[
X
]
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
For the quarterly period ended June 30, 2006
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|
[
]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|
For
the transition period from ________________ to
_________________
|
|
Commission file number 0-50742
|
SIGN
MEDIA SYSTEMS, INC.
_____________________________________________________________________________
(Exact
name of small business issuer as specified in its
charter)
|
|
FLORIDA
________________________________________________
(State
or other jurisdiction of incorporation or organization)
|
02-0555904
____________________________
(IRS
Employer Identification No.)
|
2100
19th
Street, Sarasota FL 34234
_____________________________________________________________________________
(Address
of principal executive offices)
|
|
(941)
330-0336
_____________________________________________________________________________
(Issuer's
telephone number)
|
|
_____________________________________________________________________________
(Former
name, former address and former fiscal year, if changed since last
report)
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SIGN
MEDIA SYSTEMS, INC.
|
||||
CONDENSED
CONSOLIDATED BALANCE SHEET
|
||||
JUNE
30, 2006
|
||||
(UNAUDITED)
|
||||
|
||||
ASSETS
|
||||
2006
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$
|
4,163
|
||
Accounts
receivable, net
|
724,575
|
|||
Inventory,
net
|
17,460
|
|||
746,198
|
||||
PROPERTY
AND EQUIPMENT - Net
|
143,839
|
|||
OTHER
ASSETS
|
||||
Due
from related parties
|
594,746
|
|||
594,746
|
||||
|
||||
TOTAL
ASSETS
|
$
|
1,484,783
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Current
portion of long-term debt
|
$
|
7,397
|
||
Accounts
payable and accrued expenses
|
305,545
|
|||
Liability
for stock to be issued
|
224,900
|
|||
537,842
|
||||
LONG-TERM
DEBT - Net of Current Portion
|
32,765
|
|||
TOTAL
LIABILITIES
|
570,607
|
|||
STOCKHOLDERS'
EQUITY
|
||||
Common
stock, no par value, 100,000,000 shares authorized at
|
||||
June
30, 2006; 8,460,000 shares issued and outstanding
|
||||
at
June 30 2006
|
5,000
|
|||
Additional
paid-in capital
|
671,700
|
|||
Retained
earnings
|
237,476
|
|||
914,176
|
||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
1,484,783
|
||
|
SIGN
MEDIA SYSTEMS, INC.
|
|||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|||||||||||||
FOR
THE SIX AND THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(UNAUDITED)
|
|||||||||||||
SIX
MONTHS ENDED
|
THREE
MONTHS ENDED
|
||||||||||||
June
30,
|
June
30,
|
June
30,
|
June
30,
|
||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
(restated)
|
(restated)
|
||||||||||||
REVENUE
|
728,679
|
$
|
511,385
|
426,427
|
$
|
489,114
|
|||||||
Other
revenue
- recovery
of bad debt
|
-
|
500,000
|
-
|
500,000
|
|||||||||
728,679
|
1,011,385
|
426,427
|
989,114
|
||||||||||
COST
OF GOODS SOLD
|
15,820
|
13,396
|
6,469
|
10,889
|
|||||||||
GROSS
PROFIT
|
712,859
|
997,989
|
419,958
|
978,225
|
|||||||||
OPERATING
EXPENSES
|
|||||||||||||
Professional
fees and administrative payroll
|
157,386
|
223,180
|
78,003
|
111,297
|
|||||||||
General
and administrative expenses
|
63,522
|
154,472
|
22,971
|
88,481
|
|||||||||
Depreciation
|
32,938
|
24,941
|
23,938
|
13,050
|
|||||||||
253,846
|
402,593
|
124,912
|
212,828
|
||||||||||
NET
INCOME BEFORE OTHER INCOME (EXPENSE)
|
459,013
|
595,396
|
295,046
|
765,397
|
|||||||||
OTHER
INCOME (EXPENSE)
|
|||||||||||||
Interest
income and other
|
18,000
|
103
|
7,296
|
101
|
|||||||||
Interest
expense
|
(583
|
)
|
(918
|
)
|
(316
|
)
|
(615
|
)
|
|||||
17,417
|
(815
|
)
|
6,980
|
(514
|
)
|
||||||||
NET
INCOME BEFORE PROVISION FOR INCOME TAXES
|
476,430
|
594,581
|
302,026
|
764,883
|
|||||||||
Provision
for income taxes
|
(101,775
|
)
|
-
|
(96,175
|
)
|
-
|
|||||||
NET
INCOME APPLICABLE TO COMMON SHARES
|
$
|
374,655
|
$
|
594,581
|
$
|
205,851
|
$
|
764,883
|
|||||
NET
INCOME PER BASIC AND DILUTED SHARES
|
$
|
0.04
|
$
|
0.07
|
$
|
0.02
|
$
|
0.09
|
|||||
WEIGHTED
AVERAGE NUMBER OF COMMON
|
|||||||||||||
SHARES
OUTSTANDING
|
8,460,000
|
8,460,000
|
8,460,000
|
8,460,000
|
|||||||||
SIGN
MEDIA SYSTEMS, INC.
