证券代码：300232 证券简称：洲明科技 公告编号：2022-044
深圳市洲明科技股份有限公司
关于海外上市子公司Trans-Lux Corporation
发布2022年第一季度报告的公告
本公司及董事会全体成员保证信息披露内容真实、准确和完整，没有虚假记
载、误导性陈述或者重大遗漏。
深圳市洲明科技股份有限公司的子公司 Trans-Lux Corporation 于近日公布了
2022 年第一季度报告。
2022 年第一季度 Trans-Lux Corporation 主要的财务数据列示如下：
项目 本报告期 上年同期 本报告期比上年同期增减
营业总收入（千美元） 3,665 2,586 41.72%
净利润（千美元） 493 -621 179.39%
经营活动产生的现金流
-828 238 -447.90%
量净额（千美元）
基本每股收益（美元/
0.04 -0.05 180.00%
股）
项目 本报告期末 上年度末 本报告期末比上年度末增减
总资产（千美元） 9,773 8,651 12.97%
净资产（千美元） -10,428 -10,948 4.75%
随着对 Trans-Lux 的整合进一步深入，成本大幅削减，生产运营效率显著提
高，交货率提升，订单增加，2022 年一季度 Trans-Lux Corporation 生产经营有序
开展，订单及出货达到良好水平，经营费用大幅降低，经营业绩显著改善，实现
营业收入 3,665 千美元，同比增长 41.72%，净利润 493 千美元，实现扭亏为盈。
Trans-Lux Corporation 2022 年第一季度报告的内容详见附录，并可于美国证
券交易委员会网站（https://www.sec.gov/）查询。
特此公告，敬请投资者关注。
深圳市洲明科技股份有限公司董事会
2022 年 5 月 17 日
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
Commission file number 1-2257
TRANS-LUX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-1394750
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
254 West 31st Street, 12th Floor, New York, New York 10001
(Address of principal executive offices) (Zip code)
(800) 243-5544
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to file such files). Yes X No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ___ Accelerated filer ___
Non-accelerated filer X Emerging growth company ___ Smaller reporting company X
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
Date Class Shares Outstanding
5/13/22 Common Stock - $0.001 Par Value 13,446,276
TRANS-LUX CORPORATION AND SUBSIDIARIES
Table of Contents
Page No.
Part I - Financial Information (unaudited)
Item 1. Condensed Consolidated Balance Sheets – March 31, 2022 and December 31, 2021 (see Note 1) 1
Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2022 and 2021 2
Condensed Consolidated Statements of Comprehensive Loss – Three Months Ended March 31, 2022
and 2021 2
Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Three Months Ended
March 31, 2022 and 2021 3
Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2022 and 2021 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 21
Item 4. Controls and Procedures 22
Part II - Other Information
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23
Item 3. Defaults upon Senior Securities 23
Item 4. Mine Safety Disclosures 23
Item 5. Other Information 23
Item 6. Exhibits 24
Signatures 25
Exhibits
Table of Contents
Part I - Financial Information (unaudited)
Item 1.
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31 December 31
In thousands, except share data 2022 2021
ASSETS
Current assets:
Cash and cash equivalents $ 383 $ 524
Receivables, net 2,416 2,149
Inventories 1,611 871
Prepaids and other assets 2,001 1,551
Total current assets 6,411 5,095
Long-term assets:
Rental equipment, net 364 411
Property, plant and equipment, net 1,899 1,950
Right of use assets 1,065 1,162
Other assets 34 33
Total long-term assets 3,362 3,556
TOTAL ASSETS $ 9,773 $ 8,651
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 4,883 $ 5,248
Accrued liabilities 4,365 4,287
Current portion of long-term debt 2,940 3,030
Current lease liabilities 419 397
Customer deposits 3,079 1,951
Total current liabilities 15,686 14,913
Long-term liabilities:
Long-term debt, less current portion 500 500
Long-term lease liabilities 696 805
Deferred pension liability and other 3,319 3,381
Total long-term liabilities 4,515 4,686
Total liabilities 20,201 19,599
Stockholders' deficit:
Preferred Stock Series A - $20 stated value - 416,500 shares authorized;
shares issued and outstanding: 0 in 2022 and 2021 - -
Preferred Stock Series B - $200 stated value - 51,000 shares authorized;
shares issued and outstanding: 0 in 2022 and 2021 - -
Common Stock - $0.001 par value - 30,000,000 shares authorized;
shares issued: 13,474,116 in 2022 and 2021;
shares outstanding: 13,446,276 in 2022 and 2021 13 13
Additional paid-in-capital 41,330 41,330
Accumulated deficit (42,482) (42,975)
Accumulated other comprehensive loss (6,226) (6,253)
Treasury stock - at cost - 27,840 common shares in 2022 and 2021 (3,063) (3,063)
Total stockholders' deficit (10,428) (10,948)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 9,773 $ 8,651
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
3 Months Ended
March 31
In thousands, except per share data 2022 2021
Revenues:
Digital product sales $ 3,237 $ 2,093
Digital product lease and maintenance 428 493
Total revenues 3,665 2,586
Cost of revenues:
Cost of digital product sales 2,958 2,254
Cost of digital product lease and maintenance 165 153
Total cost of revenues 3,123 2,407
Gross income 542 179
General and administrative expenses (762) (799)
Operating loss (220) (620)
Interest expense, net (142) (103)
Loss on foreign currency remeasurement (16) (36)
Gain on extinguishment of debt - 77
Gain on forgiveness of PPP loan 824 -
Pension benefit 53 67
Income (loss) before income taxes 499 (615)
Income tax expense (6) (6)
Net income (loss) $ 493 $ (621)
The accompanying notes are an integral part of these condensed consolidated financial statements.
