洲明科技:关于海外上市子公司Trans-Lux Corporation发布2022年年度报告的公告

证券代码：300232证券简称：洲明科技公告编号：2023-009
深圳市洲明科技股份有限公司
关于海外上市子公司Trans-Lux Corporation
发布2022年年度报告的公告
本公司及董事会全体成员保证信息披露内容真实、准确和完整，没有虚假记载、误导性陈述或者重大遗漏。
深圳市洲明科技股份有限公司的子公司 Trans-Lux Corporation 于近日公布了
2022年年度报告。
2022 年年度 Trans-Lux Corporation 主要的财务数据列示如下：
项目本报告期上年同期本报告期比上年同期增减
营业总收入（千美元）216611135090.85%
净利润（千美元）323-4968106.50%经营活动产生的现金流
-1968-137-1336.50%
量净额（千美元）基本每股收益（美元/
0.02-0.37105.41%
股）项目本报告期末上年度末本报告期末比上年度末增减
总资产（千美元）941286518.80%
净资产（千美元）-10324-109485.70%
Trans-Lux Corporation 2022 年年度报告的内容详见附录，并可于美国证券交易委员会网站（https://www.sec.gov/）查询。
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
2023 年 4 月 6 日UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C.FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31 2022
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to_______
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.)
254 West 31st Street 12th Floor New York New York 10001
(Address of registrant’s principal executive offices) (Zip code)
Registrant’s telephone number including area code: (800) 243-5544
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the
Securities Act. Yes No X
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act. Yes No X
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 NoCONTINUED
TRANS-LUX CORPORATION
2022 Form 10-K Cover Page Continued
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 during the preceding 12 months (or for
such shorter period that the registrant was required to submit 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 growthcompany” 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 by check mark whether the registrant has filed a report on and attestation to its management’s
assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes No X
If securities are registered pursuant to Section 12(b) of the Act indicate by check mark whether the
financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements. ?
Indicate by check mark whether any of those error corrections are restatements that required a recovery
analysis of incentive-based compensation received by any of the registrant’s executive officers during
the relevant recovery period pursuant to §240.10D-1(b). ?
The aggregate market value of the registrant’s voting Common Stock held by non-affiliates of the
registrant based upon the last sale price of the registrant’s Common Stock reported on OTC Pink on
June 30 2022 was approximately $734000 which value solely for the purposes of this calculation
excludes shares held by the registrant’s officers directors and 10% stockholders. Such exclusion should
not be deemed a determination by the registrant that all such individuals or entities are in fact affiliates
of the registrant. The registrant has no non-voting common stock.The number of shares outstanding of the registrant’s Common Stock par value $0.001 per share as of
the latest practicable date on March 24 2023 was 13446276 shares of Common Stock.DOCUMENTS INCORPORATED BY REFERENCE:
None.TRANS-LUX CORPORATION
2022 Form 10-K Annual Report
Table of Contents
PART I
Page
ITEM 1. Business 1
ITEM 1A. Risk Factors 3
ITEM 1B. Unresolved Staff Comments 9
ITEM 2. Properties 9
ITEM 3. Legal Proceedings 9
ITEM 4. Mine Safety Disclosures 9
PART II
ITEM 5. Market for the Registrant’s Common Equity Related Stockholder Matters and Issuer
Purchases of Equity Securities 9
ITEM 6. Removed and Reserved 9
ITEM 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations 10
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 14
ITEM 8. Financial Statements and Supplementary Data 15
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 34
ITEM 9A. Controls and Procedures 34
ITEM 9B. Other Information 35
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 35
PART III
ITEM 10. Directors Executive Officers and Corporate Governance 35
ITEM 11. Executive Compensation 39
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters 42
ITEM 13. Certain Relationships and Related Transactions and Director Independence 43
ITEM 14. Principal Accounting Fees and Services 43
PART IV
ITEM 15. Exhibits and Financial Statement Schedules 43
ITEM 16. Form 10-K Summary 45
Signatures 46PART I
ITEM 1. BUSINESS
SUMMARY
Trans-Lux Corporation is a Delaware corporation incorporated on February 5 1920. Our Common Stock is quoted on OTC
Pink under the symbol “TNLX.” Our principal executive offices are located at 254 West 31st Street 12th Floor New York
NY 10001 where our telephone number is (800) 243-5544.Unless the context otherwise requires the terms “Trans-Lux” the “Company” the “Corporation” “we” “us” and “our” as
used herein refer to Trans-Lux Corporation and its subsidiaries.The Company is a leading designer and manufacturer of digital display solutions and fixed digit scoreboards.DIGITAL DISPLAY PRODUCTS
The Company’s LED display systems include the latest features and functionality. The Company’s product line of high-
performance state-of-the-art digital display products and controllers are used to show full-color video and messages in
virtually any configuration and application. The products are used by sports arenas and stadiums; financial institutions
including brokerage firms banks energy companies insurance companies and mutual fund companies; educational
institutions; outdoor advertising companies; corporate and government communication centers; retail outlets; casinos
racetracks and other gaming establishments; airports train stations bus terminals and other transportation facilities; movie
theatres; health maintenance organizations and in various other applications. All sales and service including fixed digit
scoreboards related to sports are sold through our wholly owned subsidiary FairPlay Corporation capitalizing on a well-
recognized brand name that has been servicing this segment for over 85 years.For its fixed digit scoreboards the Company has an industry leading unibody design that allows for seamless appearance and
facilitates field installation.For its digital displays the Company employs a modular engineering design strategy allowing basic “building blocks” of
modules to be easily combined and configured in order to meet the broad application requirements of the various industries it
serves. This approach ensures product flexibility reliability ease of service and reduced spare parts requirements.The Company’s display product line is comprised of two distinct segments: the Digital product sales division and the Digital
product lease and maintenance division.Digital Product Sales Division: The Digital product sales division is segmented into five categories: Out-of-Home Sports
Transportation Live Entertainment and Retail & Hospitality.Digital product Lease and Maintenance Division: The Digital product lease and maintenance division leases and performs
maintenance on digital products across all the sectors under agreement terms ranging from 30 days to 10 years.Sales Order Backlog (excluding leases): The amount of sales order backlog at December 31 2022 and 2021 was
approximately $6.8 million and $9.5 million respectively. The December 31 2022 backlog is expected to be recognized as
sales in 2023 although there can be no assurance thereof. These amounts include only the sale of products; they do not
include new lease orders or renewals of existing lease agreements that may be presently in-house.ENGINEERING AND PRODUCT DEVELOPMENT
The Company’s ability to compete and operate successfully depends on its capacity to anticipate and respond to the changing
technological and product needs of its customers among other factors. For this reason the Company continually develops
enhancements to its existing product lines and examines and tests new display technologies.The Company’s TLVisionTM line includes our latest LED Large Screen Systems that feature the most recent digital product
technologies and capabilities available in various pitch design. TLVisionTM consists of full-color video products that can be
used in a multitude of applications. These applications range from posting alphanumeric data to the displaying of full HD
video. The pixel pitches of the products range from 1.5mm for close distance viewing and up to 50mm for long-distance
1viewing. The Company also continues to expand its line of scoreboard solutions using its TLVisionTM technology and
improved hand-held simple to operate remotes and wireless control devices.As part of its ongoing development efforts the Company seeks to package certain products for specific market segments and
continually tracks emerging technologies that can enhance its products. Full color live video and digital input technologies
continue to be enhanced.The Company maintains a staff responsible for product development and support. The engineering product enhancement
and development efforts are supplemented by outside independent engineering consulting organizations as required.MARKETING AND DISTRIBUTION
In North America the Company markets its digital display products in the United States and Canada using a combination of
distribution channels including direct sales representatives and a network of independent dealers and distributors. By
working with software vendors and using the internet to expand the quality and quantity of multimedia content that can be
delivered to our digital products we offer customers relevant timely information content management software and display
hardware in the form of turnkey display communications packages.The Company employs a number of different marketing techniques to attract new customers including direct marketing
efforts by its sales force to known and potential users of information displays; internet marketing; advertising in industry
publications; and exhibiting at domestic and international trade shows.Headquartered in New York New York the Company has sales and service offices in Des Moines Iowa and Hazelwood
Missouri as well as satellite offices in other parts of the United States.Internationally the Company uses a combination of internal salespeople and independent distributors to market its products
outside the United States. The Company has existing relationships with independent distributors worldwide covering the rest
of North America Europe the Middle East South America Africa the Far East and Australia. Foreign revenues represented
less than 10% of total revenues for the years ended December 31 2022 and 2021.In 2022 one customer accounted for 13.3% of the Company’s total revenues. In 2021 no customers accounted for at least
10% of the Company’s total revenues.
MANUFACTURING AND OPERATIONS
The Company’s production facilities are located in Hazelwood Missouri and Des Moines Iowa. The production facilities
consist principally of the manufacturing assembly and testing of digital product units and related components. The Company
performs most subassembly and final assembly of its digital display products.All product lines are design engineered by the Company and controlled throughout the manufacturing process. The
Company has the ability to produce very large sheet metal fabrications cable assemblies and surface mount and through-hole
designed assemblies. Some of the subassembly and final assembly processes are outsourced. The Company’s production of
many of the subassemblies and final assemblies gives the Company the control opportunity needed for on-time delivery to its
customers.The Company has the ability to modify its product lines. The Company’s displays are designed with flexibility in mind
enabling the Company to customize its displays to meet different applications with a minimum amount of lead-time. The
Company designs certain of its materials to match components furnished by suppliers. If such suppliers are unable to provide
the Company with those components the Company would have to contract with other suppliers to obtain replacement
sources. Such replacement might result in engineering design changes and delays in obtaining such replacement components.The Company believes it maintains suitable inventory and has contracts providing for delivery of sufficient quantities of such
components to meet its needs. The Company also believes that there are presently other qualified vendors of these
components. Other than the LEDs and LED modules which are manufactured by foreign sources the Company does not
acquire significant amounts of components directly from foreign suppliers. The Company’s products are third-party certified
for compliance with applicable safety electromagnetic emissions and susceptibility requirements worldwide.SERVICE AND SUPPORT
2The Company emphasizes the quality and reliability of its products and the ability of its field service personnel and third-
party agents to provide timely and expert service to the Company’s equipment on lease and maintenance bases and other
types of customer-owned equipment. The Company believes that the quality and timeliness of its on-site service personnel
are essential components for the Company’s ongoing and future success. The Company provides turnkey installation and
support for the products it leases and sells in the United States and Canada. The Company provides training to end-users and
ongoing support to users who have questions regarding operating procedures equipment problems or other issues. The
Company provides installation and service to those who purchase and lease equipment. Additionally the Company’s dealers
and distributors offer support for the products they sell in the market segments they cover.Personnel based in regional and satellite service locations throughout the United States provide high quality and timely on-
site service for the installed equipment on lease and maintenance bases and other types of customer-owned equipment.Purchasers or lessees of the Company’s larger products such as financial exchanges casinos and sports stadiums often retain
the Company to provide on-site service through the deployment of a service technician who is on-site daily for scheduled
events.The Company operates its National Technical Services and Repair Centers from its facility in Hazelwood Missouri.Equipment repairs are performed and service technicians are dispatched nationwide from our Hazelwood location. The
Company’s field service division is augmented by various service companies in the United States Canada and overseas.From time to time the Company uses various third-party service agents to install service and/or assist in the service of
certain displays for reasons that include geographic area size and height of displays.COMPETITION
The Company’s availability of short and long-term leases to customers and its nationwide sales service and installation
capabilities are major competitive advantages in the digital product business. The Company believes that it is the largest
supplier of large-scale stock commodity sports and race book gaming digital products in the United States as well as one of
the larger digital product and service organizations in the country.The Company competes with a number of competitors both larger and smaller than itself with products based on different
forms of technology. There are several competitors whose current products utilize similar technology to the Company’s and
who possess the resources necessary to develop competitive and more sophisticated products in the future.INTELLECTUAL PROPERTY
The Company holds a number of trademarks for its products and considers such trademarks important to its business.EMPLOYEES
The Company had approximately 53 employees as of March 1 2023 none of whom is unionized. The Company believes its
employee relations are good.ITEM 1A. RISK FACTORS
THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN
Our Consolidated Financial Statements were prepared assuming we will continue as a going concern. Our continuing
operating losses and uncertainty regarding our ability to make the required minimum funding contributions to the defined
benefit pension plan and the past due principal and payments on our outstanding 8?% Limited convertible senior
subordinated notes due 2012 (the “Notes”) and 9?% Subordinated debentures due 2012 (the “Debentures”) raise substantial
doubt about our ability to continue as a going concern. In addition 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 the Notes and the Debentures and/or (iv) repay our obligations under our Credit
Agreement (hereinafter defined) with Unilumin there would be a significant adverse impact on our financial position and
operating results.
