Insignia(LDWY) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's analysis Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2021, covering balance sheets, operations, and cash flows Condensed Balance Sheet Highlights (Unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,838,000 | $7,128,000 | | Total Current Assets | $12,532,000 | $13,793,000 | | Total Assets | $12,769,000 | $14,060,000 | | Total Current Liabilities | $4,950,000 | $5,099,000 | | Total Liabilities | $5,652,000 | $6,366,000 | | Total Shareholders' Equity | $7,117,000 | $7,694,000 | Condensed Statements of Operations (Unaudited) | Metric | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Total Net Sales | $5,419,000 | $4,682,000 | | Gross Profit | $962,000 | $969,000 | | Operating Loss | $(1,708,000) | $(1,109,000) | | Gain on forgiveness of debt | $1,062,000 | $0 | | Net Loss | $(659,000) | $(863,000) | | Net loss per share (Basic & Diluted) | $(0.38) | $(0.50) | Condensed Statements of Cash Flows (Unaudited) | Activity | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(303,000) | $257,000 | | Net cash used in investing activities | $(13,000) | $(32,000) | | Net cash provided by financing activities | $26,000 | $20,000 | | Net (decrease) increase in cash | $(290,000) | $245,000 | - In August 2020, the company sold its custom print business for $300,000 to focus on its core business of selling product solutions to CPGs. This divestiture is not presented as a discontinued operation[21] - The company's application for forgiveness of its $1,054,000 PPP loan, plus $8,000 in accrued interest, was approved by the SBA on January 29, 2021. This resulted in a gain on debt forgiveness of $1,062,000 recognized in Q1 2021[46] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2021 financial performance, highlighting sales growth, increased operating loss, and a narrowed net loss from PPP loan forgiveness Q1 2021 vs Q1 2020 Performance | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net Sales | $5,419,000 | $4,682,000 | | Gross Profit | $962,000 | $969,000 | | Gross Margin | 17.8% | 20.7% | | Operating Loss | $(1,708,000) | $(1,109,000) | | Net Loss | $(659,000) | $(863,000) | - Net sales growth was driven by a 96.8% increase in non-POPS solutions revenue, which was partially offset by a 40.7% decrease in POPS solutions revenue due to competitive pressures[52][62] - General and administrative expenses increased 93.3% to $1.9 million, primarily due to expenses incurred from the litigation with News America[72] - Other income increased to $1,062,000 from $24,000 in the prior-year quarter, entirely due to the gain on forgiveness of the company's PPP loan[73] - At March 31, 2021, the company had working capital of $7.6 million and a cash balance of $6.8 million. Management believes existing cash and future cash from operations will be sufficient for at least the next twelve months[81][84] Quantitative and Qualitative Disclosures about Market Risk The company has indicated that this section is not applicable for this reporting period - Not applicable[90] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the company's principal executive officer and interim principal accounting officer concluded that disclosure controls and procedures were effective[92] - No changes in internal control over financial reporting occurred during Q1 2021 that have materially affected, or are reasonably likely to materially affect, the company's internal control[93] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, and other required disclosures Legal Proceedings The company is engaged in ongoing antitrust litigation with News America, involving counterclaims and a December 2021 trial, with an uncertain outcome - In July 2019, the company sued News America for alleged antitrust violations, seeking an injunction and treble damages[96] - News America has filed a counterclaim. The court has denied motions from both parties to dismiss the respective claims[97] - A trial is scheduled for December 2021. The company is currently unable to determine the outcome or estimate any potential liability[98] Risk Factors The company reports no material changes to its risk factors from those disclosed in the December 31, 2020 Annual Report on Form 10-K - There have been no material changes in risk factors from those disclosed in the Form 10-K for the year ended December 31, 2020[99] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None[100] Defaults upon Senior Securities The company reported no defaults upon senior securities - None[101] Mine Safety Disclosures This section is not applicable to the company - Not applicable[102] Other Information The company reported no other information for this period - None[103] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents, officer certifications, and XBRL financial statements - Lists exhibits filed electronically with the report, including Certifications of the Principal Executive Officer and Principal Accounting Officer, and XBRL data[105]