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
3 Months Ended
March 31
In thousands 2022 2021
Net income (loss) $ 493 $ (621)
Other comprehensive income:
Unrealized foreign currency translation gain 27 34
Total other comprehensive income, net of tax 27 34
Comprehensive income (loss) $ 520 $ (587)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(unaudited)
Accumulated Total
Preferred Stock Add'l Other Stock-
Series A Series B Common Stock Paid-in Accumulated Comprehensive Treasury holders'
In thousands, except share data Shares Amt Shares Amt Shares Amt Capital Deficit Loss Stock Deficit
For the 3 months ended March 31, 2022
Balance January 1, 2022 - $ - - $ - 13,474,116 $ 13 $ 41,330 $ (42,975) $ (6,253) $ (3,063) $ (10,948)
Net income - - - - - - - 493 - - 493
Other comprehensive loss, net of tax:
Unrealized foreign currency translation loss - - - - - - - - 27 - 27
Balance March 31, 2022 - $ - - $ - 13,474,116 $ 13 $ 41,330 $ (42,482) $ (6,226) $ (3,063) $ (10,428)
For the 3 months ended March 31, 2021
Balance January 1, 2021 - $ - - $ - 13,474,116 $ 13 $ 41,330 $ (38,007) $ (7,322) $ (3,063) $ (7,049)
Net loss - - - - - - - (621) - - (621)
Other comprehensive loss, net of tax:
Unrealized foreign currency translation gain - - - - - - - - 34 - 34
Balance March 31, 2021 - $ - - $ - 13,474,116 $ 13 $ 41,330 $ (38,628) $ (7,288) $ (3,063) $ (7,636)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
3 Months Ended
March 31
In thousands 2022 2021
Cash flows from operating activities
Net income (loss) $ 493 $ (621)
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 110 127
Amortization of right of use assets 97 72
Gain on forgiveness of PPP loan (824) -
Amortization of deferred financing fees and debt discount 32 32
Gain on extinguishment of debt - (77)
Loss on foreign currency remeasurement 16 36
Bad debt expense 56 42
Changes in operating assets and liabilities:
Accounts receivable (309) (438)
Inventories (740) 105
Prepaids and other assets (451) 87
Accounts payable (365) 1,059
Accrued liabilities 78 364
Operating lease liabilities (87) (73)
Customer deposits 1,128 (355)
Deferred pension liability and other (62) (122)
Net cash (used in) provided by operating activities (828) 238
Cash flows from investing activities
Purchases of property, plant and equipment (12) -
Net cash used in investing activities (12) -
Cash flows from financing activities
Proceeds from long-term debt 703 90
Payments of long-term debt - (20)
Net cash provided by financing activities 703 70
Effect of exchange rate changes (4) -
Net (decrease) increase in cash and cash equivalents (141) 308
Cash and cash equivalents at beginning of year 524 43
Cash and cash equivalents at end of period $ 383 $ 351
Supplemental disclosure of cash flow information:
Interest paid $ - $ 38
Income taxes paid 10 9
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TRANS-LUX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2022
(unaudited)
Note 1 – Basis of Presentation
As used in this report, “Trans-Lux,” the “Company,” “we,” “us,” and “our” refer to Trans-Lux Corporation and its subsidiaries.
Financial information included herein is unaudited, however, such information reflects all adjustments (of a normal and recurring nature), which are, in the opinion
of management, necessary for the fair presentation of the Condensed Consolidated Financial Statements for the interim periods. The results for the interim periods
are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”) and therefore do not include all
information and footnote disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). The Condensed
Consolidated Financial Statements included herein should be read in conjunction with the Consolidated Financial Statements and notes included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2021. The Condensed Consolidated Balance Sheet at December 31, 2021 is derived from the
December 31, 2021 audited financial statements.
The following new accounting pronouncements were adopted in 2022:
None.
The following new accounting pronouncements, and related impacts on adoption, are being evaluated by the Company:
None.
Note 2 – Liquidity and Going Concern
A fundamental principle of the preparation of financial statements in accordance with GAAP is the assumption that an entity will continue in existence as a going
concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. This
principle is applicable to all entities except for entities in liquidation or entities for which liquidation appears imminent. In accordance with this requirement, the
Company has prepared its accompanying Condensed Consolidated Financial Statements assuming the Company will continue as a going concern.
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Due to the onset of the COVID-19 pandemic in 2020, the Company experienced a reduction in sales orders from customers in 2020 and 2021, which has just
recently started to rebound. The Company recorded income of $493,000 in the three months ended March 31, 2022 but recorded a loss of $5.0 million in the year
ended December 31, 2021. The Company had working capital deficiencies of $9.3 million and $9.8 million as of March 31, 2022 and December 31, 2021,
respectively.
The Company is dependent on future operating performance in order to generate sufficient cash flows in order to continue to run its businesses. Future operating
performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control, including the impact of the current
economic environment, the spread of major epidemics (including coronavirus), increases in interest rates and other related uncertainties such as government-
imposed travel restrictions, interruptions to supply chains, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash
resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our
vendors, which in turn delayed certain deliveries to our customers.
If we are unable to (i) obtain additional liquidity for working capital, (ii) make the required minimum funding contributions to the defined benefit pension plan, (iii)
make the required principal and interest payments on our outstanding 8% Limited convertible senior subordinated notes due 2012 (the “Notes”) and 9%
Subordinated debentures due 2012 (the “Debentures”) and/or (iv) repay our obligations under our Loan Agreement (hereinafter defined) with Unilumin, there would
be a significant adverse impact on our financial position and operating results. The Company continually evaluates the need and availability of long-term capital in
order to meet its cash requirements and fund potential new opportunities. Due to the above, there is substantial doubt as to whether we will have adequate liquidity,
including access to the debt and equity capital markets, to operate our business over the next 12 months from the date of issuance of this Form 10-Q.
Note 3 – Revenue Recognition
We recognize revenue in accordance with two different accounting standards: 1) Accounting Standards Codification (“ASC”) Topic 606 and 2) ASC Topic 842.
Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales
incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer,
and is the unit of account under Topic 606. Our contracts with customers generally do not include multiple performance obligations. We recognize revenue when we
satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we
expect to be entitled to in exchange for such products or services. None of the Company’s contracts contained a significant financing component as of March 31,
2022. Revenue from the Company’s digital product and maintenance service is recognized ratably over the lease term in accordance with ASC Topic 842.