3WE TYPICALLY HAVE EXPERIENCED OPERATING LOSSES FOR THE PAST SEVERAL YEARS AND THERE
CAN BE NO ASSURANCE THAT WE WILL BE ABLE TO INCREASE OUR REVENUE SUFFICIENTLY TO
GENERATE THE CASH REQUIRED TO FUND OUR CURRENT OPERATIONS
We have incurred operating losses for the past several years. The Company recorded net operating losses of $389000 and
$4.2 million in the years ended December 31 2022 and 2021 respectively. We are dependent upon future operating
performance and to the extent that operating performance falls short of our needs future financing to generate sufficient cash
flows to continue to run our businesses. Future operating performance is dependent on general economic conditions as well
as financial competitive and other factors beyond our control. We have experienced a decline in our lease and maintenance
bases for the past several years. In addition our ability to achieve profitability is subject to a number of risks and
uncertainties many of which are beyond our control including the impact of the current economic environment the spread of
major epidemics (including coronavirus) and other related uncertainties such as government imposed travel restrictions
interruptions to supply chains and extended shut down of businesses. These macroeconomic developments could negatively
affect our business operating results and financial condition in a number of ways. For example current or potential
customers may delay or decrease spending with us or may not pay us or may delay paying us for previously performed
services.There can be no assurance that we will be able to increase our revenue sufficiently to generate the cash required to fund our
current operations and to the extent we are unable to do so we may need to undertake additional financings. In addition we
cannot predict whether future financing if any will be in the form of equity debt or a combination of both. We may not be
able to obtain additional funds on a timely basis on acceptable terms or at all. Any equity financing we receive could be
substantially dilutive to our shareholders.WE HAVE SIGNIFICANT DEBT WHICH COULD IMPAIR OUR FINANCIAL CONDITION
As of December 31 2022 we had outstanding debt of approximately $4.3 million of which $3.8 million was reflected under
current portion of long-term debt in our consolidated balance sheet. Such amount includes an aggregate of $522000 of
Notes and Debentures for which we are in default. Our ability to satisfy our obligations will be dependent upon our future
performance which is subject to prevailing economic conditions and financial business and other factors including factors
beyond our control. As of December 31 2022 we had cash and cash equivalents of $48000 and there can be no assurance
that our operating cash flows will be sufficient to meet our long-term debt service requirements or that we will be able torefinance indebtedness at maturity. See “Management’s Discussion and Analysis of Financial Condition and Results ofOperations - Liquidity and Capital Resources.”
WE HAVE NOT AND MAY NOT MEET OUR LOAN COVENANTS
The Loan Agreement with Unilumin contains financial and other covenant requirements including financial covenants that
require the Borrowers to attain certain EBITDA amounts for certain periods. If we are not able to attain the EBITDA
amounts required by the covenant Unilumin may exercise certain remedies including termination of the Loan Agreement
which would have a significant adverse impact on our financial position and operating results.NON-PAYMENT OF PRINCIPAL AND INTEREST ON OUTSTANDING NOTES AND DEBENTURES HAS
RESULTED IN EVENTS OF DEFAULT AND MAY CONTINUE TO NEGATIVELY AFFECT OUR BALANCE SHEET
As of December 31 2022 we had outstanding $302000 of Notes. The Notes matured as of March 1 2012 and are currently
in default. The trustee by notice to us or the holders of 25% of the principal amount of the Notes outstanding by notice to
us and the trustee may declare the outstanding principal plus interest due and payable immediately.As of December 31 2022 we had outstanding $220000 of Debentures. The Debentures matured as of December 1 2012
and are currently in default. The trustee by notice to us or the holders of 25% of the principal amount of the Debentures
outstanding by notice to us and the trustee may declare the outstanding principal plus interest due and payable immediately.OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH
Our indebtedness could have important consequences to you. For example it could: increase our vulnerability to general
adverse economic and industry conditions; restrict us from making strategic acquisitions or cause us to make non-strategic
divestitures; require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness
thereby reducing the availability of our cash flow to fund working capital capital expenditures and other general corporate
purposes; make it more difficult for us to satisfy our obligations to our creditors resulting in possible defaults on and
4acceleration of such indebtedness; limit our flexibility in planning for or reacting to changes in our business and the industry
in which we operate; place us at a competitive disadvantage compared to our competitors that have less debt; and limit our
ability to borrow additional funds or increase our cost of borrowing.COMPETITORS MAY POSSESS SUPERIOR RESOURCES AND DELIVER MORE MARKETABLE PRODUCTS
WHICH WOULD ADVERSELY AFFECT OUR OPERATING MARGINS
Our digital products compete with a number of competitors both larger and smaller than us and with products based on
different forms of technology. In addition there are several competitors whose current products utilize similar technology
and who possess the resources to develop competitive and more sophisticated products in the future. Our success is to some
extent dependent upon our ability to anticipate technological changes in the industry and to successfully identify obtain
develop and market new products that satisfy evolving industry requirements. There can be no assurance that competitors
will not market new products which may have perceived advantages over our products or which because of pricing strategies
render the products currently sold by us less marketable or would otherwise adversely affect our operating margins.OUR SUCCESS IS PARTIALLY DEPENDENT UPON OUR ABILITY TO OBTAIN THE RENEWAL OF EXISTING
LEASES OR ENTER INTO NEW LEASES AS OUR CURRENT LEASES EXPIRE WHICH MAY NOT BE FEASIBLE.THE INABILITY TO RENEW OR REPLACE OUR LEASES WOULD NEGATIVELY AFFECT OUR OPERATIONS
We derive a substantial percentage of our revenues from the leasing of our digital products generally pursuant to leases that
have an average term of one to five years. Consequently our future success is at a minimum dependent on our ability to
obtain the renewal of existing leases or to enter into new leases as existing leases expire. We also derive a significant
percentage of our revenues from maintenance agreements relating to our digital display products. The average term of such
agreements is one to five years. A portion of the maintenance agreements is cancelable upon 30 days notice. There can be
no assurance that we will be successful in obtaining the renewal of existing leases or maintenance agreements obtaining
replacement leases or realizing the value of assets currently under leases that are not renewed. We expect our success in
obtaining the renewal of existing leases or maintenance agreements or obtaining replacement leases will also be negatively
impacted by the economic uncertainty arising from the impact of the coronavirus which has caused disruptions and extreme
volatility in global financial markets and is expected to increase rates of default and bankruptcy and impact levels ofconsumer and commercial spending. See “Management’s Discussion and Analysis of Financial Condition and Results ofOperations – Results of Operations.”
WE ARE DEPENDENT ON OUR CHIEF EXECUTIVE OFFICER AND OTHER KEY PERSONNEL
We believe that our Chief Executive Officer Nicholas J. Fazio plays a significant role in our success and the loss of his
services could have an adverse effect on us. We have no employment agreement with Mr. Fazio and there can be no
assurance that we would be able to find a suitable replacement for Mr. Fazio. We believe that in addition to Mr. Fazio there
is a core group of executives that also plays a significant role in our success.OUR INTERNATIONAL OPERATIONS SUBJECT US TO POTENTIAL FLUCTUATIONS IN EXCHANGE RATES
BETWEEN THE UNITED STATES DOLLAR AND FOREIGN CURRENCIES AS WELL AS INTERNATIONAL
LEGAL REQUIREMENTS WHICH COULD IMPACT OUR PROFITABILITY
Our financial condition operating results and future growth could be significantly impacted by risks associated with our
international activities including specifically changes in the value of the U.S. dollar relative to foreign currencies and
international tax rules. Because a portion of our business is transacted in Canada dollars fluctuations in the exchange rate
between the U.S. dollar and the Canadian dollar could seriously impact our manufacturing and other costs as well as overall
profitability. The risks to our business related to fluctuations in currency exchange rates is further magnified by the current
volatility in the currency markets that are characteristic of financial markets and currency markets in particular.Compliance with U.S. and foreign laws and regulations that apply to our international operations including import and
export requirements anti-corruption laws including the Foreign Corrupt Practices Act tax laws (including U.S. taxes on
foreign subsidiaries) foreign exchange controls anti-money laundering and cash repatriation restrictions data privacy
requirements labor laws and anti-competition regulations increases the costs of doing business in foreign jurisdictions and
may subject us to additional costs which may arise in the future as a result of changes in these laws and regulations or in their
interpretation. We have not implemented formal policies and procedures designed to ensure compliance with all of these
laws and regulations. Any such violations could individually or in the aggregate materially adversely affect our reputation
financial condition or operating results.
5OUR RELIANCE UPON THIRD-PARTY MANUFACTURERS IN CHINA COULD SUBJECT US TO POLITICAL AND
LEGAL RISKS BEYOND OUR CONTROL
Many components of our products are produced in China by third-party manufacturers. Our reliance on third-party Chinese
manufacturers exposes us to risks that are not in our control such as unanticipated cost increases negative fluctuations in
currency or the impact of the coronavirus on the ability of the third-party Chinese manufacturers to provide product and
international commerce which could negatively impact our results of operations and working capital. Any termination of or
significant disruption in our relationship with our Chinese suppliers may prevent us from filling customer orders in a timely
manner. Given the state of the Chinese political system we cannot guaranty that our agreements with our Chinese suppliers
will remain enforceable pursuant to Chinese law. Furthermore we cannot guaranty that all rights to payment or performance
under our agreements with our Chinese manufacturing partners will be enforceable and that all debts owing to us whether in
the form of cash or product will be collectible. While we do not envision any adverse change to our international operations
or suppliers especially given the gradual move towards global integration by the Chinese government and financial markets
adverse changes to these operations as a result of political governmental regulatory economic exchange rate labor health-
related logistical or other factors could have a material adverse effect on our future operating results.SUPPLIERS MAY BE UNABLE OR UNWILLING TO FURNISH US WITH REQUIRED COMPONENTS WHICH
MAY DELAY OR REDUCE OUR PRODUCT SHIPMENTS AND NEGATIVELY AFFECT OUR BUSINESS
We design certain of our products to match components furnished by suppliers. If such suppliers were unable or unwilling to
provide us with those components we would have to contract with other suppliers to obtain replacement sources. In
particular we purchase most of the LEDs and LED module blocks used in our digital products from three main suppliers.We do not have long-term supply contracts with these suppliers. A change in suppliers of either LED module blocks or
certain other components may result in engineering design changes as well as delays in obtaining such replacement
components. We believe that there are presently other qualified vendors of these components. Our inability to obtain
sufficient quantities of certain components as required or to develop alternative sources at acceptable prices and within a
reasonable time could result in delays or reductions in product shipments that could have a materially adverse effect on our
business and results of operations.CYBER-ATTACKS AND BREACHES COULD CAUSE OPERATIONAL DISRUPTIONS FRAUD OR THEFT OF
SENSITIVE INFORMATION
Aspects of our operations are reliant upon internet-based activities such as ordering supplies and back-office functions such
as accounting and transaction processing making and accepting payments processing payroll and other administrative
functions etc. Although we have taken measures to protect our technology systems and infrastructure including employee
education programs regarding cybersecurity a breach of the security surrounding these functions could result in operational
disruptions theft or fraud or exposure of sensitive information to unauthorized parties. A significant disruption or failure of
our information technology systems may have a significant impact on our operations potentially resulting in service
interruptions security violations regulatory compliance failures and other operational difficulties. In addition any attack
perpetrated against our information systems including through a system failure security breach or disruption by malware or
other damage could similarly impact our operations and result in loss or misuse of information litigation and potential
liability. Although we have taken steps intended to mitigate the risks presented by potential cyber incidents it is not possible
to protect against every potential power loss telecommunications failure cybersecurity attack or similar event that may arise.Moreover the safeguards we use are subject to human implementation and maintenance and to other uncertainties. Any of
these cyber incidents may result in a violation of applicable laws or regulations (including privacy and other laws) damage
our reputation cause a loss of customers and give rise to monetary fines and other penalties which could be significant.Such events could have an adverse effect on our results of operations financial condition and liquidity.
