[
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, 2006
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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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ASSETS
|
||||
2006
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$
|
5,616
|
||
Accounts
receivable, net
|
752,823
|
|||
Inventory,
net
|
7,462
|
|||
765,901
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||||
PROPERTY
AND EQUIPMENT - Net
|
131,468
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|||
OTHER
ASSETS
|
||||
Due
from related parties
|
430,329
|
|||
430,329
|
||||
|
||||
TOTAL
ASSETS
|
$
|
1,327,698
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||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Current
portion of long-term debt
|
$
|
9,156
|
||
Accounts
payable and accrued expenses
|
238,622
|
|||
Liability
for stock to be issued
|
224,900
|
|||
472,678
|
||||
LONG-TERM
DEBT - Net of Current Portion
|
28,717
|
|||
TOTAL
LIABILITIES
|
501,395
|
|||
STOCKHOLDERS'
EQUITY
|
||||
Common
stock, no par value, 100,000,000 shares authorized at
|
||||
September
30, 2006; 8,460,000 shares issued and outstanding
|
||||
at
September 30 2006
|
5,000
|
|||
Additional
paid-in capital
|
671,700
|
|||
Retained
earnings
|
149,603
|
|||
826,303
|
||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
1,327,698
|
||
NINE
MONTHS ENDED
|
THREE
MONTHS ENDED
|
||||||||||||
September
30,
|
September
30,
|
September
30,
|
September
30,
|
||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
REVENUE
|
$
|
734,494
|
$
|
936,923
|
$
|
5,816
|
$
|
425,538
|
|||||
Other
revenue
- recovery
of bad debt
|
-
|
500,000
|
-
|
||||||||||
734,494
|
1,436,923
|
5,816
|
425,538
|
||||||||||
COST
OF GOODS SOLD
|
26,929
|
28,299
|
11,109
|
14,903
|
|||||||||
GROSS
PROFIT (LOSS)
|
707,565
|
1,408,624
|
(5,293)
|
|
410,635
|
||||||||
OPERATING
EXPENSES
|
|||||||||||||
Professional
fees and administrative payroll
|
40,976
|
86,765
|
10,277
|
52,911
|
|||||||||
General
and administrative expenses
|
276,815
|
513,753
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63,178
|
170,754
|
|||||||||
Depreciation
|
48,938
|
41,333
|
16,000
|
16,392
|
|||||||||
366,729
|
641,851
|
89,455
|
240,057
|
||||||||||
NET
INCOME BEFORE OTHER INCOME (EXPENSE)
|
340,836
|
766,773
|
(94,748)
|
|
170,578
|
||||||||
OTHER
INCOME (EXPENSE)
|
|||||||||||||
Interest
income and other
|
25,001
|
16,004
|
7,001
|
15,901
|
|||||||||
Interest
expense
|
(1,280)
|
|
(2,516)
|
|
(799)
|
|
|||||||
23,721
|
13,488
|
7,001
|
15,102
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||||||||||
NET
INCOME BEFORE PROVISION FOR INCOME TAXES
|
364,557
|
780,261
|
(87,747)
|
|
185,680
|
||||||||
Provision
for income taxes
|
77,775
|
61,000
|
61,000
|
||||||||||
NET
INCOME APPLICABLE TO COMMON SHARES
|
$
|
286,782
|
$
|
719,261
|
$
|
(87,747)
|
|
$
|
124,680
|
||||
NET
INCOME PER BASIC AND DILUTED SHARES
|
$
|
0.03
|
$
|
0.09
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$
|
(0.01)
|
|
$
|
0.01
|
||||
WEIGHTED
AVERAGE NUMBER OF COMMON
|
|||||||||||||
SHARES
OUTSTANDING
|
8,460,000
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8,460,000
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8,460,000
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8,460,000
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|||||||||
2006
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
286,782
|
$
|
719,261
|
|||
Adjustments
to reconcile net income
|
|||||||
to
net cash (used in) provided by operating
activities:
|
|||||||
Depreciation
|
48,938
|
41,333
|
|||||
Changes
in assets and liabilities:
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|||||||
(Increase)
in accounts receivable
|
(752,823)
|
|
(170,755)
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|
|||
Decrease
in inventory
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17,538
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15,072
|
|||||
Decrease
in prepaid expenses and other current assets
|
3,300
|
||||||
Increase
in accounts payable and accrued expenses
|
22,352
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123,776
|
|||||
Increase
in deferred revenue
|
538,948
|
||||||
Total
adjustments
|
(663,995)
|
|
551,674
|
||||
Net
cash (used in) provided by operating activities
|
(377,213)
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|
1,270,935
|
||||
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|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Acquisition
of property and equipment
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(5,612)
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(107,528)
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|
|||
(
Increase) decrease in receivable - related party
|
407,821
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(1,200,000)
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|
||||
Proceeds
from related parties
|
228,000
|