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Disaggregated Revenues
The following table represents a disaggregation of revenue from contracts with customers for the three months ended March 31, 2022 and 2021, along with the
reportable segment for each category:
For the Three Months Ended
March 31, March 31,
In thousands 2022 2021
Digital product sales:
Catalog and small customized products $ 3,237 $ 2,093
Large customized products - -
Subtotal 3,237 2,093
Digital product lease and maintenance:
Operating leases 171 209
Maintenance agreements 257 284
Subtotal 428 493
Total $ 3,665 $ 2,586
The Company has two primary revenue streams which are Digital product sales and Digital product lease and maintenance.
Digital Product Sales
The Company recognizes net revenue on digital product sales to its distribution partners and to end users related to digital display solutions and fixed digit
scoreboards. For the Company’s catalog products, revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a
point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. For the Company’s customized products, revenue is
either recognized at a point in time or over time depending on the length of the contract. For those customized product contracts that are smaller in size, revenue is
generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery
based on the contractual shipping terms of a contract. For those customized product contracts that are larger in size, revenue is recognized over time based on
incurred costs as compared to projected costs using the input method, as this best reflects the Company’s progress in transferring control of the customized product
to the customer. The Company may also contract with a customer to perform installation services of digital display products. Similar to the larger customized
products, the Company recognizes the revenue associated with installation services using the input method, whereby the basis is the total contract costs incurred to
date compared to the total expected costs to be incurred.
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Revenue on sales to distribution partners are recorded net of prompt-pay discounts, if offered, and other deductions. To the extent the transaction price includes
variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount
method to which the Company expects to be entitled. In the case of prompt-pay discounts, there are only two possible outcomes: either the customer pays on-time
or does not. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative
revenue under the contract will not occur. Determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the
Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company believes that the estimates it
has established are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the
estimated amounts to vary. The Company offers an assurance-type warranty that the digital display products will conform to the published specifications. Returns
may only be made subject to this warranty and not for convenience.
Digital Product Lease and Maintenance
Digital product lease revenues represent revenues from leasing equipment that we own. We do not generally provide an option for the lessee to purchase the rented
equipment at the end of the lease and do not generate material revenue from sales of equipment under such options. Our lease revenues do not include material
amounts of variable payments. Digital product maintenance revenues represent revenues from maintenance agreements for equipment that we do not own. Lease
and maintenance contracts generally run for periods of one month to 10 years. A contract entered into by the Company with a customer may contain both lease and
maintenance services (either or both services may be agreed upon based on the individual customer contract). Maintenance services may consist of providing labor,
parts and software maintenance as may be required to maintain the customer’s equipment in proper operating condition at the customer’s service location. The
Company concluded the lease and maintenance services represent a series of distinct services and the most representative method for measuring progress towards
satisfying the performance obligation of these services is the input method. Additionally, maintenance services require the Company to “stand ready” to provide
support to the customer when and if needed. As there is no discernable pattern of efforts other than evenly over the lease and maintenance terms, the Company will
recognize revenue straight-line over the lease and maintenance terms of service.
The Company has an enforceable right to payment for performance completed to date, as evidenced by the requirement that the customer pay upfront for each month
of services. Lease and maintenance service amounts billed ahead of revenue recognition are recorded in deferred revenue and are included in accrued liabilities in
the Condensed Consolidated Financial Statements.
Revenues from equipment lease and maintenance contracts are recognized during the term of the respective agreements. At March 31, 2022, the future minimum
lease payments due to the Company under operating leases that expire at varying dates through 2029 for its rental equipment and maintenance contracts, assuming
no renewals of existing leases or any new leases, aggregating $1,924,000 are as follows: $508,000 – remainder of 2022, $457,000 – 2023, $349,000 – 2024,
$266,000 – 2025, $186,000 – 2026 and $158,000 thereafter.
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Contract Balances with Customers
Contract assets primarily relate to rights to consideration for goods or services transferred to the customer when the right is conditional on something other than the
passage of time. The contract assets are transferred to the receivables when the rights become unconditional. As of March 31, 2022 and December 31, 2021, the
Company had no contract assets. The contract liabilities primarily relate to the advance consideration received from customers for contracts prior to the transfer of
control to the customer and therefore revenue is recognized on completion of delivery. Contract liabilities are classified as deferred revenue by the Company and are
included in customer deposits and accrued liabilities in the Condensed Consolidated Balance Sheets.
The following table presents the balances in the Company’s receivables and contract liabilities with customers:
March 31, December 31,
In thousands 2022 2021
Gross receivables $ 2,881 $ 2,572
Allowance for bad debts 465 423
Net receivables 2,416 2,149
Contract liabilities 3,236 2,011
During the three months ended March 31, 2022 and 2021, the Company recognized the following revenues as a result of changes in the contract asset and the
contract liability balances in the respective periods:
For the Three Months Ended
March 31, March 31,
In thousands 2022 2021
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period $ 344 $ 479
Performance obligations satisfied in previous periods
(for example, due to changes in transaction price) $ - $ -
Transaction Price Allocated to Future Performance Obligations
As of March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations for digital product sales was $6.7 million and
digital product lease and maintenance was $1.9 million.
The Company expects to recognize revenue on approximately 86%, 8% and 6% of the remaining performance obligations over the next 12 months, 13 to 36 months
and 37 or more months, respectively.
Costs to Obtain or Fulfill a Customer Contract
The Company capitalizes incremental costs of obtaining customer contracts. Capitalized commissions are amortized based on the transfer of the products or services
to which the assets relate. Applying the practical expedient in paragraph 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an
expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in
General and administrative expenses.
9
The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products.
When shipping and handling costs are incurred after a customer obtains control of the products, the Company also has elected to account for these as costs to fulfill
the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of finished products to customers are
recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer.