6INCREASED PRICES AND INFLATION COULD NEGATIVELY IMPACT OUR FINANCIAL RESULTS
Though we believe that the rates of inflation in recent years have not had a significant impact on our operations a continued
increase in inflation including inflationary pressure on labor and the goods and services we rely upon to deliver service to
our customers could result in increases to our operating costs and we may be unable to pass these costs on to our customers.If inflation in these costs increases beyond our ability to control for them through measures such as implementing operating
efficiencies we may not be able to increase prices to sufficiently offset the effect of various cost increases without negatively
impacting customer demand thereby increasing our costs of doing business and reducing our margins. If such impacts are
prolonged and substantial they could have a material adverse effect on our results of operations.WE ARE CURRENTLY OPERATING IN A PERIOD OF ECONOMIC UNCERTAINTY AND CAPITAL MARKETS
DISRUPTION WHICH HAS BEEN SIGNIFICANTLY IMPACTED BY GEOPOLITICAL INSTABILITY DUE TO THE
ONGOING MILITARY CONFLICT BETWEEN RUSSIA AND UKRAINE. OUR BUSINESS FINANCIAL
CONDITION AND RESULTS OF OPERATIONS MAY BE MATERIALLY AND ADVERSELY AFFECTED BY ANY
NEGATIVE IMPACT ON THE GLOBAL ECONOMY AND CAPITAL MARKETS RESULTING FROM THE
CONFLICT IN UKRAINE OR ANY OTHER GEOPOLITICAL TENSIONS
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the
start of the military conflict between Russia and Ukraine. On February 24 2022 a full-scale military invasion of Ukraine by
Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable the
conflict in Ukraine could lead to market disruptions including significant volatility in commodity prices credit and capital
markets as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and
assessing its potential impact on our business.Additionally Russia’s prior annexation of Crimea recent recognition of two separatist republics in the Donetsk and Luhansk
regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by
the United States European Union and other countries against Russia Belarus the Crimea Region of Ukraine the so-called
Donetsk People’s Republic and the so-called Luhansk People’s Republic including agreements to remove certain Russian
financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system. Additional
potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting
sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in
capital markets potentially making it more difficult for us to obtain additional funds.Any of the abovementioned factors could affect our business prospects financial condition and operating results. The
extent and duration of the military action sanctions and resulting market disruptions are impossible to predict but could be
substantial. Any such disruptions may also magnify the impact of other risks described in this Form 10-K.FAILURE TO MAINTAIN EFFECTIVE INTERNAL CONTROL OVER FINANCIAL REPORTING COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR ABILITY TO REPORT OUR FINANCIAL RESULTS ON A TIMELY AND
ACCURATE BASIS
Failure to maintain appropriate and effective internal controls over our financial reporting could result in misstatements in
our financial statements and potentially subject us to sanctions or investigations by the SEC or other regulatory authorities
and could cause us to delay the filing of required reports with the SEC and our reporting of financial results. Any of these
events could result in a decline in the market price of our Common Stock. Although we have taken steps to maintain our
internal control structure as required we cannot guarantee that a control deficiency will not result in a misstatement in the
future.EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS AND CONTROL BY EXISTING STOCKHOLDERS
Our Amended and Restated Certificate of Incorporation as amended (our “Certificate of Incorporation”) contains certain
provisions that could have the effect of making it more difficult for a third party to acquire or of discouraging a third party
from attempting to acquire control of the Company. Such provisions could limit the price that certain investors might be
willing to pay in the future for shares of our Common Stock thus making it less likely that a stockholder will receive a
premium on any sale of shares of our Common Stock. Our Board of Directors is divided into three classes each of which
serves for a staggered three-year term making it more difficult for a third party to gain control of our Board. Our Certificate
of Incorporation also contains a provision that requires a four-fifths vote on any merger consolidation or sale of assets with
or to an “Interested Person” or “Acquiring Person” as well as any amendment to the provision which divides the Board into
three classes.
7Additionally we are authorized to issue 2500000 shares of preferred stock of which (i) 416500 are designated as Series A
Convertible Preferred Stock none of which are outstanding and (ii) 51000 are designated as Series B Convertible Preferred
Stock none of which are outstanding. The remaining unissued preferred stock if issued will contain such rights preferences
privileges and restrictions as may be fixed by our Board of Directors which may adversely affect the voting power or other
rights of the holders of Common Stock or delay defer or prevent a change in control of the Company or discourage bids for
the Common Stock at a premium over its market price or otherwise adversely affect the market price of the Common Stock.These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes
in our control or management including transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices. These provisions may also limit the ability of stockholders to approve transactions
that they may deem to be in their best interests.CONCENTRATION OF OWNERSHIP AMONG OUR PRINCIPAL STOCKHOLDERS MAY LIMIT OUR OTHER
STOCKHOLDERS FROM INFLUENCING SIGNIFICANT COMPANY DECISIONS
As of March 24 2023 one stockholder Unilumin North America Inc. (“Unilumin”) owns approximately 52.0% of our
Common Stock and beneficially owns approximately 53.7% of our Common Stock. In addition three of the Company’s four
directors are employed by Unilumin or other entities affiliated with Unilumin. Accordingly such stockholder could exert
significant control over any potential stockholder actions. The interests of this stockholder may not align with our interests or
the interests of other stockholders and thereby could control our policies and operations including the election of directors
the appointment of management future issuances of our Common Stock or other securities the incurrence or modification of
debt by us amendments to our Certificate of Incorporation and bylaws and the entering of extraordinary transactions such
as a merger or sale of all or substantially all of our assets. In addition this majority stockholder will be able to cause or
prevent a change of control of the Company and could preclude any unsolicited acquisition of the Company. This
concentration of ownership could deprive stockholders of an opportunity to receive a premium for their shares of Common
Stock as part of a sale of the Company and ultimately might affect the market price of the Common Stock.WE DO NOT EXPECT TO PAY ANY DIVIDENDS ON OUR COMMON STOCK FOR THE FORESEEABLE FUTURE
We currently expect to retain all future earnings if any for future operation expansion and debt repayment and have no
current plans to pay any cash dividends to holders of our Common Stock for the foreseeable future. Any decision to declare
and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on among other
things our operating results financial condition cash requirements contractual restrictions and other factors that our Board
of Directors may deem relevant. In addition we must comply with the covenants in our credit agreement in order to be able
to pay cash dividends and our ability to pay dividends generally may be further limited by covenants of any existing and
future outstanding indebtedness we or our subsidiaries incur. As a result you may not receive any return on an investment in
our Common Stock unless you sell our Common Stock for a price greater than that which you paid for it.OUR COMMON STOCK IS QUOTED ON OTC PINK AND MAY BE SUBJECT TO LIMITED TRADING VOLUME
AND PRICE VOLATILITY
Our Common Stock is quoted on the OTC Pink an inter-dealer electronic quotation and trading system for equity securities.Quotation of our Common Stock on OTC Pink may limit the liquidity and price of our Common Stock more than if our
Common Stock were quoted or listed on the NASDAQ Stock Market or another national exchange. Some investors may
perceive our Common Stock to be less attractive because it is traded in the over-the-counter market. In addition as an OTC
Pink company we do not attract the extensive analyst coverage that accompanies companies listed on national exchanges.Further institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded
on OTC Pink. These factors may have an adverse impact on the trading and price of our Common Stock.Our Common Stock is not widely held and the volume of trading has been relatively low and sporadic. Accordingly our
Common Stock is subject to increased price volatility and reduced liquidity. There can be no assurance that a more active
trading market for our Common Stock will develop or be sustained if it does develop. The market price of our Common
Stock has been and may continue to be subject to wide fluctuations in response to numerous factors some of which arebeyond our control. These factors include among other things the factors described in the sections entitled “Safe HarborStatement under the Private Securities Reform Act of 1995” and “Risk Factors” in this Annual Report on Form 10-K the
general state of the securities markets and the market for similar stocks changes in capital markets that affect the perceived
availability of capital to companies in our industry and governmental legislation or regulation as well as general economic
and market conditions.
8ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.ITEM 2. PROPERTIES
The Company’s headquarters and principal executive offices are located in a leased facility at 254 West 31st Street 12th Floor
New York New York at no annual rental cost (because it is additional space in a Unilumin office) which it uses as its
primary executive sales and administrative office. The Company leases a facility in Hazelwood Missouri at an annual
rental of $348000 which is being used for manufacturing operations. The Company leases a facility in Des Moines Iowa at
an annual rental of $129000 which is used for manufacturing sales and administrative operations.The aggregate property rent expense was $477000 and $395000 for the years ended December 31 2022 and 2021
respectively.ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business and/or which are
covered by insurance. The Company has accrued reserves individually and in the aggregate for such legal proceedings.Should actual litigation results differ from the Company’s estimates revisions to increase or decrease the accrued reserves
may be required. There are no open matters that the Company deems material.ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) The Company’s Common Stock trades on the OTC Pink under the symbol “TNLX.” The Company had
approximately 86 holders of record of its Common Stock as of March 24 2023. The number of record
holders does not include DTC participants or beneficial owners holding shares through nominee names.The Board of Directors did not declare any cash dividends on Common Stock during 2022 and the
Company does not anticipate paying any cash dividends on its Common Stock for the foreseeable future.In addition the Company’s loan agreement with Unilumin restricts the payment of dividends.(b) Not applicable.(c) The Company did not purchase any of its equity securities during any month of the fourth fiscal quarter of
2022.
ITEM 6. REMOVED AND RESERVED
9ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
Trans-Lux is a leading supplier of LED technology for display applications. The essential elements of these systems are the
real-time programmable digital products that we design manufacture distribute and service. Designed to meet the digital
signage solutions for any size venue’s indoor and outdoor needs these displays are used primarily in applications for the
financial banking gaming corporate advertising transportation entertainment and sports markets. The Company operates
in two reportable segments: Digital product sales and Digital product lease and maintenance.The Digital product sales segment includes worldwide revenues and related expenses from the sales of both indoor and
outdoor digital product signage. This segment includes the financial government/private gaming scoreboards and outdoor
advertising markets. The Digital product lease and maintenance segment includes worldwide revenues and related expenses
from the lease and maintenance of both indoor and outdoor digital product signage. This segment includes the lease and
maintenance of digital product signage across all markets.Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s
Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in
the United States of America (“GAAP”). The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. On an ongoing basis management evaluates its estimates and judgments including those related to uncollectible
accounts receivable slow-moving and obsolete inventories rental equipment income taxes warranty reserve warrants
pension plan obligations contingencies and litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under the circumstances the results of which form
the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions. Management has
discussed the development and selection of these accounting estimates and the related disclosures with the Audit Committee
of the Board of Directors.Management believes the following critical accounting policies involve its more significant judgments and estimates used in
the preparation of its Consolidated Financial Statements:
Uncollectible Accounts Receivable: The Company maintains allowances for uncollectible accounts receivable for estimated
losses resulting from the inability of its customers to make required payments. Should non-payment by customers differ
from the Company’s estimates a revision to increase or decrease the allowance for uncollectible accounts receivable may be
required.Slow-Moving and Obsolete Inventories: The Company writes down its inventory for estimated obsolescence equal to the
difference between the carrying value of the inventory and the estimated net realizable value based upon assumptions about
future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by
management additional inventory write-downs may be required.Rental Equipment: The Company evaluates rental equipment assets for possible impairment annually to determine if the
$225000 carrying amount of such assets may not be recoverable. The Company uses a cash flow model to determine the fair
value under the income approach based on the remaining lengths of existing leases. Changes in the assumptions used could
materially impact our fair value estimates. Assumptions critical to our fair value estimates are projected renewal rates and
CPI rate changes. These and other assumptions are impacted by national and global economic conditions including changes
in national and international interest rates taxes inflation etc. and will change in the future based on period-specific facts
and circumstances thereby possibly requiring an impairment charge in the future. The December 31 2022 impairment
analysis included a renewal rate estimate of 74.5% and a CPI rate change of approximately 7.0% which were the actual
average rates for the two-year period ended December 31 2022. Based on these assumptions the cash flow model
determined a fair value of $2.6 million exceeding its carrying value by 1075%. Therefore there is no impairment of the
Rental Equipment. For every 1-percentage-point change in the renewal rate the valuation would change by approximately
$48000. For every 1-percentage-point change in the CPI rate the valuation would change by approximately $53000.
