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Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Description of Business

Insignia Systems, Inc. (the “Company”) is a leading provider of in-store and digital advertising solutions to consumer-packaged goods (“CPG”) manufacturers, retailers, shopper marketing agencies and brokerages. The Company operates in a single reportable segment. The Company’s leadership and employees have extensive industry knowledge with direct experience in both CPG manufacturers and retailers. The Company provides marketing solutions to CPG manufacturers spanning from some of the largest multinationals to new and emerging brands.

 
Sale of our Custom Print Business

In August 2020 we sold our custom print business to an existing strategic partner. This divestiture has allowed us to focus on our core business, selling product solutions to CPGs. The custom print business was not material to our operations as a whole and did not represent a strategic shift and therefore is not presented as a discontinued operation. The sale price was $300,000 resulting in a gain on the sale of $195,000. We received $200,000 of cash and recorded a short-term receivable of $75,000 and a long-term receivable of $25,000. In addition to the initial sale price, we are eligible to receive up to $100,000 in additional payments to the extent net sales by the custom print business during the first year after closing exceeds a threshold amount. Due to the contingent nature of the earn-out no gain has been recognized as part of the recorded gain.

 
Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. They do not include all information and footnotes required by U.S. GAAP for complete financial statements. However, except as described herein, there has been no material change in the information disclosed in the notes to financial statements included in the Company’s financial statements as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. 

 
Inventories

Inventories are primarily comprised of sign cards and hardware. Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method, and consisted of the following as of the dates indicated:

 

    September 30,     December 31,  
    2020      2019  
Raw materials   $ 32,000     $ 47,000  
Work-in-process     8,000       16,000  
Finished goods     100,000       259,000  
    $ 140,000     $ 322,000  
                 
Property and Equipment
    September 30,     December 31,  
    2020     2019  
Property and Equipment:            
Production tooling, machinery and equipment   $ 3,392,000     $ 3,685,000  
Office furniture and fixtures     425,000       393,000  
Computer equipment and software     1,469,000       1,426,000  
      5,286,000       5,504,000  
Accumulated depreciation and amortization     (4,917,000 )     (4,955,000 )
Net Property and Equipment   $ 369,000     $ 549,000  
                 

 

Depreciation expense was approximately $85,000 and $255,000 in the three and nine months ended September 30, 2020, respectively, and was $300,000 and $740,000 in the three and nine months ended September 30, 2019, respectively.

 
Stock-Based Compensation

The Company measures and recognizes compensation expense for all stock-based payments at fair value. Restricted stock units and awards are valued at the closing market price of the Company’s stock as of the date of the grant. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and employee stock purchase plan rights. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

 

During the nine months ended September 30, 2020 and 2019, no equity awards were issued by the Company.

 

In June 2019, non-employee members of the Board of Directors received restricted stock grants totaling 70,755 shares pursuant to the 2018 Equity Incentive Plan (the “2018 Plan”). The shares underlying the awards were assigned a value of $1.06 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $75,000. The awards granted to directors in 2019 vested in full on the day immediately preceding the date of the 2020 annual shareholder meeting, July 29, 2020.

 

In July 2020, the Company issued 11,053 shares of common stock in settlement of $9,000 of total deferred fees as a result of a non-employee director’s departure from the Board. In June 2019, the Company issued 8,370 shares of common stock in settlement of $9,000 of total deferred fees as a result of a non-employee director’s departure from the Board. The Company’s non-employee directors are eligible to participate in a director deferred compensation plan, which allows a director to make voluntary deferrals of up to 100% of their annual cash retainers relating to Board and committee service.

 

The Company estimated the fair value of stock-based awards granted during the nine months ended September 30, 2020 under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 year, expected volatility of 58.5%, dividend yield of 0% and risk-free interest rate of 1.56%.

 

Total stock-based compensation expense recorded for the three and nine months ended September 30, 2020 was $37,000 and $145,000, respectively, and for the three and nine months ended September 30, 2019 was $101,000 and $378,000, respectively.

 
Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average shares outstanding and excludes any potential dilutive effects of stock options and restricted stock units and awards. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period.

 

Due to the net loss incurred during the three and nine months ended September 30, 2020 and 2019 all outstanding stock options were anti-dilutive for that period.

 

Weighted average common shares outstanding for the three and nine months ended September 30, 2020 and 2019 were as follows:

 

    Three Months Ended     Nine Months Ended        
    September 30           September 30        
    2020     2019     2020     2019  
Denominator for basic net loss per share - weighted average shares     12,179,000       11,986,000       12,108,000       11,911,000  
Effect of dilutive securities:                                
Stock options and restricted stock units     —       —       —       —  
Denominator for diluted net loss per share - weighted average shares     12,179,000       11,986,000       12,108,000       11,911,000