Note 4 – Inventories
Inventories consist of the following:
March 31 December 31
In thousands 2022 2021
Raw materials $ 1,251 $ 467
Work-in-progress 274 -
Finished goods 86 404
$ 1,611 $ 871
Note 5 – Rental Equipment, net
Rental equipment consists of the following:
March 31 December 31
In thousands 2022 2021
Rental equipment $ 3,664 $ 3,664
Less accumulated depreciation 3,300 3,253
Net rental equipment $ 364 $ 411
Depreciation expense for rental equipment for the three months ended March 31, 2022 and 2021 was $47,000 and $61,000, respectively.
Note 6 – Property, Plant and Equipment, net
Property, plant and equipment consists of the following:
March 31 December 31
In thousands 2022 2021
Machinery, fixtures and equipment $ 2,920 $ 2,908
Leaseholds and improvements 23 23
2,943 2,931
Less accumulated depreciation 1,044 981
Net property, plant and equipment $ 1,899 $ 1,950
Machinery, fixtures and equipment having a net book value of $1.9 million and $2.0 million at March 31, 2022 and December 31, 2021, respectively, were pledged
as collateral under various financing agreements.
Depreciation expense for property, plant and equipment for the three months ended March 31, 2022 and 2021 was $63,000 and $65,000, respectively.
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Note 7 – Long-Term Debt
Long-term debt consists of the following:
March 31 December 31
In thousands 2022 2021
8% Limited convertible senior subordinated notes due 2012 $ 302 $ 302
9% Subordinated debentures due 2012 220 220
Revolving credit line – related party 1,439 1,189
Term loans - related party 1,000 1,000
Term loans 500 871
Total debt 3,461 3,582
Less deferred financing costs and debt discount 21 52
Net debt 3,440 3,530
Less portion due within one year 2,940 3,030
Net long-term debt $ 500 $ 500
On September 16, 2019, the Company entered into a loan agreement (the “Loan Agreement”) with MidCap. On June 3, 2020, March 23, 2021 and May 31, 2021,
the Company and MidCap entered into modification agreements to the Loan Agreement. On July 30, 2021, MidCap assigned the loan to Unilumin. The Loan
Agreement terminates on September 16, 2022, unless earlier terminated by the parties in accordance with the termination provisions of the Loan Agreement. The
Loan Agreement allows the Company to borrow up to an aggregate of $4.0 million at an interest rate of the 3-month LIBOR interest rate plus 4.75% (12.00% at
March 31, 2022) on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. As of March 31, 2022, the
balance outstanding under the Loan Agreement was $1.4 million, including $250,000 of borrowings in the quarter ended March 31, 2022. The Loan Agreement also
requires the payment of certain fees, including a facility fee, an unused credit line fee and a collateral monitoring charge. The Loan Agreement contains financial and
other covenant requirements, including financial covenants that require the Company to attain certain EBITDA amounts for certain periods, including the period
ended March 31, 2022. The Company was not in compliance with this covenant. As such, Unilumin has the right to demand payment of the outstanding balance, but
no such demand has been made as of the time of this filing. The Loan Agreement is secured by substantially all of the Company’s assets.
The Company entered into a loan note (the “Loan Note”) with the SBA (“Lender”) as lender under their Economic Injury Disaster Loan (“EIDL”) program, dated as
of December 10, 2021. Under the Loan Note, the Company borrowed $500,000 from Lender under the EIDL Program. As of March 31, 2022, $500,000 was
outstanding. The loan matures on December 10, 2051 and carries an interest rate of 3.75%. As of March 31, 2022, the Company had accrued $5,000 of interest
related to the Loan Note, which is included in Accrued liabilities in the Consolidated Balance Sheets.
On April 23, 2020, the Company entered into a loan note (the “Loan Note”) with Enterprise Bank and Trust (“Lender”) as lender under the CARES Act of the Small
Business Administration of the United States of America (“SBA”), dated as of April 20, 2020. Under the Loan Note, the Company borrowed $810,800 from Lender
under the Paycheck Protection Program (“PPP”) included in the SBA’s CARES Act. The Loan Note proceeds were forgivable as long as the Company uses the loan
proceeds for eligible purposes including payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leave; rent;
utilities; and maintains its payroll levels. In January 2022, the loan was forgiven in full and the payments that had previously been paid were refunded. Refund
proceeds in the amount of $ 452,631 are included in proceeds from long-term debt in the accompanying condensed consolidated statements of Cash Flows for the
three months ended March 31, 2022.
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The Company has a $500,000 loan from Carlisle Investments Inc. (“Carlisle”) at a fixed interest rate of 12.00%, which matured on April 27, 2019 with a bullet
payment of all principal due at such time. Interest is payable monthly. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020,
and has not made any such demands as of the date of this filing. As of March 31, 2022, the entire amount was outstanding and is included in current portion of long-
term debt in the Consolidated Balance Sheets. As of March 31, 2022 and December 31, 2021, the Company had accrued $255,000 and $240,000, respectively, of
interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets.
The Company has an additional $500,000 loan from Carlisle at a fixed interest rate of 12.00%, which matured on December 10, 2017 with a bullet payment of all
principal due at such time (the “Second Carlisle Agreement”). Interest is payable monthly. Carlisle had agreed to not demand payment on the loan through at least
December 31, 2020, and has not made any such demands as of the date of this filing. As of March 31, 2022, the entire amount was outstanding and is included in
current portion of long-term debt Consolidated Balance Sheets. As of March 31, 2022 and December 31, 2021, the Company had accrued $255,000 and $240,000,
respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Under the Second Carlisle
Agreement, the Company granted a security interest to Carlisle in accounts receivable, materials and intangibles relating to a certain purchase order for equipment
issued in April 2017.
As of March 31, 2022 and December 31, 2021, the Company had outstanding $302,000 of Notes. The Notes matured as of March 1, 2012 and are currently in
default. As of March 31, 2022 and December 31, 2021, the Company had accrued $314,000 and $307,000, respectively, of interest related to the Notes, which is
included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the
Notes outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately. On January 15, 2021,
holders of $50,000 of the Notes accepted the Company’s offer to exchange each $1,000 of principal, forgiving any related interest, for $400 in cash, for an aggregate
payment by the Company of $20,000. As a result of the transaction, the Company recorded a gain on the extinguishment of debt, net of expenses, of $77,000 in the
three months ended March 31, 2021.
