following table sets forth, for the periods indicated, certain items in the Company’s Statements of Operations as a percentage of total net sales.

|  | Three Months Ended September 30 2013 | 2012 | Nine Months Ended September 30 2013 | 2012 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | 100.0% | 100.0% | 100.0% | 100.0% |
| Cost of sales | 54.7 | 57.9 | 55.0 | 66.6 |
| Gross profit | 45.3 | 42.1 | 45.0 | 33.4 |
| Operating expenses: |  |  |  |  |
| Selling | 21.7 | 18.0 | 19.8 | 26.1 |
| Marketing | 3.0 | 3.8 | 3.1 | 6.2 |
| General and administrative | 13.3 | 12.5 | 14.0 | 17.9 |
| Total operating expenses | 38.0 | 34.3 | 36.9 | 50.2 |
| Operating income (loss) | 7.3 | 7.8 | 8.1 | (16.8) |
| Other income | 0.1 | 0.1 | 0.1 | 0.1 |
| Income (loss) before taxes | 7.4 | 7.9 | 8.2 | (16.7) |
| Income tax expense (benefit) | 2.6 | 1.6 | 3.7 | (5.3) |
| Net income (loss) | 4.8% | 6.3% | 4.5% | (11.4)% |

10

### Three and Nine months Ended September 30, 2013 Compared to Three and Nine months Ended September 30, 2012

***Net Sales.*** Net sales for the three months ended September 30, 2013 increased 20.5% to $7,320,000 compared to $6,074,000 for the three months ended September 30, 2012. Net sales for the nine months ended September 30, 2013 increased 40.5% to $20,849,000 compared to $14,844,000 for the nine months ended September 30, 2012.

Service revenues from our POPS programs for the three months ended September 30, 2013 increased 21.3% to $6,927,000 compared to $5,710,000 for the three months ended September 30, 2012. The increase was primarily due to an increase of 9% in the number of signs placed and an 11% increase in the average price per sign. Service revenues from our POPS programs for the nine months ended September 30, 2013 increased 45.6% to $19,642,000 compared to $13,489,000 for the nine months ended September 30, 2012. The increase was primarily due to an increase of 40% in the number of signs placed.

Product sales for the three months ended September 30, 2013 increased 8.0% to $393,000 compared to $364,000 for the three months ended September 30, 2012. The increase was primarily due to increased sales of laser sign card supplies. Product sales for the nine months ended September 30, 2013 decreased 10.9% to $1,207,000 compared to $1,355,000 for the nine months ended September 30, 2012. The decrease was primarily due to lower sales of Stylus software and related Stylus maintenance agreements.

***Gross Profit.*** Gross profit for the three months ended September 30, 2013 increased 29.7% to $3,320,000 compared to $2,560,000 for the three months ended September 30, 2012. Gross profit for the nine months ended September 30, 2013 increased 89.7% to $9,397,000 compared to $4,954,000 for the nine months ended September 30, 2012. Gross profit as a percentage of total net sales increased to 45.3% for the three months ended September 30, 2013, compared to 42.1% for the three months ended September 30, 2012. Gross profit as a percentage of total net sales increased to 45.0% for the nine months ended September 30, 2013, compared to 33.4% for the nine months ended September 30, 2012.

***POPS program:*** Gross profit from our POPS program revenues for the three months ended September 30, 2013 increased 31.3% to $3,211,000 compared to $2,445,000 for the three months ended September 30, 2012. Gross profit from our POPS program revenues for the nine months ended September 30, 2013 increased 98.7% to $9,038,000 compared to $4,549,000 for the nine months ended September 30, 2012. The increase was primarily due to an overall increase in sales, as our gross profit percentage is highly dependent on sales volume. Gross profit as a percentage of POPS program revenues for the three months ended September 30, 2013, increased to 46.4% compared to 42.8% for the three months ended September 30, 2012. Gross profit as a percentage of POPS program revenues for the nine months ended September 30, 2013 increased to 46.0% compared to 33.7% for the nine months ended September 30, 2012. The increase in gross profit as a percentage of POPS program revenues was primarily due to an overall increase in sales, as our gross profit percentage is highly dependent on sales volume.

***Product sales:*** Gross profit from our product sales for the three months ended September 30, 2013 decreased 5.2% to $109,000 compared to $115,000 for the three months ended September 30, 2012. The decrease was primarily due to higher costs of thermal sign card supplies. Gross profit from our product sales for the nine months ended September 30, 2013 decreased 11.4% to $359,000 compared to $405,000 for the nine months ended September 30, 2012. The decrease was primarily due to lower sales of Stylus software and related Stylus maintenance agreements. Gross profit as a percentage of product sales was 27.7% for the three months ended September 30, 2013, compared to 31.6% for the three months ended September 30, 2012. Gross profit as a percentage of product sales was 29.7% for the nine months ended September 30, 2013 compared to 29.9% for the nine months ended September 30, 2012. The decrease was primarily due to the decrease in sales and increase in costs of thermal sign card supplies.