||||||
Net
cash provided by (used in) investing activities
|
402,209
|
(1,079,528)
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|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
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|||||||
Increase
in liability for stock to be issued
|
-
|
24,900
|
|||||
(Payments)
on long-term debt
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(21,632)
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(13,814)
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|
|||
(Payments)
on debt-related party
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(202,800)
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|||||
Net
cash (used in) financing activities
|
(21,632)
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|
(191,714)
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|
|||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
3,364
|
(337)
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|
||||
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|||||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
2,252
|
6,352
|
|||||
|
|||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
5,616
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$
|
6,015
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
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|||||||
Cash
paid during the year for interest
|
$
|
1,280
|
$
|
-
|
(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
|
|||||||||
|
|
|
|
|
|||||||||
Nine
Months ended September 30, 2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
|
|||||||||||||
Nine
Months ended September 30, 2005
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
September
30,
|
|||||||
2006
|
2005
|
||||||
Net
income
|
$
|
286,782
|
$
|
719,261
|
|||
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
|
$
|
752,823
|
||
Less
allownace for doubtful accounts
|
-
|
|||
Total
accounts receivable, net
|
$
|
752,823
|
2006
|
||||
Equipment
|
$
|
130,939
|
||
Furniture
and Fixtures
|
112,022
|
|||
Transportation
Equipment
|
54,622
|
|||
297,583
|
||||
Less:
Accumulated Depreciation
|
166,115
|
|||
Net
Book Value
|
$
|
131,468
|
2006
|
||||
Current
tax expense
|
$
|
77,765
|
||
Benefit
of loss carry forward
|
$
|
-
|
||
Net
current expense
|
$
|
77,765
|
2006
|
2005
|
||||||
Revenue
|
$
|
734,494
|
$
|
1,436,923
|
|||
Cost
of Goods Sold
|
26,929
|
28,299
|
|||||
Gross
Profit (Loss)
|
707,565
|
1,408,624
|
|||||
Total
Operating Expenses
|
366,729
|
641,851
|
|||||
Net
Income (Loss) Before
Other
Income (Expense)
|
340,836
|
766,773
|
|||||
Total
Other Income
(Expense)
|
23,721
|
13,488
|
|||||
Net
Income (Loss)Before
Provision
For Income
Taxes
|
364,557
|
780,261
|
|||||
Provision
For Income
Taxes
|
77,775
|
61,000
|
|||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$
|
286,782
|
$
|
719,261
|
|||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$
|
0.03
|
$
|
0.09
|
|||
Weighted
Average
Number
OF Common
Shares
Outstanding
|
8,460,000
|
8,460,000
|
|||||
Gross
profit margin
|
96%
|
|
98%
|
|
2006
|
2005
|
||||||
Revenue
|
$
|
734,494
|
$
|
1,436,923
|
|||
Cost
of Goods Sold
|
29,929
|
28,299
|
|||||
Gross
Profit (Loss)
|
707,565
|
1,408,624
|
|||||
Total
Operating Expenses
|
366,729
|
641,851
|
|||||
Net
Income (Loss) Before
Other
Income (Expense)
|
340,836
|
766,773
|
|||||
Total
Other Income
(Expense)
|
23,721
|
13,488
|
|||||
Net
Income (Loss)Before
Provision
For Income
Taxes
|
364,557
|
780,261
|
|||||
Provision
For Income
Taxes
|
77,775
|
61,000
|
|||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$
|
286,782
|
$
|
719,261
|
|||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$
|
0.03
|
$
|
0.09
|
|||
Weighted
Average
Number
OF Common
Shares
Outstanding
|
8,460,000
|
8,460,000
|
|||||
Gross
profit margin
|
96%
|
|
98%
|
|
2006
|
2005
|
||||||
Revenue
|
$
|
5,816
|
$
|
425,538
|
|||
Cost
of Goods Sold
|
11,109
|
14,903
|
|||||
Gross
Profit (Loss)
|
(5,293)
|
|
410,635
|
||||
Total
Operating Expenses
|
89,455
|
240,057
|
|||||
Net
Income (Loss) Before
Other
Income (Expense)
|
(94,748)
|
|
170,578
|
||||
Total
Other Income
(Expense)
|
7,001
|
15,102
|
|||||
Net
Income (Loss) Before
Provision
For Income
Taxes
|
(87,747)
|
|
185,680
|
||||
Provision
For Income
Taxes
|
-
|
61,000
|
|||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$
|
(87,747)
|
|
$
|
124,680
|
||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$
|
(0.01)
|
|
$
|
0.01
|
||
Weighted
Average
Number
OF Common
Shares
Outstanding
|
8,460,000
|
8,460,000
|
|||||
Gross
profit margin
|
(91%)
|
|
96%
|
|
10.6
|
Promissory
Note described in Part I, Item 2 above incorporated herein reference
from
the Company’s Form 10-QSB/A2 dated November 11, 2005, and filed with the
Securities and Exchange Commission on November 18,
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
November
14, 2006
|
/s/Antonio
F. Uccello, III
Antonio
F. Uccello, III
Chief
Executive Officer
Chairman
of the Board
|