10Rental equipment is comprised of installed digital products on lease primarily used for indoor trading applications time and
temperature displays and other digital message displays and have estimated useful lives of 10-15 years. For example the
Company is party to contracts for equipment originally installed over 30 or 40 years ago in the 1970’s and 1980’s as well as
dozens of installations from the 1990’s still in operation. Current contracts have an average age of 24.4 years from their
installation dates through the expiration of their current terms.Income Taxes: The Company records a valuation allowance to reduce its deferred tax assets to the amount that it believes is
more likely than not to be realized. While the Company has considered future taxable income and ongoing feasible tax
planning strategies in assessing the need for the valuation allowance in the event the Company were to determine that it
would not be able to realize all or part of its net deferred tax assets in the future an adjustment to the deferred tax assets
would be charged to income in the period such determination was made. Likewise should the Company determine that it
would be able to realize its deferred tax assets in the future in excess of its net recorded amount an adjustment to the deferred
tax assets would increase income in the period such determination was made.Warranty Reserve: The Company provides for the estimated cost of product warranties at the time revenue is recognized.While the Company engages in product quality programs and processes including evaluating the quality of the component
suppliers the warranty obligation is affected by product failure rates. Should actual product failure rates differ from the
Company’s estimates revisions to increase or decrease the estimated warranty liability may be required.Pension Plan Obligations: The Company is required to make estimates and assumptions to determine the obligation of our
pension benefit plan which includes investment returns and discount rates. The Company recorded after-tax benefit in
unrecognized pension liability of $352000 and $1.1 million in 2022 and 2021 respectively in other comprehensive income.Estimates and assumptions are reviewed annually with the assistance of external actuarial professionals and adjusted as
circumstances change. Assumed mortality rates of plan participants are a critical estimate in measuring the expected
payments a participant will receive over their lifetime and the amount of liability and expense we recognize. At December
31 2022 plan assets were invested 31.0% in fixed income contracts and 69.0% in equity and index funds. The investment
return assumption takes the asset mix into consideration. The assumed discount rate reflects the rate at which the pension
benefits could be settled. The Company utilizes a yield curve in lieu of a single weighted discount rate in determining
liabilities and the interest cost for the following year. At December 31 2022 the weighted average rates used for the
computation of benefit plan liabilities were: investment returns 8.00% and discount rate 2.75%. The net periodic cost for
2023 will be based on the December 31 2022 valuation. The defined benefit pension plan periodic benefit (cost) was
$142000 and ($181000) in 2022 and 2021 respectively. At December 31 2022 assuming no change in the other
assumptions a one-percentage point increase/(decrease) in the discount rate would have increased/(decreased) the net
periodic cost by $40000/($50000).As of December 31 2003 the benefit service under the defined benefit pension plan had been frozen and accordingly there
is no service cost for the years ended December 31 2022 and 2021. The minimum required pension plan contribution for
2022 was $138000 which the Company fully contributed. At this time there are no minimum required contributions due in
2023. See Note 15 to the Consolidated Financial Statements – Pension Plan for further details.
Contingencies and Litigation: The Company is subject to legal proceedings and claims which arise in the ordinary course of
its business and/or which are covered by insurance. The Company has accrued reserves individually and in the aggregate for
such legal proceedings. Should actual litigation results differ from the Company’s estimates revisions to increase or
decrease the accrued reserves may be required. There are no open matters that the Company deems material.
11Results of Operations
The following table presents our Statements of Operations data expressed as a percentage of revenue for the years ended
December 31 2022 and 2021:
In thousands except percentages 2022 2021
R evenues:
Digital product sales $ 20386 94.1 % $ 9418 83.0 %
Digital product lease and maintenance 1275 5.9 % 1932 17.0 %
Total revenues 21661 100.0 % 11350 100.0 %
Cos t of revenues:
Cost of digital product sales 18196 84.0 % 11896 104.8 %
Cost of digital product lease and maintenance 547 2.5 % 612 5.4 %
Total cost of revenues 18743 86.5 % 12508 110.2 %
Gros s profit (loss) from operations 2918 13.5 % (1158) (10.2)%
General and administrative expenses (3307) (15.3)% (3075) (27.1)%
Operating loss (389) (1.8)% (4233) (37.3)%
Interest expense net (410) (1.9)% (578) (5.1)%
Gain (loss) on foreign currency remeasurement 191 0.9 % (18) (0.2)%
Gain on extinguishment of debt - - % 77 0.7 %
Gain on forgiveness of PPP loan 824 3.8 % - - %
Pension benefit (expense) 142 0.7 % (181) (1.6)%
Income (loss) before income taxes 358 1.7 % (4933) (43.5)%
Income tax expense (35) (0.2)% (35) (0.3)%
Net income (loss) $ 323 1.5 % $(4968) (43.8)%
2022 Compared to 2021
Total revenues for the year ended December 31 2022 increased $10.3 million or 116.5% to $21.7 million from $11.4 million
for the year ended December 31 2021 primarily due to increases in Digital product sales partially offset by a decrease in
Digital lease and maintenance revenues.Digital product sales revenues increased $11.0 million or 116.5% to $20.4 million for the year ended December 31 2022
compared to $9.4 million for the year ended December 31 2021 primarily due to the large rebound in 2022 from the onset of
the coronavirus pandemic in 2020.Digital product lease and maintenance revenues decreased $657000 or 34.0% to $1.3 million for the year ended December
31 2022 compared to $1.9 million for the year ended December 31 2021 primarily due to the continued expected revenue
decline in the older outdoor display equipment rental and maintenance bases acquired in the early 1990s. The financial
services market continues to be negatively impacted by the current investment climate resulting in consolidation within that
industry and the wider use of flat-panel screens for smaller applications.Total operating loss for the year ended December 31 2022 decreased $3.8 million to $389000 from $4.2 million for the year
ended December 31 2021 principally due to the increase in revenues and a decrease in the cost of revenues as a percentage
of revenues partially offset by an increase in general and administrative expenses.Digital product sales operating income (loss) increased $4.7 million to income of $394000 for the year ended December 31
2022 compared to a loss of $4.3 million for the year ended December 31 2021 primarily due to the increase in revenues and
a decrease in the cost of revenues as a percentage of revenues. The cost of Digital product sales increased $6.3 million or
53.0% primarily due to the increase in revenues. The cost of Digital product sales represented 89.3% of related revenues in
2022 compared to 126.3% in 2021. General and administrative expenses for Digital product sales decreased slightly.
Digital product lease and maintenance operating income decreased $483000 or 37.7% to $799000 for the year ended
December 31 2022 compared to $1.3 million for the year ended December 31 2021 primarily due to the reduction in
revenues. The cost of Digital product lease and maintenance decreased $65000 or 10.6% primarily due to a decrease in
depreciation expense. The cost of Digital product lease and maintenance revenues represented 42.9% of related revenues in
2022 compared to 31.7% in 2021. The cost of Digital product lease and maintenance includes field service expenses plant
repair costs maintenance and depreciation. General and administrative expenses for Digital product lease and maintenance
decreased $109000 primarily due to a decrease in bad debt expenses.
12Corporate general and administrative expenses increased $352000 or 28.6% to $1.6 million for the year ended December 31
2022 compared to $1.2 million for the year ended December 31 2021 primarily due to an increase in employee expenses
partially offset by a decrease in consulting expense.Net interest expense decreased $168000 or 29.1% to $410000 for the year ended December 31 2022 compared to $578000
for the year ended December 31 2021 primarily due to a decrease in the interest rate on the revolving credit loan partially
offset by an increase in the average outstanding long-term debt.There was no extinguishment of debt in the year ended December 31 2022. The gain on extinguishment of debt for the year
ended December 31 2021 represented the gain on the extinguishment of $50000 of Notes.The effective tax rate for the years ended December 31 2022 and 2021 was an expense (benefit) of 9.8% and (0.7)%
respectively. In both 2022 and 2021 the Company recognized income tax expense of $35000. The income tax expense in
2022 and 2021 is affected by income tax expense related to the Company’s Canadian subsidiary and the valuation allowance
on the Company’s deferred tax assets as a result of reporting pre-tax losses.Liquidity and Capital Resources
Current Liquidity
The Company has incurred recurring operating losses and continues to have a working capital deficiency. The Company
recorded income of $323000 in the year ended December 31 2022 which included the gain on forgiveness of the PPP loan
of $824000 and had a working capital deficiency of $9.3 million as of December 31 2022. As of December 31 2021 the
Company had a working capital deficiency of $9.8 million. The decrease in the working capital deficiency as compared to
December 31 2021 is primarily due to increases in inventory and receivables as well as a decrease in customer deposits
partially offset by decreases in prepaids and other assets and cash as well as a decrease in accounts payable and the current
portion of long-term debt.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. In order to more effectively manage its cash resources the Company had
from time to time increased the payment timetable of some of its payables which had from time to time delayed certain
product deliveries from our vendors which in turn had from time to time delayed certain deliveries to our customers. The
recent cash infusions have resolved these previous issues.Management believes there is substantial doubt as to whether we will have adequate liquidity including access to the debt
and equity capital markets to operate our business over the next 12 months from the date of issuance of this Form 10-K. The
Company continually evaluates the need and availability of long-term capital to meet its cash requirements and fund potential
new opportunities.The Company used cash for operating activities of $2.0 million and $137000 in the years ended December 31 2022 and
2021 respectively. The Company has implemented several initiatives to improve operational results and cash flows over
future periods including reducing headcount reorganizing its sales department and outsourcing certain administrative
functions. The Company continues to explore ways to reduce operational and overhead costs. The Company periodically
takes steps to reduce the cost to maintain the digital products on lease and maintenance agreements.Cash and cash equivalents decreased $476000 in 2022. The decrease is primarily attributable to cash used in operating
activities of $2.0 million and purchases of equipment of $18000 partially offset by proceeds from long-term debt
borrowings of $1.1 million and refund proceeds from loan forgiveness of $453000. The current economic environment has
increased the Company’s trade receivables collection cycle and its allowances for uncollectible accounts receivable but
collections continue to be favorable.Under various agreements the Company is obligated to make future cash payments in fixed amounts. These include
payments under the Company’s long-term debt agreements payments to the Company’s pension plan warranty liabilities
and rental payments required under operating lease agreements. The Company has both variable and fixed interest rate debt.Interest payments are projected based on actual interest payments incurred in 2022 until the underlying debts mature.
