[中报]洲明科技(300232):海外上市控股子公司TRANS-LUX CORPORATION发布2024年半年度报告
原标题:洲明科技:关于海外上市控股子公司Trans-Lux Corporation发布2024年半年度报告的公告 2024年半年度 Trans-Lux Corporation主要的财务数据列示如下：
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 2024年 8月 26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 June 30, 2024 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.) st th 254 West 31 Street, 13 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 Smaller reporting company X Emerging growth company ___ 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 8/13/24 Common Stock - $0.001 Par Value 13,496,276 TRANS-LUX CORPORATION AND SUBSIDIARIES Table of Contents Page No. Part I - Financial Information (unaudited) Item 1. Condensed Consolidated Balance Sheets – June 30, 2024 and December 31, 2023 (see Note 1) 1 Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2024 and 2023 2 Condensed Consolidated Statements of Comprehensive Loss – Three and Six Months Ended June 30, 2024 and 2023 2 Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Three and Six Months Ended June 30, 2024 and 2023 3 Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2024 and 2023 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 24 Item 4. Controls and Procedures 24 Part II - Other Information Item 1. Legal Proceedings 25 Item 1A. Risk Factors 25 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25 Item 3. Defaults upon Senior Securities 25 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 27 Signatures 28 Exhibits Part I - Financial Information (unaudited) Item 1. TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) June 30 December 31 2024 2023 In thousands, except share data ASSETS Current assets: Cash and cash equivalents $ 169 $ 185 Receivables, net 1,950 1,531 Inventories 1,811 2,372 Prepaids and other assets 247 148 Total current assets 4,177 4,236 Long-term assets: Rental equipment, net 82 111 Property, plant and equipment, net 1,652 1,778 Right of use assets 1,788 1,971 Restricted cash 200 200 Other assets 34 34 Total long-term assets 3,756 4,094 TOTAL ASSETS $ 7,933 $ 8,330 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 9,249 $ 8,420 Accrued liabilities 6 ,029 5,352 Current portion of long-term debt 3 ,776 3,776 Current lease liabilities 378 352 Customer deposits 7 79 2 13 Total current liabilities 20,211 18,113 Long-term liabilities: Long-term debt, less current portion 531 535Long-term lease liabilities 1,447 1,644 Deferred pension liability and other 2,153 2,248 Total long-term liabilities 4,131 4,427 Total liabilities 24,342 22,540 Stockholders' deficit: Preferred Stock Series A - $20 stated value - 416,500 shares authorized;shares issued and outstanding: 0 in 2024 and 2023 - -Preferred Stock Series B - $200 stated value - 51,000 shares authorized;shares issued and outstanding: 0 in 2024 and 2023 - -Common Stock - $0.001 par value - 30,000,000 shares authorized;shares issued: 13,524,116 in 2024 and 2023 shares outstanding: 13,496,276 in 2024 and 2023 13 13Additional paid-in-capital 41,508 41,508 Accumulated deficit (48,846) (46,719) Accumulated other comprehensive loss (6,021) (5,949)Treasury stock - at cost - 27,840 common shares in 2024 and 2023 (3,063) (3,063)Total stockholders' deficit (16,409) (14,210) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 7,933 $ 8,330The accompanying notes are an integral part of these condensed consolidated financial statements.TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) 3 Months Ended 6 Months Ended June 30 June 30 In thousands, except per share data 2024 2023 2024 2023 Revenues: Digital product sales $ 3,273 $ 2,767 $ 5,702 $ 6 ,888 Digital product lease and maintenance 1 90 219 385 447Total revenues 3,463 2,986 6,087 7,335 Cost of revenues: Cost of digital product sales 2,964 2,617 5,499 6,420Cost of digital product lease and maintenance 1 14 115 199 220Total cost of revenues 3,078 2,732 5,698 6,640 Gross income 3 85 254 389 695 General and administrative expenses ( 1,064) (816) (2,190) (1,894) (679) (562) (1,801) (1,199) Operating loss Interest expense, net (147) (194) (289) (338)Gain (loss) on foreign currency remeasurement 24 (51) 76 (59)Pension expense (50) (62) (100) (125) (852) (869) (2,114) (1,721) Loss before income taxes Income tax expense (6) (6) (13) (12)Net loss $ (858) $ (875) $ (2,127) $ (1,733) The accompanying notes are an integral part of these condensed consolidated financial statements.TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) 3 Months Ended 6 Months Ended June 30 June 30 2024 2023 2024 2023 In thousands Net loss $ (858) $ (875) $ (2,127) $ (1,733) Other comprehensive (loss) income: Unrealized foreign currency translation (loss) gain (23) 47 (72) 54Total other comprehensive (loss) income, net of tax (23) 47 (72) 54Comprehensive loss $ (881) $ (828) $ (2,199) $ (1,679) The accompanying notes are an integral part of these condensed consolidated financial statements.