As of March 31, 2022 and December 31, 2021, the Company had outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are
currently in default. As of March 31, 2022 and December 31, 2021, the Company had accrued $258,000 and $253,000, respectively, of interest related to the
Debentures, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the
principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable
immediately.
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Note 8 – Pension Plan
As of December 31, 2003, the benefit service under the pension plan had been frozen and, accordingly, there is no service cost. As of April 30, 2009, the
compensation increments had been frozen and, accordingly, no additional benefits are being accrued under the pension plan.
The following table presents the components of net periodic pension cost:
Three months ended March 31
In thousands 2022 2021
Interest cost $ 76 $ 63
Expected return on plan assets (200) (210)
Amortization of net actuarial loss 71 80
Net periodic pension benefit $ (53) $ (67)
As of March 31, 2022 and December 31, 2021, the Company had recorded a current pension liability of $138,000 and $129,000, respectively, which is included in
accrued liabilities in the Condensed Consolidated Balance Sheets, and a long-term pension liability of $3.3 million and $3.4 million, respectively, which is included
in deferred pension liability and other in the Condensed Consolidated Balance Sheets. The minimum required contribution in 2022 is expected to be $138,000, none
of which the Company has contributed as of March 31, 2022.
Note 9 – Leases
The Company leases administrative and manufacturing facilities through operating lease agreements. The Company has no finance leases as of March 31, 2022.
Our leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common area or other maintenance costs). The facility leases
include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion, therefore, the renewals to extend the lease terms are
not included in our right of use (“ROU”) assets or lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and,
when they are reasonably certain of exercise, we include the renewal period in our lease term.
Operating leases result in the recognition of ROU assets and lease liabilities on the Condensed Consolidated Balance Sheets. ROU assets represent our right to use
the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our estimated
incremental borrowing rate at the commencement date to determine the present value of lease payments. Most real estate leases include one or more options to
renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Lease expense is recognized on a straight-line basis over the lease term. Leases
with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. The primary leases we enter into with initial terms of 12
months or less are for equipment.
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Supplemental information regarding leases:
March, 31
In thousands, unless otherwise noted 2022
Balance Sheet:
ROU assets $ 1,065
Current lease liabilities – operating 419
Non-current lease liabilities - operating 696
Total lease liabilities 1,115
Weighted average remaining lease term (years) 2.5
Weighted average discount rate 7.9%
Future minimum lease payments:
Remainder of 2022 $ 367
2023 438
2024 146
2025 146
2026 152
Thereafter 13
Total 1,262
Less: Imputed interest 147
Total lease liabilities 1,115
Less: Current lease liabilities 419
Long-term lease liabilities $ 696
Supplemental cash flow information regarding leases:
For the three months ended
In thousands March 31, 2022
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities $ 110
Non-cash activity:
ROU assets obtained in exchange for lease liabilities -
Total operating lease expense was $130,000 for the three months ended March 31, 2022. There was no short-term lease expense for the three months ended March
31, 2022. Total operating lease expense and short-term lease expense was $94,000 and $2,000, respectively, for the three months ended March 31, 2021.
Note 10 – Stockholders’ Deficit and Income (Loss) Per Share
The following table presents the calculation of income (loss) per share for the three months ended March 31, 2022 and 2021:
Three months ended March 31
In thousands, except per share data 2022 2021
Numerator:
Net income (loss), as reported $ 493 $ (621)
Denominator:
Weighted average shares outstanding – basic 13,446 13,696
Weighted average shares outstanding – diluted 13,531 13,696
Basic and diluted earnings (loss) per share – basic and diluted $ 0.04 $ (0.05)
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Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to common shares by the weighted average number of common
shares outstanding for the period. Diluted earnings (loss) per common share is computed by dividing net income (loss) attributable to common shares, by the
weighted average number of common shares outstanding, adjusted for shares that would be assumed outstanding after warrants and stock options vested under the
treasury stock method.
As of March 31, 2022, the Company included the effects of the 280,000 stock options outstanding in the calculation of diluted income per share. As of March 31,
2022 and 2021, the Company had other warrants to purchase 1.6 million shares of Common Stock outstanding, which were excluded from the calculation of diluted
income (loss) per share because their exercise price was greater than the average stock price for the period and their inclusion would have been anti-dilutive.
On March 28, 2022, the Company issued 280,000 stock options to executives and employees at an exercise price of $0.40 per share, which become vested on March
28, 2023. The options were valued at the grant date using the Black-Scholes model with the following inputs: expiration date March 28, 2026; risk-free rate of
return 2.55%; and volatility 108%.
A summary of the status of the Company’s stock options as of March 31, 2022 and the changes during the three months then ended is presented below:
Weighted average remaining
Number of Weighted Average contractual life
Options Exercise Price (in years) Average intrinsic value
Outstanding at December 31, 2021 - - - -
Granted 280,000 $ 0.40
Expired - -
Outstanding at March 31, 2022 280,000 $ 0.40 4.0 $ 0.19
Exercisable at the end of the period - - - -
Equity based compensation was $0 for the three months ended March 31, 2022 and 2021. The total unrecognized equity based compensation cost related to
unvested stock options was approximately $152,000 as of March 31, 2022 and will be recognized over the vesting period.
Note 11 – Contingencies
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business and/or which are covered by insurance. The Company has
accrued reserves individually and in the aggregate for such legal proceedings. Should actual litigation results differ from the Company’s estimates, revisions to
increase or decrease the accrued reserves may be required. There are no open matters that the Company deems material.
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Note 12 – Related Party Transactions
The Company has the following related party transactions:
As of March 31, 2022, Unilumin USA (“Unilumin”) owns 52.0% of the Company’s Common Stock and beneficially owns 53.7% of the Company’s Common Stock.
