[
X
]
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended September 30, 2005
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[
]
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
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For
the transition period from ________________ to
_________________
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Commission
file number 0-50742
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SIGN
MEDIA SYSTEMS, INC.
(Exact
name of small business issuer as specified in its
charter)
|
|
FLORIDA
(State
or other jurisdiction of incorporation or organization)
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02-0555904
(IRS
Employer Identification No.)
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2100
19th
Street, Sarasota FL 34234
(Address
of principal executive offices)
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|
(941)
330-0336
(Issuer's
telephone number)
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|
_____________________________________________________________________________
(Former
name, former address and former fiscal year, if changed since last
report)
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(a) |
Condensed
Consolidated Balance Sheet (Unaudited) as of September 30,
2005.
|
(b) |
Condensed
Consolidated Statements of Income for the Nine and Three Month
Months
ended September 30, 2005 and 2004 (Unaudited); |
(c) |
Condensed
Consolidated Statements of Cash Flows for the Nine and Three Months
ended September 30, 2005 and 2004 (Unaudited); |
(d) |
Notes
to Condensed Consolidated Financial
Statements.
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SIGN
MEDIA SYSTEMS, INC.
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||||
CONDENSED
CONSOLIDATED BALANCE SHEET
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||||
SEPTEMBER
30, 2005
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||||
(UNAUDITED)
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||||
ASSETS
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$
|
6,015
|
||
Accounts
receivable
|
705,463
|
|||
Interest
receivable
|
15,900
|
|||
Inventory
|
70,500
|
|||
Due
from employees
|
700
|
|||
Total
current assets
|
798,578
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|||
PROPERTY
AND EQUIPMENT - Net
|
190,750
|
|||
OTHER
ASSETS
|
||||
Due
from related parties
|
972,000
|
|||
Total
other assets
|
972,000
|
|||
|
||||
TOTAL
ASSETS
|
$
|
1,961,328
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Deferred
revenue
|
$
|
538,948
|
||
Liability
for stock to be issued
|
224,900
|
|||
Accounts
payable and accrued expenses
|
232,765
|
|||
Income
taxes payable
|
61,000
|
|||
Due
to related parties
|
14,151
|
|||
Current
portion of long-term debt
|
4,606
|
|||
Total
current liabilities
|
1,076,370
|
|||
Long-term
debt - net of current portion
|
51,184
|
|||
TOTAL
LIABILITIES
|
$
|
1,127,554
|
||
STOCKHOLDERS'
EQUITY
|
||||
Common
stock, no par value, 100,000,000 shares authorized at
|
||||
September
30, 2005 and 8,460,000 shares issued and outstanding
|
||||
at
September 30, 2005
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$
|
5,000
|
||
Additional
paid-in capital
|
671,700
|
|||
Retained
Earnings
|
157,074
|
|||
Total
stockholders' equity
|
833,774
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
1,961,328
|
||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
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SIGN
MEDIA SYSTEMS, INC.