### Operating Expenses

***Selling.*** Selling expenses for the three months ended September 30, 2013 increased 44.6% to $1,586,000 compared to $1,097,000 for the three months ended September 30, 2012. With the large increase in sales and the projected bookings in the fourth quarter, certain accruals for our annual performance-based compensation programs were triggered in the third quarter, which increased selling expenses. Selling expenses for the nine months ended September 30, 2013 increased 6.9% to $4,138,000 compared to $3,871,000 for the nine months ended September 30, 2012. This increase was primarily due to the accrual for performance-based awards and the hire of additional sales personnel.

Selling expenses as a percentage of total net sales increased to 21.7% for the three months ended September 30, 2013, compared to 18.0% for the three months ended September 30, 2012. The increase in selling expenses as a percent of total net sales was primarily due to the performance-based compensation expenses and sales hires described above. Selling expenses as a percentage of total net sales decreased to 19.8% for the nine months ended September 30, 2013 compared to 26.1% for the nine months ended September 30, 2012. The decrease in selling expenses as a percentage of total net sales was primarily due to increased sales.

***Marketing.*** Marketing expenses for the three months ended September 30, 2013 decreased 4.3% to $220,000 compared to $230,000 for the three months ended September 30, 2012. Marketing expenses for the nine months ended September 30, 2013 decreased 29.4% to $649,000 compared to $919,000 for the nine months ended September 30, 2012. Decreased marketing expenses in the nine months ended September 30, 2013 were primarily the result of reduced staffing levels resulting from the 2012 RIF and other staffing-related expense reductions.

Marketing expenses as a percentage of total net sales decreased to 3.0% for the three months ended September 30, 2013 compared to 3.8% for the three months ended September 30, 2012. Marketing expenses as a percentage of total net sales decreased to 3.1% for the nine months ended September 30, 2013 compared to 6.2% for the nine months ended September 30, 2012. The decrease in marketing expenses as a percentage of total net sales was primarily due to the factors described above, combined with increased sales.

***General and administrative.*** General and administrative expenses for the three months ended September 30, 2013 increased 28.1% to $970,000 compared to $757,000 for the three months ended September 30, 2012. General and administrative expenses for the nine months ended September 30, 2013 increased 10.0% to $2,921,000 compared to $2,656,000 for the nine months ended September 30, 2012. With the large increase in sales and, and the projected bookings in the fourth quarter, certain accruals for our annual performance-based compensation programs were triggered in the third quarter, which increased general and administrative expenses. An increase to our accounts receivable allowance of approximately $105,000, relating to a collection risk on the total amount due from one customer, also increased general and administrative expenses.

General and administrative expenses as a percentage of total net sales increased to 13.3% for the three months ended September 30, 2013 compared to 12.5% for the three months ended September 30, 2012. The increase was primarily due to the performance-based compensation expenses described above. General and administrative expenses as a percentage of total net sales decreased to 14.0% for the nine months ended September 30, 2013 compared to 17.9% for the nine months ended September 30, 2012. This decrease was primarily the result of increased sales.

***Other Income.*** Other income for the three months ended September 30, 2013 and 2012 was $6,000. Other income for the nine months ended September 30, 2013 and 2012 was $20,000. Other income is comprised of interest earned on cash and cash equivalents balances.

***Income Taxes.*** For the three months ended September 30, 2013, income tax expense of $196,000 was recorded, or 35.6% of income before taxes, compared to $102,000, or 21.1% of loss before taxes for the three months ended September 30, 2012. For the nine months ended September 30, 2013, the income tax expense was $771,000 or 45.1% of income before income taxes, compared to an income tax benefit of $779,000 or 31.5% of loss before taxes for the nine months ended September 30, 2012. The income tax provision (benefit) for the three and nine months ended September 30, 2013 and 2012, is comprised of federal and state taxes. The primary differences between the Company’s September 30, 2013 and 2012 effective tax rates and the statutory federal rate are expenses related to equity compensation and nondeductible meals and entertainment. The Company reassesses its effective rate each reporting period and adjusts the annual effective rate if deemed necessary, based on projected annual taxable income. The result of that reassessment as of September 30, 2013 caused the Company’s effective tax rate for the three months ended September 30, 2013 to be lower than the effective tax rate for the nine months ended September 30, 2013.

***Net Income (Loss).*** Net income for the three months ended September 30, 2013 was $354,000 compared to $380,000 for the three months ended September 30, 2012. Net income for the nine months ended September 30, 2013 was $938,000 compared to a net loss of $(1,693,000) for the nine months ended September 30, 2012.