Nicholas J. Fazio, Yang Liu and Yantao Yu, each directors of the Company, are each directors and/or officers of Unilumin. The Company purchased $492,000 and
$59,000 of product from Unilumin in the three months ended March 31, 2022 and 2021, respectively. The Company borrowed $250,000 under the revolving credit
line with Unilumin in the three months ended March 31, 2022. The amount payable by the Company to Unilumin, including accounts payable, accrued interest and
long-term debt, was $4.5 million and $3.7 million as of March 31, 2022 and December 31, 2021, respectively.
Note 13 – Business Segment Data
Operating segments are based on the Company’s business components about which separate financial information is available and are evaluated regularly by the
Company’s chief operating decision makers in deciding how to allocate resources and in assessing performance of the business.
The Company evaluates segment performance and allocates resources based upon operating income (loss). The Company’s operations are managed in two
reportable business segments: Digital product sales and Digital product lease and maintenance. Both design and produce large-scale, multi-color, real-time digital
displays. Both operating segments are conducted on a global basis, primarily through operations in the United States. The Company also has operations in Canada.
The Digital product sales segment sells equipment and the Digital product lease and maintenance segment leases and maintains equipment. Corporate general and
administrative items relate to costs that are not directly identifiable with a segment. There are no intersegment sales.
Foreign revenues represent less than 10% of the Company’s revenues in the three months ended March 31, 2022 and 2021. The Company’s foreign operation does
not manufacture its own equipment; the domestic operation provides the equipment that the foreign operation leases or sells. The foreign operation operates
similarly to the domestic operation and has similar profit margins. Foreign assets are immaterial.
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Information about the Company’s operations in its two business segments for the three months ended March 31, 2022 and 2021 is as follows:
Three Months Ended March 31
In thousands 2022 2021
Revenues:
Digital product sales $ 3,237 $ 2,093
Digital product lease and maintenance 428 493
Total revenues $ 3,665 $ 2,586
Operating (loss) income:
Digital product sales $ (71) $ (626)
Digital product lease and maintenance 257 319
Corporate general and administrative expenses (406) (313)
Total operating loss (220) (620)
Interest expense, net (142) (103)
Loss on foreign currency remeasurement (16) (36)
Gain on extinguishment of debt - 77
Gain on forgiveness of PPP loan 824 -
Pension benefit 53 67
Income (loss) before income taxes 499 (615)
Income tax expense (6) (6)
Net income (loss) $ 493 $ (621)
March 31 December 31
2022 2021
Assets
Digital product sales $ 7,712 $ 6,379
Digital product lease and maintenance 1,678 1,748
Total identifiable assets 9,390 8,127
General corporate 383 524
Total assets $ 9,773 $ 8,651
Note 14 – Subsequent Events
The Company has evaluated events and transactions subsequent to March 31, 2022 and through the date these Condensed Consolidated Financial Statements were
included in this Form 10-Q and filed with the SEC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Trans-Lux is a leading supplier of LED technology for display applications. The essential elements of these systems are the real-time, programmable digital
products that we design, manufacture, distribute and service. Designed to meet the digital signage solutions for any size venue’s indoor and outdoor needs, these
displays are used primarily in applications for the financial, banking, gaming, corporate, advertising, transportation, entertainment and sports markets. The
Company operates in two reportable segments: Digital product sales and Digital product lease and maintenance.
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The Digital product sales segment includes worldwide revenues and related expenses from the sales of both indoor and outdoor digital product signage. This
segment includes the financial, government/private, gaming, scoreboards and outdoor advertising markets. The Digital product lease and maintenance segment
includes worldwide revenues and related expenses from the lease and maintenance of both indoor and outdoor digital product signage. This segment includes the
lease and maintenance of digital product signage across all markets.
Results of Operations
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021
The following table presents our Statements of Operations data, expressed as a percentage of revenue for the three months ended March 31, 2022 and 2021:
Three months ended March 31
In thousands, except percentages 2022 2021
Revenues:
Digital product sales $ 3,237 88.3 % $ 2,093 80.9 %
Digital product lease and maintenance 428 11.7 % 493 19.1 %
Total revenues 3,665 100.0 % 2,586 100.0 %
Cost of revenues:
Cost of digital product sales 2,958 80.7 % 2,254 87.2 %
Cost of digital product lease and maintenance 165 4.5 % 153 5.9 %
Total cost of revenues 3,123 85.2 % 2,407 93.1 %
Gross profit 542 14.8 % 179 6.9 %
General and administrative and restructuring expenses (762) (11.1)% (799) (30.9)%
Operating loss (220) (6.0)% (620) (24.0)%
Interest expense, net (142) (3.9)% (103) (4.0)%
Loss on foreign currency remeasurement (16) (0.4)% (36) (1.4)%
Gain on extinguishment of debt - -% 77 3.0 %
Gain on forgiveness of PPP loan 824 22.5 % - -%
Pension benefit 53 1.4 % 67 2.6 %
Income (loss) before income taxes 499 13.6 % (615) (23.8)%
Income tax expense (6) (0.2)% (6) (0.2)%
Net income (loss) $ 493 13.5 % $ (621) (24.0)%
Total revenues for the three months ended March 31, 2022 increased $1.1 million or 41.7% to $3.7 million from $2.6 million for the three months ended March 31,
2021, primarily due to increases in Digital product sales.
Digital product sales revenues increased $1.1 million or 54.7%, primarily due to the return of customer orders since COVID-19 pandemic restrictions have been
reduced or eliminated over the past year.
Digital product lease and maintenance revenues decreased $65,000 or 13.2%, primarily due to the continued expected revenue decline in the older outdoor display
equipment rental bases acquired in the early 1990s. The financial services market continues to be negatively impacted by the current investment climate resulting in
consolidation within that industry and the wider use of flat-panel screens for smaller applications.
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Total operating loss for the three months ended March 31, 2022 decreased $400,000 to $220,000 from $620,000 for the three months ended March 31, 2021,
principally due to the increase in revenues and a decrease in the cost of revenues as a percentage of revenues, as well as a decrease in general and administrative
expenses.