13The following table summarizes the Company’s fixed cash obligations as of December 31 2022 over the next five fiscal
years:
In thousands 2023 2024 2025 2026 2027
Long-term debt including interest $5160 $ 31 $ 31 $ 31 $ 31
Pension plan payments - 702 364 323 298
Estimated warranty liability 301 93 67 55 38
Operating lease payments 452 146 149 152 13
Total $5913 $972 $611 $561 $380
As of December 31 2022 the Company still had outstanding $302000 of Notes which matured as of March 1 2012. The
Company also still had outstanding $220000 of Debentures which matured on December 1 2012. The Company continues
to consider future exchanges of the remaining Notes and Debentures but has no agreements commitments or understandings
with respect to any further exchanges. See Note 12 to the Consolidated Financial Statements – Long-Term Debt for further
details.The Company may still seek additional financing in order to provide enough cash to cover our remaining current fixed cash
obligations as well as providing working capital. However there can be no assurance as to the amounts if any the Company
will receive in any such financing or the terms thereof. The Company has no agreements commitments or understandings
with respect to any such financings. To the extent the Company issues additional equity securities it could be dilutive to
existing shareholders.Pension Plan Contributions
The minimum required pension plan contribution for 2022 was $138000 which the Company fully contributed. At this time
there is no minimum contribution required in 2023. See Note 15 to the Consolidated Financial Statements – Pension Plan for
further details.Off-Balance Sheet Arrangements: The Company has no majority-owned subsidiaries that are not included in the
Consolidated Financial Statements nor does it have any interests in or relationships with any special purpose off-balance
sheet financing entities.Safe Harbor Statement under the Private Securities Reform Act of 1995
This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as
amended and Section 21E of the Securities Exchange Act of 1934 as amended. Any statement that is not a statement of
historical fact should be considered a forward-looking statement. We often use words or phrases of expectation or
uncertainty like “believe” “anticipate” “plan” “expect” “intent” “project” “future” “may” “will” “could” “would” and
similar words to help identify forward-looking statements. Examples of forward-looking statements include statements
regarding our future financial results operating results business strategies projected costs product development or future
sales competitive positions and plans and objectives of management for future operations.We have based these forward-looking statements on our current expectations and projections about future events. However
they are subject to various risks and uncertainties many of which are outside our control including the circumstances
described in the section entitled “Risk Factors” in this report. Accordingly our actual results or financial condition could
differ materially and adversely from those discussed in or implied by these forward-looking statements. We caution you not
to place undue reliance on our forward-looking statements. Each forward-looking statement speaks only as of the date on
which it is made and except to the extent required by federal securities laws we undertake no obligation to update or revise
any forward-looking statements whether as a result of new information future events or otherwise.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to interest rate risk on its long-term debt. The Company manages its exposure to changes in interest
rates by the use of variable and fixed interest rate debt. The fair value of the Company’s fixed rate long-term debt is
disclosed in Note 12 to the Consolidated Financial Statements – Long-Term Debt. Every 1-percentage-point change in
interest rates would result in an annual interest expense fluctuation of approximately $22000. In addition the Company is
exposed to foreign currency exchange rate risk mainly as a result of investment in its Canadian subsidiary. A 10% change in
the Canadian dollar relative to the U.S. dollar would result in a currency exchange expense fluctuation of approximately
14$248000 based on dealer quotes considering current exchange rates. The Company does not enter into derivatives for
trading or speculative purposes and did not hold any derivative financial instruments at December 31 2022.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of Trans-Lux Corporation and its subsidiaries are included on the following pages:
Report of Independent Registered Public Accounting Firm (PCAOB ID 688) 16
Consolidated Balance Sheets as of December 31 2022 and 2021 17
Consolidated Statements of Operations for the Years Ended December 31 2022 and 2021 18
Consolidated Statements of Comprehensive Loss for the Years Ended December 31 2022 and 2021 18
Consolidated Statements of Changes in Stockholders’ Deficit for the Years Ended December 31 2022 and 2021 19
Consolidated Statements of Cash Flows for the Years Ended December 31 2022 and 2021 20
Notes to Consolidated Financial Statements 21
15REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Trans-Lux Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Trans-Lux Corporation (the “Company”) as of December
31 2022 and 2021 the related consolidated statements of operations comprehensive loss stockholders’ deficit and cash
flows for each of the two years in the period ended December 31 2022 and the related notes (collectively referred to as the
“financial statements”). In our opinion the financial statements present fairly in all material respects the financial position
of the Company as of December 31 2022 and 2021 and the results of its operations and its cash flows for each of the two
years in the period ended December 31 2022 in conformity with accounting principles generally accepted in the United
States of America.Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As more fully described in Note 2 the Company has a significant working capital deficiency has incurred
significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise
substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement whether
due to error or fraud. The Company is not required to have nor were we engaged to perform an audit of its internal control
over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over
financial reporting. Accordingly we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether
due to error or fraud and performing procedures that respond to those risks. Such procedures included examining on a test
basis evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging subjective or complex judgments. We determined that there
are no critical audit matters./S/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2015.New Haven CT
March xx 2023
16TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31 December 31
In thousands except share data 2022 2021
ASSETS
Current assets:
Cash and cash equivalents $ 48 $ 524
Receivables net 2832 2149
Inventories 2722 871
Prepaids and other assets 1071 1551
Total current assets 6673 5095
Long-term assets:
Rental equipment net 225 411
Property plant and equipment net 1715 1950
Right of use assets 765 1162
Other assets 34 33
Total long-term assets 2739 3556
TOTAL ASSETS $ 9412 $ 8651
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 6339 $ 5248
Accrued liabilities 4 279 4287
Current portion of long-term debt 3768 3030
Current lease liabilities 393 397
Customer deposits 1183 1 951
Total current liabilities 15962 14913
Long-term liabilities:
Long-term debt less current portion 500 500
Long-term lease liabilities 412 805
Deferred pension liability and other 2862 3381
Total long-term liabilities 3774 4686
Total liabilities 19736 19599
Stockholders' deficit:
Preferred Stock Series A - $20 stated value - 416500 shares authorized;
shares issued and outstanding: 0 in 2022 and 2021 - -
Preferred Stock Series B - $200 stated value - 51000 shares authorized;
shares issued and outstanding: 0 in 2022 and 2021 - -
Common Stock - $0.001 par value - 30000000 shares authorized;
shares issued: 13474116 in 2022 and 2021;
shares outstanding: 13446276 in 2022 and 2021 13 13
Additional paid-in-capital 41444 41330
Accumulated deficit (42652) (42975)
Accumulated other comprehensive loss (6066) (6253)
Treasury stock - at cost - 27840 common shares in 2022 and 2021 (3063) (3063)
Total stockholders' deficit (10324) (10948)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 9412 $ 8651
The accompanying notes are an integral part of these consolidated financial statements.
17TRANS-LUX CORPORATION AND SUBSIDIARIES YTD previous month
CONSOLIDATED STATEMENTS OF OPERATIONS
12 Months Ended 11 Months Ended
December 31 November 30
In thousands except per share data 2022 2021
Revenues:
Digital product sales $ 20386 $ 9418
Digital product lease and maintenance 1 275 1932
Total revenues 21661 11350
Cost of revenues:
Cost of digital product sales 18196 11896
Cost of digital product lease and maintenance 547 612
Total cost of revenues 18743 12508
Gross income (loss) 2918 (1158)
General and administrative expenses (3307) (3075)
Operating loss (389) (4233)
Interest expense net (410) (578)
Gain (loss) on foreign currency remeasurement 191 (18)
Gain on extinguishment of debt - 77
Gain on forgiveness of PPP loan 824 -
Pension benefit (expense) 142 (181)
Income (loss) before income taxes 358 (4933)
Income tax expense (35) (35)
Net income (loss) $ 323 $ (4968)
The accompanying notes are an integral part of these consolidated financial statements.TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
12 Months Ended 11 Months Ended
December 31 November 30
In thousands 2022 2021
Net income (loss) $ 3 23 $ (4968)
Other comprehensive (loss) income:
Unrealized foreign currency translation (loss) gain (165) 18
Change in unrecognized pension costs 352 1051
Total other comprehensive income net of tax 187 1069
Comprehensive income (loss) $ 510 $ (3899)
The accompanying notes are an integral part of these consolidated financial statements.
18TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
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) Income Stock Deficit
For the year ended December 31 2022
Balance January 1 2022 - $ - - $ - 13474116 $ 13 $ 41330 $ (42975) $ (6253) $ (3063) $( 10948)
Net income - - - - - - - 323 - - 323
Issuance of options - - - - - - 1 14 - - - 114
Other comprehensive (loss) gain net of tax:
Unrealized foreign currency translation loss - - - - - - - - (165) - (165)
Change in unrecognized pension costs - - - - - - - - 3 52 - 352
Balance December 31 2022 - $ - - $ - 13474116 $ 13 $ 41444 $ (42652) $ (6066) $ (3063) $( 10324)
For the 12 months ended December 31 2021
Balance January 1 2021 - $ - - $ - 13474116 $ 13 $ 41330 $ (38007) $ (7322) $ (3063) $ (7049)
Net loss - - - - - - - (4968) - - (4968)
Other comprehensive gain net of tax:
Unrealized foreign currency translation gain - - - - - - - - 18 - 18
Change in unrecognized pension costs - - - - - - - - 1051 - 1051
Balance December 31 2021 - $ - - $ - 13474116 $ 13 $ 41330 $ (42975) $ (6253) $ (3063) $ (10948)
The accompanying notes are an integral part of these consolidated financial statements.
19TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
12 Months Ended
December 31
In thousands 2022 2021
Cash flows from operating activities
Net income (loss) $ 323 $ (4968)
Adjustment to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 439 495
Amortization of right of use assets 397 3 03
Gain on forgiveness of PPP loan (824) -
Amortization of deferred financing fees and debt discount 52 1 27
Gain on extinguishment of debt - (77)
(Gain) loss on foreign currency remeasurement (191) 18
Amortization of stock options 114 -
Bad debt expense (113) 64
Changes in operating assets and liabilities:
Accounts receivable (570) (832)
Inventories (1851) 671
Prepaids and other assets 479 (1210)
Accounts payable 1091 3608
Accrued liabilities (7) 6 60
Operating lease liabilities (397) (298)
Customer deposits (768) 1427
Deferred pension liability and other (142) (125)
Net cash used in operating activities (1968) (137)
Cash flows from investing activities
Purchases of property plant and equipment (18) -
Net cash used in investing activities (18) -
Cash flows from financing activities
Proceeds from long-term debt 1 057 1078
Proceeds from forgiveness of PPP loan 453 -
Payments of long-term debt - (460)
Net cash provided by financing activities 1 510 618
Effect of exchange rate changes - -
Net (decrease) increase in cash and cash equivalents (476) 481
Cash and cash equivalents at beginning of year 524 43
Cash and cash equivalents at end of period $ 48 $ 524
Supplemental disclosure of cash flow information:
Interest paid $ - $ 219
Income taxes paid 10 9
The accompanying notes are an integral part of these consolidated financial statements.