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|||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
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|||||||||||||
FOR
THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
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|||||||||||||
NINE
MONTHS ENDED
|
THREE
MONTHS ENDED
|
||||||||||||
September
30,
|
September
30,
|
September
30,
|
September
30,
|
||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
REVENUE
- sales
|
$
936,923
|
$
1,291,885
|
$
425,538
|
$
637,401
|
|||||||||
OTHER
REVENUE - recovery of bad debt
|
500,000
|
-
|
-
|
-
|
|||||||||
Total
revenue
|
1,436,923
|
1,291,885
|
425,538
|
637,401
|
|||||||||
COST
OF GOODS SOLD
|
28,299
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196,469
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14,903
|
102,209
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|||||||||
GROSS
PROFIT
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1,408,624
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1,095,416
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410,635
|
535,192
|
|||||||||
OPERATING
EXPENSES
|
|||||||||||||
Professional
fees
|
86,765
|
63,064
|
52,911
|
35,043
|
|||||||||
General
and administrative expenses
|
513,753
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320,258
|
170,754
|
71,163
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|||||||||
Depreciation
|
41,333
|
17,463
|
16,392
|
748
|
|||||||||
Total
operating expenses
|
641,851
|
400,785
|
240,057
|
106,954
|
|||||||||
NET
INCOME BEFORE OTHER INCOME (EXPENSE)
|
766,773
|
694,631
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170,578
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428,238
|
|||||||||
OTHER
INCOME (EXPENSE)
|
|||||||||||||
Interest
income
|
15,900
|
-
|
15,900
|
-
|
|||||||||
Other
income
|
104
|
-
|
1
|
-
|
|||||||||
Interest
expense
|
(2,516
|
)
|
(53,609
|
)
|
(799
|
)
|
(18,477
|
)
|
|||||
Total
Other Income (Expense)
|
13,488
|
(53,609
|
)
|
15,102
|
(18,477
|
)
|
|||||||
NET
INCOME BEFORE PROVISION FOR INCOME TAXES
|
780,261
|
641,022
|
185,680
|
409,761
|
|||||||||
Provision
for income taxes
|
61,000
|
80,850
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61,000
|
-
|
|||||||||
NET
INCOME APPLICABLE TO COMMON SHARES
|
$
|
719,261
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$
|
560,172
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$
|
124,680
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$
|
409,761
|
|||||
NET
INCOME PER BASIC AND DILUTED SHARES
|
$
|
0.09
|
$
|
0.07
|
$
|
0.01
|
$
|
0.05
|
|||||
WEIGHTED
AVERAGE NUMBER OF COMMON
|
|||||||||||||
SHARES
OUTSTANDING
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8,460,000
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8,368,865
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8,460,000
|
8,460,000
|
|||||||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
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SIGN
MEDIA SYSTEMS, INC.
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
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|||||||
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
|
|||||||
2005
|
2004
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
719,261
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$
|
560,172
|
|||
Adjustments
to reconcile net income to net cash provided by
|
|||||||
operating
activities
|
|||||||
Recovery
of allowance for accounts receivable
|
(500,000
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)
|
-
|
||||
Depreciation
|
41,333
|
17,463
|
|||||
Changes
in assets and liabilities:
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|||||||
(Increase)
decrease in accounts receivable
|
345,115
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(834,442
|
)
|
||||
(Increase)
in investment receivable
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(15,900
|
)
|
-
|
||||
Decrease
in inventory
|
15,072
|
4,995
|
|||||
Decrease
in prepaid expenses and other current assets
|
3,300
|
55,144
|
|||||
(Increase)
in miscellaneous receivable
|
-
|
(4,000
|
)
|
||||
Increase
in accounts payable and accrued expenses
|
62,776
|
67,666
|
|||||
Increase
in income taxes payable
|
61,000
|
80,850
|
|||||
Increase
in deferred revenue
|
538,948
|
-
|
|||||
Total
adjustments
|
551,644
|
(612,324
|
)
|
||||
Net
cash provided by (used in) operating activities
|
1,270,905
|
(52,152
|
)
|
||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Acquisition
of property and equipment
|
(107,528
|
)
|
(63,141
|
)
|
|||
Investment
in related party
|
(1,200,000
|
)
|
-
|
||||
Proceeds
from investment in related party
|
228,000
|
-
|
|||||
Net
cash (used in) investing activities
|
(1,079,528
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)
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(63,141
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)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Increase
in liability for stock to be issued
|
24,900
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-
|
|||||
Payments
on long-term debt
|
(13,814
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)
|
(55,214
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)
|
|||
Payments
on debt - related parties
|
(202,800
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)
|
(73,685
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)
|
|||
Contribution
of additional paid-in capital
|
-
|
200,000
|
|||||
Net
cash (used in) provided by financing activities
|
(191,714
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)
|
71,101
|
||||
NET
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(337
|
)
|
(44,192
|
)
|
|||
|
|||||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
6,352
|
47,068
|
|||||
|
|||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
6,015
|
$
|
2,876
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid during the period for interest.
