# Bloomia Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2016

- Company: [Bloomia Holdings, Inc.](/companies/tulp.md) (CIK 875355)
- Form: 10-Q
- Filed: 2016-04-29
- Accepted by EDGAR: Apr 29, 2016, 20:01 ET
- Period: 2016-03-31
- Accession: 0001104659-16-116170
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/875355/000110465916116170/a16-6508_110q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/875355/000110465916116170/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2016-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2016-01-01 to 2016-03-31 | $6.1m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2016-01-01 to 2016-03-31 | $4.1m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2016-01-01 to 2016-03-31 | $2.0m | us-gaap:GrossProfit |
| Operating income | 3 months, 2016-01-01 to 2016-03-31 | −$571.0k | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2016-01-01 to 2016-03-31 | −$232.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2016-01-01 to 2016-03-31 | −$322.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2016-01-01 to 2016-03-31 | −$0.03 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2016-01-01 to 2016-03-31 | −$0.03 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2016-01-01 to 2016-03-31 | 11,624,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2016-01-01 to 2016-03-31 | −$322.0k | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 3 months, 2016-01-01 to 2016-03-31 | $318.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2016-01-01 to 2016-03-31 | $106.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2016-03-31 | $9.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2016-03-31 | $25.0m | us-gaap:AssetsCurrent |
| Total assets | at 2016-03-31 | $29.1m | us-gaap:Assets |
| Current liabilities | at 2016-03-31 | $3.7m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2016-03-31 | $24.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 17,879 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, 2015, 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 “Insignia,” “we,” “us,” “our” and the “Company”) is a developer and marketer of innovative in-store products, programs and services that help consumer packaged goods (“CPG”) manufacturers and retail partners drive sales at the point of purchase. The Company was incorporated in 1990. Since 1998, the Company has focused on managing a retail network, made up of over 22,000 store locations, for the primary purpose of providing turn-key at-shelf market access for CPG manufacturers’ marketing programs. Insignia provides participating retailers with benefits including incremental revenue, incremental sales opportunities, increased shopper engagement in-store, and custom creative development and other in-kind services.

Insignia’s primary product is the Point-Of-Purchase Services (POPS®) in-store marketing program. Insignia POPS program is a national, account-specific, shelf-edge advertising and promotional tactic. Internal testing has indicated the program delivers incremental sales for the featured brand. The program allows manufacturers to deliver vital product information to consumers at the point-of-purchase, and to leverage the local retailer brand and store-specific prices to provide a unique “call to action” that draws attention to the featured brand and triggers a purchase decision. CPG customers benefit from Insignia’s nimble operational capabilities, which include short lead times, in-house graphic design capabilities, post-program analytics, and micro-marketing capabilities such as variable or bilingual messaging.

In October 2014, the Company announced the introduction of a new product, The Like MachineTM, which is an innovative new media that harnesses the power of social media, consumer engagement, and word-of-mouth recommendation at the point of purchase. The Company licenses this product from TLM Holdings, LLC (“TLMH”), a company in which Insignia’s Chief Sales and Marketing Officer, Tim Halfmann, is the majority owner and serves as a principal. In March 2016, the Company and TLMH signed a new distribution agreement for the sale of The Like Machine to Insignia’s customers. This distribution agreement replaced the Company’s prior license agreement with TLMH. Mr. Halfmann has resigned from Insignia, effective April 30, 2016 in order to focus his efforts more fully on The Like Machine product and its evolution going forward.

### 2016 Business Overview

#### Summary of Financial Results

For the quarter ended March 31, 2016, the Company generated revenues of $6,078,000, as compared with revenues of $6,541,000 for the quarter ended March 31, 2015. Net loss for the quarter ended March 31, 2016 was $322,000, as compared to a net income of $96,000 for the quarter ended March 31, 2015.

During the quarter ended March 31, 2016, cash and cash equivalents increased $1,154,000 from $8,523,000 at December 31, 2015, to $9,677,000 at March 31, 2016, with available-for-sale investments of $7,644,000, compared to $9,490,000 at December 31, 2015. We had no debt as of March 31, 2016.