20Notes To Consolidated Financial Statements
The following is a summary of the allowance for
uncollectible accounts at December 31:
1. Summary of Significant Accounting Policies
In thousands 2022 2021
Trans-Lux Corporation is a leading designer and Balance at beginning of year $ 423 $ 660
manufacturer of digital signage display solutions. The Provisions (113) 64
Write-offs (19) (301)
Company sells and leases its digital signage display
Balance at end of year $ 291 $ 423
solutions.Concentrations of credit risk with respect to accounts
Principles of consolidation: The Consolidated Financial receivable are limited due to the large number of
Statements include the accounts of Trans-Lux customers the relatively small account balances within
Corporation a Delaware corporation and all wholly- the majority of the Company’s customer base and their
owned subsidiaries (collectively the “Company”). dispersion across different businesses. At December 31
Intercompany balances and transactions have been 2022 two customers accounted for 26.9% of the balance
eliminated in consolidation. in Accounts receivable net. At December 31 2021 two
customers accounted for 36.0% of the balance in
Use of estimates: The preparation of the financial Accounts receivable net. In 2022 one customer
statements in conformity with accounting principles accounted for 13.3% of our total revenues. In 2021 no
generally accepted in the United States of America customers accounted for at least 10% of our total
(“GAAP”) requires management to make estimates and revenues.assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and Inventories: Inventories are stated at the lower of cost
liabilities at the date of the financial statements and the (first-in first-out method) or net realizable value.reported amounts of revenues and expenses during the Valuation allowances for slow-moving and obsolete
reporting period. Actual results could differ from those inventories are provided based on historical experience
estimates. Estimates and assumptions are reviewed and demand for servicing of the displays. The Company
periodically and the effects of revisions are reflected in evaluates the adequacy of these valuation allowances
the financial statements in the period in which the change regularly.is determined. Estimates are used when accounting for
such items as costs of long-term sales contracts Rental equipment and property plant and equipment net:
allowance for uncollectible accounts inventory valuation Rental equipment and property plant and equipment are
allowances depreciation and amortization valuation of stated at cost and depreciated over their respective useful
pension obligations valuation of warrants income taxes lives using the straight-line method. Leaseholds and
warranty reserve management’s assessment of going improvements are amortized over the lesser of the useful
concern contingencies impairment of long-lived assets lives or term of the lease. Repairs and maintenance costs
and litigation. related to rental equipment and property plant and
equipment are expensed in the period incurred.Cash and cash equivalents: The Company considers all
highly liquid investments with an original maturity of The estimated useful lives are as follows:
three months or less to be cash equivalents. The
Company has deposits in United States financial Years
institutions that maintain Federal Deposit Insurance Indoor rental equipment 10
Corporation (“FDIC”) deposit insurance on all interest Outdoor rental equipment 15
and non-interest-bearing accounts collectively with an Machinery fixtures and equipment 5 – 15
aggregate coverage up to $250000 per depositor per Leaseholds and improvements 7
financial institution. At times the amount of the deposits
exceeds the FDIC limits. The portion of the deposits in When rental equipment and property plant and equipment
excess of FDIC limits represents a credit risk of the are fully depreciated retired or otherwise disposed of the
Company. The Company has no cash equivalents at cost and accumulated depreciation are eliminated from
December 31 2022 and 2021. the accounts. Any gains or losses on disposals are
recorded in the period incurred.Accounts receivable net: Accounts receivable are carried
at net realizable value. Credit is extended based on an Impairment or disposal of long-lived assets: The
evaluation of each customer’s financial condition; Company evaluates whether there has been an impairment
collateral is generally not required. Reserves for in value of its long-lived assets if certain circumstances
uncollectible accounts receivable are provided based on indicate that a possible impairment may exist. An
historical experience and current trends. The Company impairment in value may exist when the carrying value of
evaluates the adequacy of these reserves regularly. a long-lived asset exceeds its undiscounted cash flows. If
21it is determined that an impairment in value has occurred an ongoing analysis of tax laws regulations and
the carrying value is written down to its fair value as interpretations thereof.determined by a discounted cash flow model. There were
no impairments of long-lived assets in 2022 or 2021. Foreign currency: The functional currency of the
Company’s Canadian business operation is the Canadian
Shipping Costs: The costs of shipping product to our dollar. The assets and liabilities of such operation are
customers of $677000 and $391000 in 2022 and 2021 translated into U.S. dollars at the year-end rate of
respectively are included in Cost of digital product sales. exchange and the operating and cash flow statements are
converted at the average annual rate of exchange. The
Advertising/Marketing Costs: The Company expenses the resulting translation adjustment is recorded in
costs of advertising and marketing at the time that the Accumulated other comprehensive loss in the
related advertising takes place. Advertising and Consolidated Balance Sheets and as a separate item in the
marketing costs of $25000 and $24000 in 2022 and 2021 Consolidated Statements of Comprehensive Loss. In
respectively are included in General and administrative relation to intercompany balances these have been
expenses. classified as short-term in nature and therefore the
changes in the foreign currency remeasurement
Revenue recognition: See Note 3 – Revenue Recognition. adjustment for intercompany balances are recorded as
Gain (loss) on foreign currency remeasurement in the
Warranty reserve: The Company provides for the Consolidated Statements of Operations.estimated cost of product warranties at the time revenue is
recognized. While the Company engages in product Share-based compensation: The Company measures
quality programs and processes including evaluating the share-based payments to employees directors and non-
quality of the component suppliers the warranty employees at the grant date fair value of the instrument.obligation is affected by product failure rates. Should The fair value is estimated on the date of grant using the
actual product failure rates differ from the Company’s Black-Scholes valuation model which requires various
estimates revisions to increase or decrease the estimated assumptions including estimating stock price volatility
warranty liability may be required. expected life of the instrument estimated forfeiture rate
and risk free interest rate. For details on the accounting
Taxes on income: Deferred income tax assets and effect of share-based compensation see Note 16 – Share-
liabilities are established for temporary differences Based Compensation.between the financial reporting basis and the tax basis of
the Company’s assets and liabilities at tax rates expected The following new accounting pronouncements were
to be in effect when such temporary differences are adopted in 2022:
expected to reverse and for operating loss carryforwards.The temporary differences are primarily attributable to There were no new accounting pronouncements that were
operating loss carryforwards depreciation and the adopted in 2022.actuarial differences between the calculations of expenses
compared to the calculations of contribution requirements The following new accounting pronouncements and
of the pension plan. The Company records a valuation related impacts on adoption are being evaluated by the
allowance against net deferred income tax assets if based Company:
upon the available evidence it is more-likely-than-not
that the deferred income tax assets will not be realized. There were no new accounting pronouncements that will
have a material impact on the financial statements based
The Company considers whether it is more-likely-than- on the determination of management.not that a tax position will be sustained upon examination
including resolution of any related appeals or litigation
processes based on the technical merits of the position. 2. Liquidity and Going Concern
Once it is determined that a position meets the more-
likely-than-not recognition threshold the position is A fundamental principle of the preparation of financial
measured to determine the amount of benefit to recognize statements in accordance with GAAP is the assumption
in the financial statements. The Company’s policy is to that an entity will continue in existence as a going
classify interest and penalties related to uncertain tax concern which contemplates continuity of operations and
positions in income tax expense. To date there have been the realization of assets and settlement of liabilities
no interest or penalties charged to the Company in occurring in the ordinary course of business. This
relation to the underpayment of income taxes. The principle is applicable to all entities except for entities in
Company’s determinations regarding uncertain income liquidation or entities for which liquidation appears
tax positions may be subject to review and adjustment at a imminent. In accordance with this requirement the
later date based upon factors including but not limited to Company has prepared its accompanying Consolidated
22Financial Statements assuming the Company will contract with the customer and excludes any sales
continue as a going concern. incentives and amounts collected on behalf of third parties.A performance obligation is a promise in a contract to
The Company has incurred recurring operating losses and transfer a distinct good or service to a customer and is the
continues to have a working capital deficiency. The unit of account under Topic 606. Our contracts with
Company recorded income of $323000 in the year ended customers generally do not include multiple performance
December 31 2022 which included the gain on obligations. We recognize revenue when we satisfy a
forgiveness of the PPP loan of $824000 and had a performance obligation by transferring control over a
working capital deficiency of $9.3 million as of product or service to a customer. The amount of revenue
December 31 2022. As of December 31 2021 the recognized reflects the consideration we expect to be
Company had a working capital deficiency of $9.8 entitled to in exchange for such products or services.million.Disaggregated Revenues
The Company is dependent on future operating
performance in order to generate sufficient cash flows in The following table represents a disaggregation of
order to continue to run its businesses. Future operating revenue from contracts with customers for the years
performance is dependent on general economic conditions ended December 31 2022 and 2021 along with the
as well as financial competitive and other factors beyond reportable segment for each category:
our control including the impact of the current economic
environment the spread of major epidemics (including
coronavirus) and other related uncertainties such as In thousands 2022 2021
government-imposed travel restrictions interruptions to Digital product sales:
supply chains and extended shut down of businesses. In
Catalog and small
order to more effectively manage its cash resources the
customized products $20386 $9418
Company had from time to time increased the timetable Large customized
of its payment of some of its payables which delayed products - -
certain product deliveries from our vendors which in turn
Subtotal
delayed certain deliveries to our customers. 20386 9418
Digital product lease and maintenance:
Our Consolidated Financial Statements were prepared
assuming we will continue as a going concern. Our Operating leases
579817
continuing operating losses and uncertainty regarding our
ability to make the required minimum funding Maintenance agreements 696 1115
contributions to the defined benefit pension plan and the
past due principal and payments on our outstanding 8?% Subtotal 1275 1932
Limited convertible senior subordinated notes due 2012
Total
(the “Notes”) and 9?% Subordinated debentures due $21661 $11350
2012 (the “Debentures”) raise substantial doubt about our
ability to continue as a going concern. In addition if we Performance Obligations
are unable to (i) obtain additional liquidity for working
capital (ii) make the required minimum funding The Company has two primary revenue streams which are
contributions to the defined benefit pension plan (iii) Digital product sales and Digital product lease and
make the required principal and interest payments on the maintenance.Notes and the Debentures and/or (iv) repay our
obligations under our Credit Agreement (hereinafter Digital Product Sales
defined) with Unilumin there would be a significant
adverse impact on our financial position and operating The Company recognizes net revenue on digital product
results. The Company continually evaluates the need and sales to its distribution partners and to end users related to
availability of long-term capital in order to meet its cash digital display solutions and fixed digit scoreboards. For
requirements and fund potential new opportunities. 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
3. Revenue Recognition may be upon shipment or upon delivery based on the
contractual shipping terms of a contract. For the
We recognize revenue in accordance with two different Company’s customized products revenue is either
accounting standards: 1) Accounting Standards recognized at a point in time or over time depending on
Codification (“ASC”) Topic 606 and 2) ASC Topic 842. the scope of the contract. For those customized product
Under Topic 606 revenue from contracts with customers contracts that are smaller in size revenue is generally
is measured based on the consideration specified in the recognized when the customer obtains control of the
23Company’s product which occurs at a point in time and to the customer when and if needed. As there is no
may be upon shipment or upon delivery based on the discernable pattern of efforts other than evenly over the
contractual shipping terms of a contract. For those lease and maintenance terms the Company will recognize
customized product contracts that are larger in size revenue straight-line over the lease and maintenance
revenue is recognized over time based on incurred costs terms of service.as compared to projected costs using the input method as
this best reflects the Company’s progress in transferring The Company has an enforceable right to payment for
control of the customized product to the customer. The performance completed to date as evidenced by the
Company may also contract with a customer to perform requirement that the customer pay upfront for each month
installation services of digital display products. Similar to of services. Lease and maintenance service amounts billed
the larger customized products the Company recognizes ahead of revenue recognition are recorded in deferred
the revenue associated with installation services using the revenue and are included in Accrued liabilities in the
input method whereby the basis is the total contract costs Consolidated Balance Sheets.incurred to date compared to the total expected costs to be
incurred. Contract Balances with Customers
Revenue on sales to distribution partners are recorded net Contract assets primarily relate to rights to consideration
of prompt-pay discounts if offered and other deductions. for goods or services transferred to the customer when the
To the extent the transaction price includes variable right is conditional on something other than the passage
consideration the Company estimates the amount of of time. The contract assets are transferred to the
variable consideration that should be included in the receivables when the rights become unconditional. As of
transaction price utilizing the most likely amount method December 31 2022 and 2021 the Company had no
to which the Company expects to be entitled. In the case contract assets. The contract liabilities primarily relate to
of prompt-pay discounts there are only two possible the advance consideration received from customers for
outcomes: either the customer pays on-time or does not. contracts prior to the transfer of control to the customer
Variable consideration is included in the transaction price and therefore revenue is recognized on completion of
if in the Company’s judgment it is probable that a delivery. Contract liabilities are classified as deferred
significant future reversal of cumulative revenue under revenue and included in Accrued liabilities in the
the contract will not occur. Determination of whether to Consolidated Balance Sheets.include estimated amounts in the transaction price are
based largely on an assessment of the Company’s The following table presents the balances in the
anticipated performance and all information (historical Company’s receivables and contract liabilities with
current and forecasted) that is reasonably available. The customers as of December 31 2022 and 2021:
Company believes that the estimates it has established are
reasonable based upon current facts and circumstances.Applying different judgments to the same facts and In thousands
20222021
circumstances could result in the estimated amounts to
vary. The Company offers an assurance-type warranty Gross receivables $3123 $2572
that the digital display products will conform to the Allowance for bad debts 291 423
published specifications. Returns may only be made
Net receivables 2832 2149
subject to this warranty and not for convenience.Contract liabilities 1229 2011
Digital Product Lease and Maintenance
During the years ended December 31 2022 and 2021 the
Lease and maintenance contracts generally run for periods Company recognized bad debt expense of ($113000) and
of one month to 10 years. A contract entered into by the $64000 respectively.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
24During the years ended December 31 2022 and 2021 the recorded in costs of goods sold and are recognized when
Company recognized the following revenues as a result of the related finished product is shipped to the customer.changes in the contract asset and the contract liability
balances in the period:
4. Fair Value
In thousands 2022 2021
Revenue recognized in the period The Company carries the cash surrender value of life
from: insurance related to its deferred compensation
Amounts included in the contract arrangements at fair value. Under ASC 820 the fair value
liability at the beginning of the of all assets and liabilities is determined using a three-tier
period $1951 $484 fair value hierarchy.Performance obligations satisfied in
previous periods (for example due to The fair value hierarchy prioritizes the inputs to valuation
changes in transaction price) - -
techniques used to measure fair value into three levels as
follows:
Transaction Price Allocated to Future Performance
Obligations
Level 1 – Inputs to the valuation methodology
based on unadjusted quoted market prices in
Remaining performance obligations represent the
active markets that are accessible at the
transaction price of contracts for which work has not been
measurement date.performed (or has been partially performed). ASC 606
Level 2 – Inputs to the valuation methodology
provides certain practical expedients that limit this
that include quoted market prices that are not
requirement and therefore the Company does not
considered to be active or financial instruments
disclose the value of unsatisfied performance obligations
for which all significant inputs are observable
for (i) contracts with an original expected length of one
either directly or indirectly.year or less and (ii) contracts for which revenue is
Level 3 – Inputs to the valuation methodology
recognized at the amount to which the Company has the
that are unobservable and significant to the fair
right to invoice for services performed. As of December
value measurement.