|
$
|
-
|
$
|
53,609
|
|||
SUPPLEMENTAL
NON-CASH INVESTING ACTIVITIES:
|
|||||||
Conversion
of liability to common stock
|
$
|
-
|
$
|
324,000
|
|||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
Accounts
receivable
|
$
|
30,668
|
||
Fixed
assets, net of depreciation
|
112,214
|
|||
Other
assets
|
85,264
|
|||
Accounts
payable
|
(29,242
|
)
|
||
Notes
payable
|
(27,338
|
)
|
||
Other
payables
|
(115,864
|
)
|
||
Totals
|
$
|
55,702
|
(1) |
The
sale and installation of their mounting
system;
|
(2) |
The
printing of advertising images to be inserted on trucks utilizing
the
Company’s mounting systems; and
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(3) |
Third
party advertising.
|
September
30,
|
|||||||
2005
|
2004
|
||||||
Net
income
|
$
|
719,261
|
$
|
560,172
|
|||
Weighted-average
common shares outstanding
|
|||||||
Basic
|
8,460,000
|
8,368,865
|
|||||
Weighted-average
common stock equivalents
|
|||||||
Stock
options
|
-
|
-
|
|||||
Warrants
|
-
|
-
|
|||||
Weighted-average
common shares outstanding
|
|||||||
Diluted
|
8,460,000
|
8,368,865
|
2005
|
2004
|
||||||
Equipment
|
$
|
124,850
|
$
|
71,461
|
|||
Furniture
and Fixtures
|
112,022
|
57,882
|
|||||
Transportation
Equipment
|
54,621
|
54,621
|
|||||
291,493
|
183,964
|
||||||
Less:
accumulated depreciation
|
100,743
|
35,232
|
|||||
Net
Book Value
|
$
|
190,750
|
$
|
148,732
|
2005
|
$
|
7,500
|
||
2006
|
30,000
|
|||
2007
|
15,000
|
|||
$
|
52,500
|
Current
tax expense
|
$
|
229,000
|
||
Benefit
of loss carry forward
|
(168,000
|
)
|
||
Net
current expense
|
$
|
61,000
|
2005
|
2004
|
||||||
Revenue
|
$
|
1,436,923
|
$
|
1,291,885
|
|||
Cost
of goods sold
|
28,299
|
196,469
|
|||||
Gross
profit
|
1,408,624
|
1,095,416
|
|||||
Operating
and other
expense
|
628,363
|
454,394
|
|||||
Net
income (loss) before
Provision
for income taxes
|
780,261
|
641,022
|
|||||
Provision
for income taxes
|
61,000
|
80,850
|
|||||
Net
income applicable to common shares
|
$
|
719,261
|
$
|
560,172
|
|||
Gross
profit margin
|
98
|
%
|
85
|
%
|
|||
Earnings
per share
of
common stock
|
$
|
0.09
|
$
|
0.07
|
|||
Weighted
average of
common
shares
|
8,460,000
|
8,368,865
|
2005
|
2004
|
||||||
Revenue
|
$
|
425,538
|
$
|
637,401
|
|||
Cost
of goods sold
|
14,903
|
102,209
|
|||||
Gross
profit
|
410,635
|
535,192
|
|||||
Operating
and other
Expenses
|
224,955
|
125,431
|
|||||
Net
income before
provision
for income taxes
|
185,680
|
409,761
|
|||||
Provision
for income taxes
|
61,000
|
-
|
|||||
Net
income (loss) applicable to common shares
|
$
|
124,680
|
$
|
409,761
|
|||
Gross
profit margin
|
96
|
%
|
84
|
%
|
|||
Earnings
per share
of
common stock
|
$
|
0.01
|
$
|
0.05
|
|||
Weighted
average of
common
shares
|
8,460,000
|
8,460,000
|
SIGN
MEDIA SYSTEMS, INC.
(Registrant)
|
|
Date
November
21, 2005
|
/s/Antonio
F. Uccello,
III
Antonio F. Uccello, III
Chief Executive Officer
Chairman
of the Board
|