### Results of Operations

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

| For the Three Months Ended March 31 | 2016 | 2015 |
| --- | ---: | ---: |
| Net sales | 100.0% | 100.0% |
| Cost of sales | 67.6 | 57.2 |
| Gross profit | 32.4 | 42.8 |
| Operating expenses: |  |  |
| Selling | 18.3 | 20.5 |
| Marketing | 4.4 | 5.1 |
| General and administrative | 19.1 | 14.7 |
| Total operating expenses | 41.8 | 40.3 |
| Operating income (loss) | (9.4) | 2.5 |
| Other income | 0.3 | 0.1 |
| Income (loss) before taxes | (9.1) | 2.6 |
| Income tax expense (benefit) | (3.8) | 1.1 |
| Net income (loss) | (5.3)% | 1.5% |

10

### Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

***Net Sales.*** Net sales for the three months ended March 31, 2016 decreased 7.1% to $6,078,000, compared to $6,541,000 for the three months ended March 31, 2015.

Service revenues for the three months ended March 31, 2016 decreased 7.1% to $5,617,000, compared to $6,046,000 for the three months ended March 31, 2015. The decrease was primarily due to our POPSign program, which had a decrease of 3.1% in average sign price per sign, resulting from program mix and a decrease of 3.6% in the number of signs placed, which was a result of a lower number of programs sold compared to the prior year.

Product sales for the three months ended March 31, 2016 decreased 6.9% to $461,000, compared to $495,000 for the three months ended March 31, 2015. The decrease was primarily due to lower sales of Impulse sign card supplies.

***Gross Profit.*** Gross profit for the three months ended March 31, 2016 decreased 29.8% to $1,967,000, compared to $2,802,000 for the three months ended March 31, 2015. Gross profit as a percentage of total net sales decreased to 32.4% for the three months ended March 31, 2016, compared to 42.8% for the three months ended March 31, 2015.

***Service revenues:*** Gross profit from our service revenues for the three months ended March 31, 2016 decreased 31.0% to $1,834,000, compared to $2,657,000 for the three months ended March 31, 2015. The decrease was primarily due to a decrease in sales, as our gross profit percentage is highly dependent on sales levels, as well as, increased costs associated with The Like Machine product launch, and costs associated with the implementation project for our new IT operating infrastructure. We estimate that the implementation of this new IT operating infrastructure will increase 2016 expense by approximately $500,000. Gross profit as a percentage of service revenue for the three months ended March 31, 2016 decreased to 32.7%, compared to 43.9% for the three months ended March 31, 2015. The decrease was primarily due to the factors described above.

***Product sales:*** Gross profit from our product sales for the three months ended March 31, 2016 decreased 8.3% to $133,000, compared to $145,000 for the three months ended March 31, 2015. The decrease was primarily due to a decrease in revenue. Gross profit as a percentage of product sales was relatively consistent at 28.9% for the three months ended March 31, 2016, compared to 29.3% for the three months ended March 31, 2015.

### Operating Expenses

***Selling.*** Selling expenses for the three months ended March 31, 2016 decreased 17.6% to $1,108,000, compared to $1,344,000 for the three months ended March 31, 2015. The decrease in selling expense was primarily due to decreased staffing and staff related costs, combined with lower variable compensation and other sales related expenses.

Selling expenses as a percentage of total net sales decreased to 18.3% for the three months ended March 31, 2016, compared to 20.5% for the three months ended March 31, 2015. The decrease in selling expenses as a percentage of total net sales in the 2016 period was primarily due to the factors described above, partially offset by decreased sales.

***Marketing.*** Marketing expenses for the three months ended March 31, 2016 decreased 19.4% to $270,000, compared to $335,000 for the three months ended March 31, 2015. Decreased marketing expense was primarily due to decreased staffing and staff related costs, combined with decreased consulting fees.

Marketing expenses as a percentage of total net sales decreased to 4.4% for the three months ended March 31, 2016, compared to 5.1% for the three months ended March 31, 2015. The decrease in marketing expenses as a percentage of total net sales in the 2016 period was primarily due to the factors described above, partially offset by decreased sales.

***General and administrative.*** General and administrative expenses for the three months ended March 31, 2016 increased 20.6% to $1,160,000, compared to $962,000 for the three months ended March 31, 2015. The increase in the 2016 period as compared to the 2015 period was primarily the result of increased legal fees, executive recruiting and onboarding costs, and consulting fees, partially offset by decreased staffing and staff related costs.

General and administrative expenses as a percentage of total net sales increased to 19.1% for the three months ended March 31, 2016, compared to 14.7% for the three months ended March 31, 2015. Increased expense as a percentage of total net sales in the 2016 period was primarily due to the factors described above combined with decreased sales.