31 2022 the aggregate amount of the transaction price
allocated to remaining performance obligations for digital
Based on this hierarchy the Company determined the fair
product sales was $5.6 million and digital product lease
value of the cash surrender value of life insurance a
and maintenance was $2.1 million. The Company expects
Level 2 based on observable inputs primarily from the
to recognize revenue on approximately 85% 9% and 6%
counter party. The Company’s cash surrender value of
of the remaining performance obligations over the next 12
life insurance had a carrying amount of $33000 at
months 13 to 36 months and 37 or more months
December 31 2022 and 2021 which was included in
respectively.Other Assets in the Consolidated Balance Sheets. The
carrying amounts of cash equivalents receivables and
Costs to Obtain or Fulfill a Customer Contract
accounts payable approximate fair value due to the short
maturities of these items. The fair value of the Notes
The Company capitalizes incremental costs of obtaining
using observable inputs was $121000 and at December
customer contracts. Capitalized commissions are
31 2022 and 2021. The fair value of the Debentures
amortized based on the transfer of the products or services
using observable inputs was $88000 at December 31
to which the assets relate. Applying the practical
2022 and 2021 respectively. The fair value of the
expedient the Company recognizes the incremental costs
Company’s remaining long-term debt including current
of obtaining contracts as an expense when incurred if the
portion approximates its carrying value of $3.7 million at
amortization period of the assets that the Company
December 31 2022 and $3.1 million at December 31
otherwise would have recognized is one year or less.
2021.
These costs are included in General and administrative
expenses.The Company accounts for shipping and handling 5. Inventories
activities related to contracts with customers as costs to
Inventories consist of the following:
fulfill the promise to transfer the associated products.When shipping and handling costs are incurred after a
In thousands 2022 2021
customer obtains control of the products the Company
Raw materials $2535 $467
also has elected to account for these as costs to fulfill the
Work-in-progress - -
promise and not as a separate performance obligation. Finished goods 187 404
Shipping and handling costs associated with the Total inventory $2722 $871
distribution of finished products to customers are
256. Rental Equipment net 9. Taxes on Income
Rental equipment consists of the following: The components of income tax expense are as follows:
In thousands 2022 2021 In thousands 2022 2021
Rental equipment $2077 $3664 Current:
Less accumulated depreciation 1852 3253 Federal $ - $ -
Net rental equipment $ 225 $ 411 State and local 25 25
Foreign 10 10
During 2022 $1.6 million of fully depreciated rental $ 35 $ 35
equipment was written off. Depreciation expense for Deferred:
rental equipment for the years ended December 31 2022 Federal $ - $ -
State and local - -
and 2021 was $186000 and $245000 respectively.--
Income tax expense $ 35 $ 35
7. Property Plant and Equipment net
Income (loss) before income taxes from the United States
activities was $0.2 million and $(4.9) million for the years
Property plant and equipment consists of the following:
ended December 31 2022 and 2021 respectively.Income (loss) before income taxes from Canadian
In thousands 2022 2021
operations was $0.2 million and $(0.01) million for the
Machinery fixtures and equipment $2856 $2908
years ended December 31 2022 and 2021 respectively.Leaseholds and improvements 23 23
28792931
Less accumulated depreciation 1164 981 The effective income tax rate differed from the expected
Net property plant and equipment $1715 $1950 federal statutory income tax benefit rate of 21.0% as
follows:
Equipment having net book values of $1.7 million and
$2.0 million at December 31 2022 and 2021 respectively 2022 2021
are pledged as collateral under various financing Statutory federal income tax benefit
agreements. rate 21.0 % 21.0 %
State income taxes net of federal
benefit (0.3) 4.0
During 2022 and 2021 $70000 and $14000 respectively PPP debt forgiven (47.6) -
of fully depreciated property plant and equipment was Foreign income taxed at different
written off. Depreciation expense for property plant and rates (7.3) (0.3)
equipment for the years ended December 31 2022 and Deferred tax asset valuation
2021 was $253000 and $250000 respectively. allowance 31.6 (24.1)
Section 382 adjustment to deferred
net operating loss 8.7 (1.3)
Other 3.7 (0.1) 8. Other Assets
Effective income tax expense
(benefit) rate 9.8% (0.7)%
Other assets consist of the following:
In thousands 2022 2021
Prepaids $34 $33
Deposits - -
Total other assets $34 $33
26Deferred income taxes reflect the net effect of temporary 10. Accrued Liabilities
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the Accrued liabilities consist of the following:
amounts used for income tax purposes. Significant
components of the Company’s deferred income tax assets In thousands 2022 2021
and liabilities are as follows: Taxes payable $1179 $1195
Interest payable 1513 1173
In thousands 2022 2021 Warranty reserve 562 380
Deferred income tax asset: Deferred revenues 140 284
Tax credit carryforwards $ - $ - Compensation and employee benefits 311 225
Operating loss carryforwards 4348 4000 Audit fees 134 134
Net pension costs 2049 2123 Current portion of pension liability
Allowance for bad debts 65 227 (see Note 15 – Pension Plan) - 128
Other 7 6 Other 440 768
Valuation allowance (6102) (5989) $4279 $4287
367367
Deferred income tax liability: A summary of the warranty reserve for the years ended
Depreciation 120 124 December 31 2022 and 2021 is as follows:
Other 247 243
367 367 In thousands 2022 2021
Net deferred income taxes $ - $ - Balance at beginning of year $ 380 $ 438
Provisions 232 115
Operating tax loss carryforwards primarily relate to U.S. Deductions (58) (173)
federal net operating loss carryforwards of approximately Balance at end of year $ 554 $ 380
$15.4 million which began to expire in 2019.Additionally net operating losses created after 2020 do
not expire. The operating loss carryforwards have been 11. Warrant and Stock Option Issuances
limited by changes in ownership of the Company in 2012
and 2019 as defined under Section 382 of the Internal On June 4 2020 the Company entered into a Contract
Revenue Code. The change in ownership as of June 26 Manufacturing Agreement (the “CMA”) with Craftsmen
2012 limited our operating loss carryforwards at that time Industries Inc. (“Craftsmen”) which commenced June 15
to $295000 per year aggregating $5.9 million. The 2020. As of October 15 2021 the Company and
change in ownership as of April 10 2019 limited our Craftsmen agreed upon a termination of the CMA. Under
operating loss carryforwards at that time to $148000 per the CMA Craftsmen manufactured and supplied goods
year aggregating $2.9 million. Losses subsequent to April and provided all necessary labor materials management
10 2019 have increased the operating loss carryforwards. expertise and oversight necessary to manufacture the
Carryforward losses of $440000 have expired as of goods at the Company’s manufacturing facility located in
December 31 2022. Hazelwood Missouri. The Company provided Craftsmen
assistance to the manufacturing process the technical
A valuation allowance has been established for the details as well as the amount of goods to be produced.amount of deferred income tax assets as management has The CMA provided that all payments owed by the
concluded that it is more-likely-than-not that the benefits Company to Craftsmen under the CMA are secured by a
from such assets will not be realized. second lien on company assets and had been guaranteed
by Unilumin USA LLC (“Unilumin USA”) through
The Company’s determinations regarding uncertain December 31 2020. Unilumin USA is wholly owned by
income tax positions may be subject to review and Unilumin North America who owns 52.0% of the
adjustment at a later date based upon factors including Company’s outstanding Common Stock and beneficially
but not limited to an ongoing analysis of tax laws owns 53.7% of the Company’s outstanding Common
regulations and interpretations thereof. The Company Stock. In connection with the Unilumin Guarantee in the
does not have any material uncertain tax positions in 2022 CMA the Company issued warrants (the “Warrants”) to
and 2021. purchase 500000 shares of the Company’s Common
Stock to Unilumin USA at an exercise price of $1.00 per
The Company is subject to U.S. federal income tax as share. The Warrants are exercisable until June 4 2024.well as income tax in multiple state and local jurisdictions The Company calculated the fair value of the Warrants as
and Canadian federal and provincial income tax. $94000 utilizing the Black-Scholes method using a
Currently no federal state or provincial income tax volatility of 151% and a risk free rate of 0.28%. The
returns are under examination. Company recorded the entire expense of $94000 in
general and administrative expenses at the date of
issuance so there were no related expenses recorded in
the years ended December 31 2022 or 2021.
2712. Long-Term Debt 2022 and 2021 the Company had accrued $20000 and
$1000 respectively of interest related to the Loan Note
Long-term debt consists of the following: which is included in Accrued liabilities in the
Consolidated Balance Sheets.In thousands 2022 2021
8?% Limited convertible senior On April 23 2020 the Company entered into a loan note
subordinated notes due 2012 $ 302 $ 302 (the “Loan Note”) with Enterprise Bank and Trust
9?% Subordinated debentures (“Lender”) as lender under the CARES Act of the Small
due 2012 220 220 Business Administration of the United States of America
Revolving credit line – related party 2246 1189
(“SBA”) dated as of April 20 2020. Under the Loan
Term loans – related party 1000 1000
Term loans 500 871 Note the Company borrowed $810800 from Lender
Total debt 4268 3582 under the Paycheck Protection Program (“PPP”) included
Less deferred financing costs and debt in the SBA’s CARES Act. In January 2022 the loan was
discount - 52 forgiven in full and the payments that had previously been
Net debt 4268 3530 paid were refunded.Less portion due within one year 3768 3030
Net long-term debt $ 500 $ 500 The Company has a $500000 loan from Carlisle
Investments Inc. (“Carlisle”) at a fixed interest rate of
Payments of long-term debt due for the next five years are: 12.00% which matured on April 27 2019 with a bullet
payment of all principal due at such time. Interest is
In payable monthly. As of December 31 2022 and 2021
thousands 2023 2024 2025 2026 2027 Thereafter
the entire amount was outstanding and is included in
$3768$-$-$2$12$486
current portion of long-term debt in the Consolidated
Balance Sheets. As of December 31 2022 and 2021 the
On September 16 2019 the Company entered into a loan
Company had accrued $300000 and $240000
agreement (the “Loan Agreement”) with MidCap. On
respectively of interest related to this loan which are
June 3 2020 March 23 2021 and May 31 2021 the
included in accrued liabilities in the Consolidated Balance
Company and MidCap entered into modification
Sheets. Marco Elser a former director of the Company
agreements to the Loan Agreement. On July 30 2021
exercises voting and dispositive power as investment
MidCap assigned the loan to Unilumin. On March 20
manager of Carlisle.