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) Gain Stock Deficit For the 6 months ended June 30, 2024 Balance January 1, 2024 - $ - - $ - 13,524,116 $ 13 $ 41,508 $ (46,719) $ (5,949) $ (3,063) $ (14,210) Net loss - - - - - - - (2,127) - - (2,127) Other comprehensive loss, net of tax: Unrealized foreign currency translation loss - - - - - - - - (72) - (72) Balance June 30, 2024 - $ - - $ - 13,524,116 $ 13 $ 41,508 $ (48,846) $ (6,021) $ (3,063) $ (16,409) For the 3 months ended June 30, 2024 Balance April 1, 2024 - $ - - $ - 13,524,116 $ 13 $ 41,508 $ (47,988) $ (5,998) $ (3,063) $ (15,528) Net loss - - - - - - - (858) - - (858) Other comprehensive loss, net of tax: Unrealized foreign currency translation loss - - - - - - - - (23) - (23) Balance June 30, 2024 - $ - - $ - 13,524,116 $ 13 $ 41,508 $ (48,846) $ (6,021) $ (3,063) $ (16,409) For the 6 months ended June 30, 2023 Balance January 1, 2023 - $ - - $ - 13,474,116 $ 13 $ 41,444 $ (42,652) $ (6,066) $ (3,063) $ (10,324) Net loss - - - - - - - (1,733) - - (1,733) Stock issued to directors/officers - - - - 5 0,000 - 2 6 - - - 26 Issuance of options - - - - - - 3 8 - - - 38 Other comprehensive income, net of tax: Unrealized foreign currency translation gain - - - - - - - - 54 - 54 Balance June 30, 2023 - $ - - $ - 13,524,116 $ 13 $ 41,508 $ (44,385) $ (6,012) $ (3,063) $ (11,939) For the 3 months ended June 30, 2023 Balance April 1, 2023 - $ - - $ - 13,474,116 $ 13 $ 41,482 $ (43,510) $ (6,059) $ (3,063) $ (11,137) Net loss - - - - - - - (875) - - (875) Stock issued to directors/officers - - - - 5 0,000 - 2 6 - - - 26 Other comprehensive income, net of tax: Unrealized foreign currency translation gain - - - - - - - - 47 - 47 Balance June 30, 2023 - $ - - $ - 13,524,116 $ 13 $ 41,508 $ (44,385) $ (6,012) $ (3,063) $ (11,939) The accompanying notes are an integral part of these condensed consolidated financial statements. TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 6 Months Ended June 30 In thousands 2024 2023 Cash flows from operating activities Net loss $ (2,127) $ (1,733) Adjustment to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 1 60 182 Amortization of right of use assets 1 83 211 (Gain) loss on foreign currency remeasurement (76) 59Issuance of common stock for compensation - 26Amortization of stock options - 38 Allowance for credit losses 21 (25) Changes in operating assets and liabilities: Accounts receivable (439) 1,197 Inventories 5 61 515 Prepaids and other assets (99) 110 Accounts payable 8 29 269 Accrued liabilities 5 66 91 Operating lease liabilities (171) (220) Customer deposits 5 66 (174) Deferred pension liability and other 19 52 Net cash (used in) provided by operating activities (7) 598Cash flows from investing activities Purchases of property, plant and equipment (5) (248)Net cash used in investing activities (5) (248) Cash flows from financing activities Proceeds from long-term debt - 200 Payments of long-term debt (3) (200) Net cash used in financing activities (3) -Effect of exchange rate changes (1) - Net (decrease) increase in cash, cash equivalents and restricted cash (16) 350Cash, cash equivalents and restricted cash at beginning of year 3 85 48Cash, cash equivalents and restricted cash at end of period $ 369 $ 398Supplemental disclosure of cash flow information: Interest paid $ 5 $ 23 Income taxes paid 6 10 Reconciliation of cash, cash equivalents and restricted cash to amountsreported in the Consolidated Balance Sheets at end of period:Current assets Cash and cash equivalents $ 169 $ 198 Long-term assets Restricted cash 2 00 200 Cash, cash equivalents and restricted cash at end of period $ 369 $ 398The accompanying notes are an integral part of these condensed consolidated financial statements. TRANS-LUX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2024 (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, 2023. The Condensed Consolidated Balance Sheet at December 31, 2023 is derived from the December 31, 2023 audited financial statements. Significant Accounting Policies For a discussion of our significant accounting policies, see Note 1, Summary of significant accounting policies, within Part II, Item 8 “Financial Statements and Supplementary Data” in our 2023 Form 10-K. There have been no changes to our significant accounting policies since the 2023 Form 10-K. The following new accounting pronouncements, and related impacts on adoption, are being evaluated by the Company: In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends ASC 280. The intent of ASU 2023-07 is to improve the disclosures around a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses, by requiring entities to disclose on an annual and interim basis: (i) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss and (ii) an amount for other segment items by reportable segment and a description of its composition, which represents the difference between segment revenue less segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. Furthermore, entities will be required to: (i) provide all annual disclosures about a segment’s profit or loss and assets currently required under ASC 280 on an interim basis as well, (ii) clarify that an entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, and (iii) disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2023-07 on its condensed consolidated financial statements and disclosures. 