Digital product sales operating loss decreased $555,000 to $71,000 for the three months ended March 31, 2022 compared to $626,000 for the three months ended
March 31, 2021, primarily due to the increase in revenues and a decrease in the cost of revenues as a percentage of revenues, as well as a decrease in general and
administrative expenses. The cost of Digital product sales increased $704,000 or 31.2%, primarily due to the increase in revenues. The cost of Digital product sales
represented 91.4% of related revenues in 2022 compared to 107.7% in 2021. This decrease as a percentage of revenues is primarily due to manufacturing
efficiencies due to the increase in revenues. General and administrative expenses for Digital product sales decreased $115,000 or 24.7%, primarily due to decreases
in consulting expenses, partially offset by increases in bad debt expenses and employees’ expenses.
Digital product lease and maintenance operating income decreased $62,000 or 19.4%, primarily due to the decrease in revenues and an increase in the cost of Digital
product lease and maintenance. The cost of Digital product lease and maintenance increased $12,000 or 7.8%, primarily due to an increase in the cost of service
agents, partially offset by a decrease in depreciation expense. The cost of Digital product lease and maintenance revenues represented 38.6% of related revenues in
2022 compared to 31.0% in 2021. The cost of Digital product lease and maintenance includes field service expenses, plant repair costs, maintenance and
depreciation. General and administrative expenses for Digital product lease and maintenance decreased $15,000 or 71.4%, primarily due to a reduction in bad debt
expenses.
Corporate general and administrative expenses increased $93,000 or 29.7%, primarily due to an increase in employees’ expenses.
Net interest expense increased $39,000 or 37.9%, primarily due to an increase in interest rates and outstanding debt.
The effective tax rate for the three months ended March 31, 2022 and 2021 was 1.2% and 1.0%, respectively. Both the 2022 and 2021 tax rates are being affected by
the valuation allowance on the Company’s deferred tax assets as a result of reporting pre-tax losses.
Liquidity and Capital Resources
Current Liquidity
The Company has incurred significant recurring losses and continues to have a significant working capital deficiency. The Company recorded income of $493,000
in the three months ended March 31, 2022 but recorded a loss of $5.0 million in the year ended December 31, 2021. The Company had working capital deficiencies
of $9.3 million and $9.8 million as of March 31, 2022 and December 31, 2020, respectively. The change in the working capital deficiency was primarily affected by
increases in the accounts receivable, inventories and prepaids and other assets, as well as decreases in accounts payable and current portion of long-term debt,
partially offset by a decrease in cash as well as increases in accrued liabilities, current lease liabilities and customer deposits.
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The Company is dependent on future operating performance in order to generate sufficient cash flows in order to continue to run its businesses. Future operating
performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control, including the impact of the current
economic environment, the spread of major epidemics (including coronavirus) and other related uncertainties such as government imposed travel restrictions,
interruptions to supply chains, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash resources, the Company
had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn
delayed certain deliveries to our customers.
There is substantial doubt as to whether we will have adequate liquidity, including access to the debt and equity capital markets, to operate our business over the next
12 months from the date of issuance of this Form 10-Q. The Company continually evaluates the need and availability of long-term capital in order to meet its cash
requirements and fund potential new opportunities.
The Company used cash of $828,000 and generated cash of $238,000 from operating activities for the three months ended March 31, 2022 and 2021, respectively.
The Company has implemented several initiatives to improve operational results and cash flows over future periods, including reducing head count, reorganizing its
sales department and outsourcing certain administrative functions. The Company continues to explore ways to reduce operational and overhead costs. The
Company periodically takes steps to reduce the cost to maintain the digital products on lease and maintenance agreements.
Cash and cash equivalents decreased $141,000 in the three months ended March 31, 2022 to $383,000 at March 31, 2022 from $524,000 at December 31, 2021. The
decrease is primarily attributable to cash used in operating activities of $828,000, partially offset by proceeds from long-term debt borrowings of $250,000 and
refund proceeds from loan forgiveness of $453,000. The current economic environment has increased the Company’s trade receivables collection cycle, and its
allowances for uncollectible accounts receivable, but collections continue to be favorable.
Under various agreements, the Company is obligated to make future cash payments in fixed amounts. These include payments under the Company’s current and
long-term debt agreements, pension plan minimum required contributions, employment agreement payments and rent payments required under operating lease
agreements. The Company has both variable and fixed interest rate debt. Interest payments are projected based on actual interest payments incurred in 2022 until the
underlying debts mature. As interest rates have increased in 2022, and may continue to increase, the amounts the Company pays for interest could exceed the
projected amounts.
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The following table summarizes the Company’s fixed cash obligations as of March 31, 2022 for the remainder of 2022 and over the next four fiscal years:
Remainder of
In thousands 2022 2023 2024 2025 2026
Long-term debt, including interest $ 3,733 $ - $ 31 $ 31 $ 31
Pension plan payments 138 - 179 129 60
Estimated warranty liability 314 114 86 50 33
Operating lease payments 355 452 146 149 152
Total $ 4,540 $ 566 $ 442 $ 359 $ 276
As of March 31, 2022, the Company had outstanding $302,000 of Notes which matured as of March 1, 2012. The Company also had outstanding $220,000 of
Debentures which matured on December 1, 2012. The Company continues to consider future exchanges of the Notes and Debentures, but has no agreements,
commitments or understandings with respect to any further such exchanges.
The Company may still seek additional financing in order to provide enough cash to cover our remaining current fixed cash obligations as well as providing working
capital. However, there can be no assurance as to the amounts, if any, the Company will receive in any such financing or the terms thereof. The Company has no
agreements, commitments or understandings with respect to any such financings. To the extent the Company issues additional equity securities, it could be dilutive
to existing shareholders.
For a further description of the Company’s long-term debt, see Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt.