***Other Income.*** Other income for the three months ended March 31, 2016 was $17,000, compared to $10,000 for the three months ended March 31, 2015. Other income is comprised of interest earned on cash, cash equivalents and available-for-sale investment balances.

***Income Taxes.*** For the three months ended March 31, 2016, the Company recorded income tax benefit of $232,000, or 41.9% of loss before taxes. For the three months ended March 31, 2015, the Company recorded income tax expense of $75,000, or 43.9% of income before taxes. The income tax provision for the three months ended March 31, 2016 and 2015 is comprised of federal and state taxes. The primary differences between the Company’s March 31, 2016 and 2015 effective tax rates and the statutory federal rate are expenses related to stock-based 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.

***Net Income (Loss).*** For the reasons stated above, net loss for the three months ended March 31, 2016 was $322,000, compared to net income of $96,000 for the three months ended March 31, 2015.

***Other Comprehensive Income (Loss).*** Other comprehensive income (loss) is comprised of unrealized gains and losses, net of tax, from available-for-sale investments.

### Liquidity and Capital Resources

The Company has financed its operations with proceeds from public and private stock sales and sales of its services and products. At March 31, 2016, working capital was $21,353,000 compared to $21,297,000 at December 31, 2015. During the three months ended March 31, 2016, cash and cash equivalents increased $1,154,000 from $8,523,000 at December 31, 2015, to $9,677,000 at March 31, 2016, while available-for-sale investments decreased $1,846,000 from $9,490,000 at December 31, 2015, to $7,644,000 at March 31, 2016.

Operating Activities: Net cash used in operating activities during the three months ended March 31, 2016, was $322,000. The net loss of $322,000, plus non-cash adjustments of $456,000 and changes in operating assets and liabilities of $(456,000) resulted in the $322,000 of cash used in operating activities. The largest component of the change in operating assets and liabilities was accounts receivable, which decreased $2,155,000 as a result of the timing of collections on these accounts, offset by decreases in accounts payable and accrued liabilities totaling $2,315,000 which will fluctuate based on normal business conditions. The non-cash adjustments consisted of depreciation and amortization expense, changes in allowance for doubtful accounts, and stock-based compensation expense. In the normal course of business, our accounts receivable, accounts payable, accrued liabilities and deferred revenue will fluctuate depending on the level of revenues and related business activity, as well as billing arrangements with customers and payment terms with retailers.

Investing Activities: Net cash provided by investing activities during the three months ended March 31, 2016 was $1,537,000. This was related to the proceeds from sale or maturity of investments of $1,855,000, partially offset by purchases of property and equipment of $318,000.

Financing Activities: Net cash used in financing activities during the three months ended March 31, 2016 was $61,000, which related to the repurchase of common stock under the Company’s share repurchase plan of $106,000, partially offset by proceeds received from issuance of common stock under the employee stock purchase plan of $45,000.

The Company anticipates capital expenditures to approximate $1.4 million in 2016; primarily related to the investment being made to upgrade the Company’s technological infrastructure.

The Company believes that based upon current business conditions and plans, its existing cash and investment balances and future cash generated from operations will be sufficient for its cash requirements for at least the next twelve months.

### 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, 2015, included in our Form 10-K filed with the Securities and Exchange Commission on March 18, 2016. 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 that 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) that we expect fluctuations in accounts receivable and payable, accrued liabilities, and deferred revenue; and (iii) plans to repurchase Company stock. 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.

Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (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 current strategic decisions, the effect of current sales trends on fiscal year 2016 results and the benefit of our relationship with News America; (v) termination of all or a major portion of, or a significant change in terms and conditions of, a material agreement with a consumer packaged goods manufacturer, retailer, or News America; (vi) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company’s business generally; (vii) our ability to successfully implement our new IT operating infrastructure; and (viii) our ability to attract and retain highly qualified managerial, operational and sales personnel. 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, 2015, any additional risks presented in our Quarterly Reports on Form 10-Q 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, 1,518 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 principal executive and 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 principal executive and financial officer concluded that the Company’s disclosure controls and procedures were 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 the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by us in these reports is accumulated and communicated to our management, 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, 2015. We believe there have been no material changes from the risk factors disclosed on Form 10-K.

Filed Apr 29, 2016.
Source: SEC EDGAR, the filing index for accession 0001104659-16-116170. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.