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. The Company has incurred recurring operating losses and continues to have a working capital deficiency including being in default on several debt obligations. The Company recorded a loss of $2.1 million in the six months ended June 30, 2024, and had a working capital deficiency of $16.0 million as of June 30, 2024. As of December 31, 2023, the Company had a working capital deficiency of $13.9 million. 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”), (iv) repay our obligations under our Loan Agreement (hereinafter defined) with Unilumin and/or (v) repay our obligations under our loan agreements with Carlisle, 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 continue as a going concern 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 June 30, 2024. Revenue from the Company’s digital product and maintenance service is recognized ratably over the lease term in accordance with ASC Topic 842. Disaggregated Revenues The following table represents a disaggregation of revenue from contracts with customers for the three and six months ended June 30, 2024 and 2023, along with the reportable segment for each category: Three months ended Six months ended June 30, 2024 June 30, 2023 In thousands June 30, 2024 June 30, 2023 Digital product sales: $5,702 $6,888 Catalog and small customized products $3,273 $2,767 - - Large customized products - - 5,702 6,888 Subtotal 3,273 2,767 Digital product lease and maintenance: 198 248 Operating leases 99 117 187 199 Maintenance agreements ` 91 102 385 447 Subtotal 190 219 $6,087 $7,335 Total $3,463 $2,986 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. 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 June 30, 2024, the future minimum lease payments due to the Company under operating leases that expire at varying dates through 2030 for its rental equipment and maintenance contracts, assuming no renewals of existing leases or any new leases, aggregating $1,095,000 are as follows: $179,000 – remainder of 2024, $359,000 – 2025, $271,000 – 2026, $202,000 – 2027, $62,000 – 2028 and $22,000 thereafter. 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 June 30, 2024 and December 31, 2023, 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: In thousands June 30, 2024 December 31, 2023 Gross receivables $2,062 $1,685 Allowance for credit 112 154 loss Net receivables 1,950 1,531 Contract liabilities 881 225 During the three and six months ended June 30, 2024 and 2023, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods: Three months ended Six months ended June 30, 2024 June 30, 2023 In thousands June 30, 2024 June 30, 2023 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $378 $570 $144 $951 Performance obligations satisfied in previous periods (for example, due to changes in transaction price) - - - - Transaction Price Allocated to Future Performance Obligations As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations for digital product sales was $3.1 million and digital product lease and maintenance was $1.1 million. The Company expects to recognize revenue on approximately 84%, 12% and 4% 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, 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. 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: June 30 December 31 In thousands 2024 2023 Raw materials $1,654 2,102 Work-in-progress - 18 Finished goods 157 252 $1,811 $2,372 Note 5 – Rental Equipment, net Rental equipment consists of the following: June 30 December 31 In thousands 2024 2023 Rental equipment $1,049 $1,049 Less accumulated depreciation 967 938 Net rental equipment $ 82 $ 111 Depreciation expense for rental equipment for the six months ended June 30, 2024 and 2023 was $29,000 and $57,000, respectively. Depreciation expense for rental equipment for the three months ended June 30, 2024 and 2023 was $15,000 and $28,000, respectively. Note 6 – Property, Plant and Equipment, net Property, plant and equipment consists of the following: June 30 December 31 In thousands 2024 2023 Machinery, fixtures and equipment $3,182 $3,177 Leaseholds and improvements 23 23 3,205 3,200 Less accumulated depreciation 1,553 1,422 Net property, plant and equipment $1,652 $1,778 The Company’s net property, plant and equipment was pledged as collateral under various financing agreements. Depreciation expense for property, plant and equipment for the six months ended June 30, 2024 and 2023 was $131,000 and $125,000, respectively. Depreciation expense for property, plant and equipment for the three months ended June 30, 2024 and 2023 was $66,000 and $62,000, respectively. Note 7 – Long-Term Debt Long-term debt consists of the following: June 30 December 31 In thousands 2024 2023 8?% Limited convertible senior subordinated notes due 2012 $ 302 $ 302 9?% Subordinated debentures due 2012 220 220 Revolving credit line – related party 2,247 2,247 Term loans – related party 1,000 1,000 Term loans 538 542 Total debt 4,307 4,311 Less portion due within one year 3,776 3,776 Net long-term debt $ 531 $ 535 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. On March 20, 2023, the Company and Unilumin entered into a modification agreement to the Loan Agreement effective December 31, 2022. The Loan Agreement matured on December 31, 2023, as such the Company is currently in default. The Loan Agreement allowed the Company to borrow up to an aggregate of $2.2 million at an interest rate of the Prime Rate as published in the Wall Street Journal plus 4.75%, capped at 9.50% as of May 1, 2024 (9.50% at June 30, 2024) on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. As of June 30, 2024, the balance outstanding under the Loan Agreement was $2.2 million. As of June 30, 2024 and December 31, 2023, the Company had accrued $691,000 and $557,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. 