Pension Plan Contributions
The minimum required pension plan contribution for 2022 is expected to be $138,000, none of which the Company has contributed as of March 31, 2022. See Note
8 to the Condensed Consolidated Financial Statements – Pension Plan for further details.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The Company may, from time to time, provide estimates as to future performance. These forward-looking statements will be estimates and may or may not be
realized by the Company. The Company undertakes no duty to update such forward-looking statements. Many factors could cause actual results to differ from these
forward-looking statements, including loss of market share through competition, introduction of competing products by others, pressure on prices from competition
or purchasers of the Company’s products, interest rate and foreign exchange fluctuations, the impact of inflation, terrorist acts and war.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is subject to interest rate risk on its long-term debt. The Company manages its exposure to changes in interest rates by the use of variable and fixed
interest rate debt. The fair value of the Company’s fixed rate long-term debt is disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-
Term Debt. Every 1-percentage-point change in interest rates would result in an annual interest expense fluctuation of approximately $19,000. In addition, the
Company is exposed to foreign currency exchange rate risk mainly as a result of its investment in its Canadian subsidiary. A 10% change in the Canadian dollar
relative to the U.S. dollar would result in a currency remeasurement expense fluctuation of approximately $265,000, based on dealer quotes, considering current
exchange rates. The Company does not enter into derivatives for trading or speculative purposes and did not hold any derivative financial instruments at March 31,
2022.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by
this report, we have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (our
principal executive officer) and our Chief Accounting Officer (our principal accounting officer), of the effectiveness of the design and operation of our disclosure
controls and procedures. Our Chief Executive Officer and Chief Accounting Officer have concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in the 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 that such information is accumulated and communicated to our management (including our
Chief Executive Officer and our Chief Accounting Officer) to allow timely decisions regarding required disclosures. Based on such evaluation, our Chief Executive
Officer and Chief Accounting Officer have concluded that these disclosure controls are effective as of March 31, 2022.
Changes in Internal Control over Financial Reporting. There has been no change in the Company’s internal control over financial reporting that occurred in the
quarter ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II – Other Information
Item 1. Legal Proceedings
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business and/or which are covered by insurance. The Company has
accrued reserves individually and in the aggregate for such legal proceedings. Should actual litigation results differ from the Company’s estimates, revisions to
increase or decrease the accrued reserves may be required. There are no open matters that the Company deems material.
Item 1A. Risk Factors
The Company is subject to a number of risks including general business and financial risk factors. Any or all of such factors could have a material adverse effect on
the business, financial condition or results of operations of the Company. You should carefully consider the risk factors identified in our Annual Report on Form 10-
K for the year ended December 31, 2021.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company had outstanding $302,000 of Notes which are no
longer convertible into common shares. The Notes matured as of March 1, 2012 and are currently in default. As of March 31, 2022 and December 31, 2021, the
Company had accrued $314,000 and $307,000, respectively, of interest related to the Notes, which is included in accrued liabilities in the Condensed Consolidated
Balance Sheets.
As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company has outstanding $220,000 of Debentures. The
Debentures matured as of December 1, 2012 and are currently in default. As of March 31, 2022 and December 31, 2021, the Company had accrued $258,000 and
$253,000, respectively, of interest related to the Debentures, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. The trustee, by
notice to the Company, or the holders of 25% of the principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the
outstanding principal plus interest due and payable immediately.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
31.1 Certification of Nicholas J. Fazio, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002, filed herewith.
31.2 Certification of Todd Dupee, Senior Vice President and Chief Accounting Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1 Certification of Nicholas J. Fazio, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, filed herewith.
32.2 Certification of Todd Dupee, Senior Vice President and Chief Accounting Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, filed herewith.
101 The following financial information from the Company’s Form 10-Q for the quarterly period ended March 31, 2022 formatted in iXBRL (Inline eXtensible
Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii)
Condensed Consolidated Statements of Cash Flows, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Deficit, and (v) Notes to
Condensed Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TRANS-LUX CORPORATION
(Registrant)
by /s/ Nicholas J. Fazio
Nicholas J. Fazio
Chief Executive Officer
by /s/ Todd Dupee
Todd Dupee
Senior Vice President and
Chief Accounting Officer
Date: May 16, 2022
25
EXHIBIT 31.1
TRANS-LUX CORPORATION
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) UNDER THE EXCHANGE ACT
I, Nicholas J. Fazio, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Trans-Lux Corporation for the quarter ended March 31, 2022;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-
15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to me by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
/s/ Nicholas J. Fazio
Date: May 16, 2022 Nicholas J. Fazio
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
TRANS-LUX CORPORATION
CERTIFICATION OF THE CHIEF ACCOUNTING OFFICER
PURSUANT TO RULE 13a-14(a) UNDER THE EXCHANGE ACT
I, Todd Dupee, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Trans-Lux Corporation for the quarter ended March 31, 2022;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-
15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to me by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
/s/ Todd Dupee
Date: May 16, 2022 Todd Dupee
Senior Vice President and
Chief Accounting Officer
(Principal Financial Officer)
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code), I, Nicholas J. Fazio, Chief Executive Officer of Trans-Lux Corporation (the "Registrant"), do hereby certify, to the best of my
knowledge that:
(1) The Registrant's Annual Report on Form 10-Q for the quarter ended March 31, 2022 being filed with the Securities and
Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Registrant.
This Certification accompanies this Form 10-Q as an exhibit, but shall not be deemed as having been filed for purposes of Section
18 of the Securities Exchange Act of 1934 or as a separate disclosure document of the Registrant or the certifying officer.
/s/ Nicholas J. Fazio
Date: May 16, 2022 Nicholas J. Fazio
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 32.2
CERTIFICATION OF CHIEF ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code), I, Todd Dupee, Senior Vice President and Chief Accounting Officer of Trans-Lux Corporation (the "Registrant"), do hereby
certify, to the best of my knowledge that:
(1) The Registrant's Annual Report on Form 10-Q for the quarter ended March 31, 2022 being filed with the Securities and
Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Registrant.
This Certification accompanies this Form 10-Q as an exhibit, but shall not be deemed as having been filed for purposes of Section
18 of the Securities Exchange Act of 1934 or as a separate disclosure document of the Registrant or the certifying officer.
/s/ Todd Dupee
Date: May 16, 2022 Todd Dupee
Senior Vice President and
Chief Accounting Officer
(Principal Financial Officer)