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|||||||
FOR
THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
|
|||||||
(restated)
|
|||||||
2006
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
374,655
|
$
|
594,581
|
|||
Adjustments
to reconcile net income
|
|||||||
to
net cash (used in) provided by operating
activities:
|
|||||||
Depreciation
|
32,938
|
24,941
|
|||||
Recovery
of allowance for accounts receivable
|
-
|
(500,000
|
)
|
||||
Changes
in assets and liabilities:
|
|||||||
(Increase)
decrease in accounts receivable
|
(724,575
|
)
|
1,041,649
|
||||
Decrease
in inventory
|
7,540
|
7,536
|
|||||
Decrease
in prepaid expenses and other current assets
|
-
|
4,000
|
|||||
Increase
in accounts payable and accrued expenses
|
89,275
|
52,834
|
|||||
Increase
in deferred revenue
|
-
|
250,000
|
|||||
Total
adjustments
|
(594,822
|
)
|
880,960
|
||||
Net
cash (used in) provided by operating activities
|
(220,167
|
)
|
1,475,541
|
||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Acquisition
of property and equipment
|
(1,984
|
)
|
(86,913
|
)
|
|||
Increase
in interest receivable - related party
|
(17,594
|
)
|
-
|
||||
Proceeds
from related parties
|
260,998
|
-
|
|||||
Net
cash provided by (used in) investing activities
|
241,420
|
(86,913
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Increase
in liability for stock to be issued
|
-
|
24,900
|
|||||
(Payments)
on long-term debt
|
(11,023
|
)
|
(9,209
|
)
|
|||
(Payments)
on debt-related party
|
(8,319
|
)
|
(1,396,966
|
)
|
|||
Net
cash (used in) financing activities
|
(19,342
|
)
|
(1,381,275
|
)
|
|||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
1,911
|
7,353
|
|||||
|
|||||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
2,252
|
6,352
|
|||||
|
|||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
4,163
|
$
|
13,705
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid during the year for interest
|
$
|
583
|
$
|
-
|
|||
|
(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
|
(3) |
Third
party advertising.
|
|
Balance
|
Charged
|
|
Balance
|
|||||||||
|
at
Beginning
|
to
Costs and
|
|
at
End of
|
|||||||||
|
of
Period
|
Expenses
|
Deductions
|
Period
|
|||||||||
|
|
|
|
|
|||||||||
Six
Months ended June 30, 2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
|
|||||||||||||
Six
Months ended June 30, 2005
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
June
30,
|
|||||||
2006
|
2005
|
||||||
Net
income
|
$
|
374,655
|
$
|
594,581
|
|||
Weighted-average
common shares outstanding
|
|||||||
Basic
|
8,460,000
|
8,460,000
|
|||||
Weighted-average
common stock equivalents
|
|||||||
Stock
options
|
-
|
-
|
|||||
Warrants
|
-
|
-
|
|||||
Weighted-average
common shares outstanding
|
|||||||
Diluted
|
8,460,000
|
8,460,000
|
2006
|
||||
Accounts
receivable
|
$
|
1,432,140
|
||
Less
allownace for doubtful accounts
|
(707,565
|
)
|
||
Total
accounts receivable, net
|
$
|
724,575
|
2006
|
||||
Equipment
|
$
|
127,311
|
||
Furniture
and Fixtures
|
112,022
|
|||
Transportation
Equipment
|
54,621
|
|||
293,954
|
||||
Less:
Accumulated Depreciation
|
150,115
|
|||
Net
Book Value
|
$
|
143,839
|
2006
|
||||
Current
tax expense
|
$
|
142,929
|
||
Benefit
of loss carry forward
|
$
|
(41,154
|
)
|
|
Net
current expense
|
$
|
101,775
|
2006
|
$
|
21,975
|
||
2007
|
15,000
|
|||
$
|
36,975
|
2006
|
2005
(restated)
|
||||||
Revenue
|
$
|
728,679
|
$
|
1,011,385
|
|||
Cost
of Goods Sold
|
15,820
|
13,396
|
|||||
Gross
profit
|
712,859
|
997,989
|
|||||
Total
Operating Expenses
|
253,846
|
402,593
|
|||||
Net
Income (Loss) Before
Other
Income (Expense)
|
459,013
|
595,396
|
|||||
Total
Other Income
(Expense)
|
17,417
|
(815)
|
|
||||
Net
Income (Loss)Before
Provision
For Income
Taxes
|
476,430
|
594,581
|
|||||
Provision
For Income
Taxes
|
(101,775)
|
|
-
|
||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$
|
374,655
|
$
|
594,581
|
|||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$
|
0.04
|
$
|
0.07
|
|
||
Weighted
Average
Number
OF Common
Shares
Outstanding
|
8,460,000
|
8,460,000
|
|||||
Gross
profit margin
|
98%
|
|
99%
|
|
2006
|
2005
|
||||||
Revenue
|
$
|
426,427
|
$
|
989,114
|
|||
Cost
of Goods Sold
|
6,469
|
10,889
|
|||||
Gross
profit
|
419,958
|
978,225
|
|||||
Total
Operating Expenses
|
124,912
|
212,828
|
|||||
Net
Income (Loss) Before
Other
Income (Expense)
|
295,046
|
765,397
|
|||||
Total
Other Income
(Expense)
|
6,980
|
(514)
|
|
||||
Net
Income (Loss)Before
Provision
For Income
Taxes
|
302,026
|
764,883
|
|||||
Provision
For Income
Taxes
|
(96,175)
|
|
-
|
||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$
|
205,851
|
$
|
764,883
|
|||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$
|
0.02
|
$
|
0.09
|
|
||
Weighted
Average
Number
of Common
Shares
Outstanding
|
8,460,000
|
8,460,000
|
|||||
Gross
profit margin
|
98%
|
|
99%
|
|
10.6
|
Promissory
Note described in Part II, Item 5 above which is incorporated herein
by
reference from the Company’s Second Amended Form 10-QSB, Quarterly Report
under Section 13 or 15(d) of the Exchange Act for the period ended
June
30, 2005 and filed with the Securities and Exchange Commission
on November
22, 2005.
|
31.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
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.
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
SIGN
MEDIA SYSTEMS, INC.
(Registrant)
|
|
Date:
August
21, 2006
|
/s/Antonio
F. Uccello, III
Antonio
F. Uccello, III
Chief
Executive Officer
Chairman
of the Board
|