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 June 30, 2023, $500,000 was outstanding. The loan matures on December 10, 2051 and carries an interest rate of 3.75%. As of June 30, 2024 and December 31, 2023, the Company had accrued $45,000 and $38,000, respectively, of interest related to the Loan Note, which is included in Accrued liabilities in the Consolidated Balance Sheets. 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 (the “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 June 30, 2024, the entire amount was outstanding and is included in current portion of long-term debt in the Consolidated Balance Sheets. As of June 30, 2024 and December 31, 2023, the Company had accrued $390,000 and $360,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Marco Elser, a director of the Company, exercises voting and dispositive power as investment manager of Carlisle. 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 June 30, 2024, the entire amount was outstanding and is included in current portion of long-term debt Consolidated Balance Sheets. As of June 30, 2024 and December 31, 2023, the Company had accrued $390,000 and $360,000, 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 June 30, 2024 and December 31, 2023, the Company had outstanding $302,000 of Notes. The Notes matured as of March 1, 2012 and are currently in default. As of June 30, 2024 and December 31, 2023, the Company had accrued $370,000 and $357,000, 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. As of June 30, 2024 and December 31, 2023, the Company had outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of June 30, 2024 and December 31, 2023, the Company had accrued $305,000 and $294,000, 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. 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 June 30 Six months ended June 30 In thousands 2024 2023 2024 2023 Interest cost $ 129 $ 134 $ 258 $ 268 Expected return on plan assets (154) (146) (308) (291) Amortization of net actuarial loss 75 74 150 148 Net periodic pension expense $ 50 $ 62 $ 100 $ 125 As of June 30, 2024 and December 31, 2023, the Company had recorded a current pension liability of $1.0 million and $840,000, respectively, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. As of both June 30, 2024 and December 31, 2023, the Company had recorded a long-term pension liability of $2.2 million, which is included in deferred pension liability and other in the Condensed Consolidated Balance Sheets. The minimum required pension plan contribution for 2024 is $840,000. Note 9 – Leases The Company leases administrative and manufacturing facilities through operating lease agreements. The Company has no finance leases as of June 30, 2024. 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. Supplemental information regarding leases: June 30 In thousands, unless otherwise noted 2024 Balance Sheet: ROU assets $1,788 Current lease liabilities – operating 378 Non-current lease liabilities - operating 1,447 Total lease liabilities 1,825 Weighted average remaining lease term (years) 3.9 Weighted average discount rate 10.5% Future minimum lease payments: Remainder of 2024 $ 273 2025 560 2026 577 2027 452 2028 414 Thereafter - Total 2,276 Less: Imputed interest 451 Total lease liabilities 1,825 Less: Current lease liabilities 378 Long-term lease liabilities $1,447 Supplemental cash flow information regarding leases: For the six months For the three months ended ended In thousands June 30, 2024 June 30, 2024 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 136 $ 272 Non-cash activity: ROU assets obtained in exchange for lease liabilities - - Total operating lease expense was $280,000 and $237,000 for the six months ended June 30, 2024 and 2023, respectively. Total operating lease expense was $140,000 and $118,000 for the three months ended June 30, 2024 and 2023, respectively. There was no short-term lease expense for the six months ended June 30, 2024 and 2023. There was no short-term lease expense for the three months ended June 30, 2024 and 2023. Note 10 – Stockholders’ Deficit and Loss Per Share The following table presents the calculation of loss per share for the three and six months ended June 30, 2024 and 2023: Three months ended June 30 Six months ended June 30 In thousands, except per share data 2024 2023 2024 2023 Numerator: Net loss, as reported $ (858) $ (875) $ (2,127) $ (1,733) Denominator: Weighted average shares outstanding – basic and diluted 13,496 13,491 13,496 13,469 Loss per share – basic and diluted $ (0.06) $ (0.06) $ (0.16) $ (0.13) Basic loss per common share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted loss per common share is computed by dividing net 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. （未完）  |