### Liquidity and Capital Resources

The Company has financed its operations with proceeds from public and private stock sales, sales of its services and products and legal settlement proceeds. At September 30, 2013, working capital was $21,434,000 compared to $21,791,000 at December 31, 2012. During the nine months ended September 30, 2013, cash and cash equivalents increased $464,000 from $20,271,000 at December 31, 2012, to $20,735,000 at September 30, 2013.

Operating Activities: Net cash provided by operating activities during the nine months ended September 30, 2013, was $2,923,000. The net income of $938,000 plus non-cash adjustments of $1,226,000 and changes in operating assets and liabilities of $759,000 resulted in the $2,923,000 of cash provided by operating activities. The largest component of the change in operating assets and liabilities was an increase in accounts receivable, which was the result of increased sales during the nine months ended September 30, 2013. The non-cash adjustments consisted primarily of depreciation and amortization expense, stock-based compensation expense and a change in allowance for doubtful accounts. In the normal course of business, our accounts receivable, accounts payable, accrued liabilities and deferred revenue will fluctuate depending on the level of POPS revenues and related business activity, as well as billing arrangements with customers and payment terms with retailers.

Investing Activities: Net cash used in investing activities during the nine months ended September 30, 2013 was $216,000, related to purchases of property and equipment of $231,000, partially offset by proceeds received from the sale of property and equipment of $15,000. The purchases of property and equipment relate mainly to the IT infrastructure investments. The Company does not currently expect significant capital expenditures in the remainder of 2013.

Financing Activities: Net cash used in financing activities during the nine months ended September 30, 2013 was $2,243,000, related to the repurchase of common stock of $2,328,000, pursuant to the Tender Offer which expired on August 15, 2013, partially offset by $85,000 of net proceeds received from the issuance of common stock under the employee stock purchase plan as well as our stock option plans.

The Company believes that based upon current business conditions, its existing cash balance and future cash generated from operations will be sufficient for its cash requirements for at least the next twelve months. However, there can be no assurances that this will occur or that the Company would be able to secure financing from public or private stock sales or from other financing agreements if needed.

### Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in Note 1 to the annual financial statements as of and for the year ended December 31, 2012, included in our Form 10-K filed with the Securities and Exchange Commission on March 18, 2013. We believe our most critical accounting policies and estimates include the following:

- revenue recognition;
- allowance for doubtful accounts;
- impairment of long-lived assets;
- income taxes; and
- stock-based compensation.

### Cautionary Statement Regarding Forward-Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q, in the Company’s other SEC filings, in press releases and in oral statements to shareholders and securities analysts, which are not statements of historical or current facts, are “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. The words “believes,” “expects,” “anticipates,” “seeks” and similar expressions identify forward-looking statements. Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team regarding, for instance: (i) our belief that our cash balance and cash generated by operations will provide adequate liquidity and capital resources for at least the next twelve months; (ii) our expectation that we will not make significant capital expenditures in future periods; and (iii) that we expect fluctuations in accounts receivable and payable, accrued liabilities, and deferred revenue. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement was made. These forward-looking statements are based on current information, which we have assessed and which by its nature is dynamic and subject to rapid and even abrupt changes.

Among the factors that could cause our estimates and assumptions as to future performance, and our actual results to differ materially, including: (i) the risk that management may be unable to fully or successfully implement its business plan to achieve and maintain increased sales and resultant profitability in the future; (ii) the risk that the Company will not be able to develop and implement new product offerings, including mobile, digital or other new offerings, in a successful manner; (iii) prevailing market conditions, including pricing and other competitive pressures, in the in-store advertising industry and, intense competition for agreements with retailers and consumer packaged goods manufacturers; (iv) potentially incorrect assumptions by management with respect to the financial effect of cost reduction initiatives, current strategic decisions, the effect of current sales trends on fiscal year 2013 results and the benefit of our relationships with News America and Valassis; (v) termination of all or a major portion of, or a significant change in terms and conditions of, a material agreement with a retailer, consumer packaged goods manufacturer, News America or Valassis; and (vi) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company’s business generally. Our risks and uncertainties also include, but are not limited to, the risks presented in our Annual Report on Form 10-K for the year ended December 31, 2012, any additional risks presented in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and our Current Reports on Form 8-K. We undertake no obligation (and expressly disclaim any such obligation) to update forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to update reasons why actual results would differ from those anticipated in any such forward-looking statements, other than as required by law.

## Controls and procedures

As filed, 1,663 characters.

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report. Disclosure controls and procedures ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in

Securities and Exchange Commission rules and forms, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosures.

(b) Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 271 characters.

We described the most significant risk factors applicable to the Company in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2012. We believe there have been no material changes from the risk factors disclosed on Form 10-K.

Filed Nov 6, 2013.
Source: SEC EDGAR, the filing index for accession 0001104659-13-081713. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.