2023 the Company and Unilumin entered into a
modification agreement to the Loan Agreement effective
The Company has an additional $500000 loan from
December 31 2022. The Loan Agreement matures on
Carlisle at a fixed interest rate of 12.00% which matured
December 31 2023. The Loan Agreement allows the
on December 10 2017 with a bullet payment of all
Company to borrow up to an aggregate of $2.2 million atprincipal due at such time (the “Second Carlislean interest rate of the Prime Rate as published in the WallAgreement”). Interest is payable monthly. As of
Street Journal plus 4.75% (9.52% at December 31 2022)
December 31 2022 and 2021 the entire amount was
on a revolving credit loan based on accounts receivable
outstanding and is included in current portion of long-
inventory and equipment for general working capital
term debt Consolidated Balance Sheets. As of December
purposes. As of December 31 2022 the balance
31 2022 and 2021 the Company had accrued $300000
outstanding under the Loan Agreement was $2.2 million.and $240000 respectively of interest related to this loan
The Loan Agreement also requires the payment of certain
which are included in accrued liabilities in the
fees including a facility fee an unused credit line fee and
Consolidated Balance Sheets. Under the Second Carlisle
a collateral monitoring charge. The Loan Agreement
Agreement the Company granted a security interest to
contains financial and other covenant requirements
Carlisle in accounts receivable materials and intangibles
including financial covenants that require the Company to
relating to a certain purchase order for equipment issued
attain certain EBITDA amounts for certain periods
in April 2017.including the year ended December 31 2022. The
Company was not in compliance with this covenant. The
As of December 31 2022 and 2021 the Company had
Loan Agreement is secured by substantially all of the
outstanding $302000 of Notes. The Notes matured as of
Company’s assets.March 1 2012 and are currently in default. As of
December 31 2022 and 2021 the Company had accrued
The Company entered into a loan note (the “Loan Note”)
$332000 and $307000 respectively of interest related to
with the SBA (“Lender”) as lender under their Economic
the Notes which is included in Accrued liabilities in the
Injury Disaster Loan (“EIDL”) program dated as of
Consolidated Balance Sheets. The trustee by notice to
December 10 2021. Under the Loan Note the Company
the Company or the holders of 25% of the principal
borrowed $500000 from Lender under the EIDL Program.amount of the Notes outstanding by notice to the
As of December 31 2022 and 2021 $500000 was
Company and the trustee may declare the outstanding
outstanding. The loan matures on December 10 2051
principal plus interest due and payable immediately. On
and carries an interest rate of 3.75%. As of December 31
28January 15 2021 holders of $50000 of the Notes ROU assets represent our right to use the leased asset for
accepted the Company’s offer to exchange each $1000 of the lease term and lease liabilities represent our obligation
principal forgiving any related interest for $400 in cash to make lease payments. Operating lease ROU assets and
for an aggregate payment by the Company of $20000. liabilities are recognized at commencement date based on
As a result of the transaction the Company recorded a the present value of lease payments over the lease term.gain on the extinguishment of debt net of expenses of As most of our leases do not provide an implicit rate we
$77000 in 2021. use our estimated incremental borrowing rate at the
commencement date to determine the present value of
As of December 31 2022 and 2021 the Company had lease payments. Most real estate leases include one or
outstanding $220000 of Debentures. The Debentures more options to renew with renewal terms that can
matured as of December 1 2012 and are currently in extend the lease term from 1 to 5 years or more. Lease
default. As of December 31 2022 and 2021 the expense is recognized on a straight-line basis over the
Company had accrued $273000 and $253000 lease term. Leases with an initial term of 12 months or
respectively of interest related to the Debentures which less are not recorded on the Consolidated Balance Sheets.is included in Accrued liabilities in the Consolidated The primary leases we enter into with initial terms of 12
Balance Sheets. The trustee by notice to the Company months or less are for equipment.or the holders of 25% of the principal amount of the
Debentures outstanding by notice to the Company and Supplemental information regarding leases:
the trustee may declare the outstanding principal plus
interest due and payable immediately.In thousands unless otherwise noted 2022
Balance Sheet:
13. Leases ROU assets $765
Current lease liabilities 393
Certain premises are occupied under operating leases that Non-current lease liabilities 412
expire at varying dates through 2027. Certain of these
Total lease liabilities
leases provide for the payment of real estate taxes and 805
Weighted average remaining lease term (years)
other occupancy costs. On December 1 2021 the 1.7
Weighted average discount rate 7.6%
Company entered into a lease for an office and
manufacturing facility in Des Moines Iowa. The lease Future minimum lease payments:
was for a five-year lease period at an initial annual rental 2023 438
of approximately $140000. On June 21 2016 the 2024 146
Company entered into a lease for a manufacturing facility 2025 149
in Hazelwood Missouri for a seven-year lease period at 2026 152
an initial annual rental of approximately $317000. On 2027 12
December 23 2019 the Company entered into a lease for Thereafter -
office space in Urbandale Iowa for a two-year lease Total 897
period which was not renewed as of the end of the first Less: Imputed interest 92
term on December 31 2022. Rent expense aggregated Total lease liabilities 805
$477000 and $395000 for the years ended December 31
Less: Current lease liabilities 393
2022 and 2021 respectively.
Long-term lease liabilities $ 412
The Company leases administrative and manufacturing
facilities through operating lease agreements. The Supplemental cash flow information regarding leases:
Company has no finance leases as of December 31 2022.Our leases include both lease (e.g. fixed payments In thousands 2022
including rent) and non-lease components (e.g. common
Operating cash flow information:
area or other maintenance costs). The facility leases
Cash paid for amounts included in the measurement
include one or more options to renew. The exercise of of lease liabilities $477
lease renewal options is typically at our sole discretion
therefore the renewals to extend the lease terms are not
included in our ROU assets or lease liabilities as they are
Total operating lease expense was $477000 for the year
not reasonably certain of exercise. We regularly evaluate
ended December 31 2022. There was no short-term lease
the renewal options and when they are reasonably certain
expense for the year ended December 31 2022. Total
of exercise we include the renewal period in our lease
operating lease expense and short-term lease expense was
term.$390000 and $5000 respectively for the year ended
December 31 2021.Operating leases result in the recognition of ROU assets
and lease liabilities on the Consolidated Balance Sheets.
29being accrued under the plan. For 2022 and 2021 the
14. Stockholders’ Deficit accrued benefit obligation of the plan exceeded the fair
value of plan assets due primarily to the plan’s
During 2022 and 2021 the Board of Directors did not investment performance and updates to actuarial
declare any quarterly cash dividends on the Company’s longevity tables. The Company’s obligations under its
Common Stock. pension plan exceeded plan assets by $2.9 million at
December 31 2022.The Company was authorized to issue 2500000 shares of
preferred stock as of December 31 2022 of which (i) The Company employs a total return investment approach
416500 shares were designated as Series A Convertible whereby a mix of equities and fixed income investments
Preferred Stock none of which were outstanding (ii) are used to maximize the long-term return of plan assets
51000 shares were designated as Series B Convertible for a prudent level of risk. The intent of this strategy is to
Preferred Stock (“SBCPS”) none of which were minimize plan expenses by outperforming plan liabilities
outstanding and (iii) 2032500 shares were not yet over the long run. Risk tolerance is established through
designated. The undesignated preferred stock would careful consideration of plan liabilities plan funded status
contain such rights preferences privileges and and corporate financial condition. The portfolio contains
restrictions as may be fixed by our Board of Directors. a diversified blend of equity and fixed income
investments. Investment risk is measured and monitored
Shares of the Company’s Common Stock reserved for on an ongoing basis through annual liability
future issuance in connection with convertible securities measurements periodic asset/liability studies and
and stock option plans were 1.9 million and 1.6 million at quarterly investment portfolio reviews.December 31 2022 and 2021 respectively.At December 31 2022 and 2021 the Company’s pension
Accumulated other comprehensive loss is comprised of plan weighted-average asset allocations by asset category
approximately $6.2 million and $6.5 million of are as follows:
unrecognized pension costs at December 31 2022 and
2021 respectively and $98000 and $263000 of 2022 2021
unrealized foreign currency translation gains at December Equity and index funds 69.0% 68.8%
31 2022 and 2021 respectively. Fixed income funds 31.0 31.2
100.0%100.0%
The components of accumulated other comprehensive
loss are as follows: The pension plan asset information included below is
presented at fair value as established by ASC 820.Pension Foreign
plan currency The following table presents the pension plan assets by
actuarial translation level within the fair value hierarchy as of December 31
In thousands (loss) gain gain (loss) Total
2022 and 2021:
Balances at January 1 2021 $(7567) $ 245 $(7322)
Actuarial gain 1051 - 1051
Translation gain - 18 18 In thousands 2022 2020
Balances at December 31 2021 (6516) 263 (6253) Level 1:
Actuarial gain 352 - 352 Equity and index funds $ 5299 $ 7267
Translation loss - (165) (165) Fixed income funds 2383 3294
Balances at December 31 2022 $(6164) $ 98 $(6066)
Total Level 1 7682 10561
Level 2 - -
Level 3 - -
15. Pension Plan Total pension plan assets $7682 $10561
All eligible salaried employees of Trans-Lux Corporation
and certain of its subsidiaries are covered by a non-
contributory defined benefit pension plan. Pension
benefits vest after five years of service and are based on
years of service and final average salary. The Company’s
general funding policy is to contribute at least the
required minimum amounts sufficient to satisfy regulatory
funding standards but not more than the maximum tax-
deductible amount. The benefit service under the pension
plan had been frozen since 2003 and accordingly there
was no service cost for the years ended December 31
2022 and 2021. In 2009 the compensation increments
were frozen and accordingly no additional benefits are
30The funded status of the plan as of December 31 2022 pension benefit plan in 2023. If we are unable to fulfill
and 2021 is as follows: our related obligations the implementation of any such
enforcement remedies would have a material adverse
In thousands 2022 2021 impact on our financial condition results of operations
Change in benefit obligation: and liquidity.Projected benefit obligation at
beginning of year $ 14055 $ 15145 The following estimated benefit payments are expected to
Interest cost 372 351 be paid by the Company’s pension plan in the next 5
Actuarial (gain) loss (3163) (311)
years:
Settlements - (519)
Benefits paid (719) (611)
Projected benefit obligation at In thousands 2023 2024 2025 2026 2027
end of year 10545 14055 $850 $906 $856 $933 $907
Change in plan assets: The following table presents the components of the net
Fair value of plan assets at periodic pension cost for the years ended December 31
beginning of year 10561 10475 2022 and 2021:
Actual return on plan assets (2298) 911
Company contributions 138 305 In thousands 2022 2021
Settlements - (519) Interest cost $ 372 $ 351
Benefits paid (719) (611) Expected return on plan assets (804) (794)
Fair value of plan assets at end of Recognized loss due to settlements - 297
year 7682 10561 Amortization of net actuarial loss 290 327
Net periodic pension (benefit) cost $(142) $ 181
Funded status (underfunded) $ (2863) $ (3494)
The following table presents the change in unrecognized
Amounts recognized in other
pension costs recorded in other comprehensive loss as of
accumulated comprehensive loss:
Net actuarial loss $ 7649 $ 8001 December 31 2022 and 2021:
Weighted average assumptions as of
December 31: In thousands 2022 2021
Discount rate: Balance at beginning of year $8001 $9051
Components of cost 2.75% 2.41% Net actuarial loss (62) (428)
Benefit obligations 5.40% 2.75% Recognized loss (290) (622)
Expected return on plan assets 8.00% 8.00% Balance at end of year $7649 $8001
Rate of compensation increase N/A N/A
The Company determines the long-term rate of return for 16. Share-Based Compensation
plan assets by studying historical markets and the long-
term relationships between equity securities and fixed The Company accounts for all share-based payments to
income securities with the widely-accepted capital employees and directors including grants of employee
market principal that assets with higher volatility generate stock options at fair value and expenses the benefit in the
higher returns over the long run. The 8.0% expected Consolidated Statements of Operations over the service
long-term rate of return on plan assets is determined period (generally the vesting period). The fair value of
based on long-term historical performance of plan assets each stock option granted is estimated on the date of grant
current asset allocation and projected long-term rates of using the Black-Scholes pricing valuation model which
return. requires various assumptions including estimating stock
price volatility expected life of the stock option risk free
In 2023 the Company expects to amortize $295000 of interest rate and estimated forfeiture rate.actuarial losses to pension expense. The accumulated
benefit obligation at December 31 2022 and 2021 was On March 28 2022 the Company granted stock options
$10.5 million and $14.1 million respectively. The to purchase 280000 shares to executives and employees
minimum required contribution in 2023 is expected to be at an exercise price of $0.40 per share which become
$0 which is included in Accrued liabilities in the vested on March 28 2023. The options were valued at
Consolidated Balance Sheets. The long-term pension the grant date using the Black-Scholes model with the
liability is $2.9 million and is included in Deferred following inputs: expiration date March 28 2026; risk-
pension liability and other in the Consolidated Balance free rate of return 2.55%; and volatility 108%.Sheets.The Company currently has one stock option plan. As of
The minimum required pension plan contribution for December 31 2022 800 shares of Common Stock were
2022 was $138000 which the Company fully contributed. available for grant under the Non-Employee Director
There are no minimum required contributions owed to the Stock Option Plan.
31Changes in the stock option plan are as follows: Basic earnings (loss) per common share is computed by
dividing net income (loss) attributable to common shares
Weighted by the weighted average number of common shares
Average outstanding for the period. Diluted income (loss) per
Number of Shares Exercise common share is computed by dividing net income (loss)
Authorized Granted Available Price attributable to common shares by the weighted average
Balance number of common shares outstanding adjusted for
January
shares that would be assumed outstanding after warrants
1 2021 800 - 800 N/A
Authorized - - - and stock options are accounted for under the treasury
Expired - - - stock method.Granted - - - -
Balance At December 31 2022 and 2021 outstanding warrants
December exercisable into 1.9 million and 1.6 million shares of
31 2021 800 - 800 Common Stock respectively were excluded from the
Authorized - - - calculation of diluted loss per share because their impact
Expired - - - would have been anti-dilutive.Granted - - -
Balance
December
31 2022 800 - 800 18. Commitments and Contingencies
Under the Non-Employee Director Stock Option Plan Commitments: At December 31 2022 and 2021 the
option prices must be at least 100% of the market value of Company had no employment agreements with its
the Common Stock at the time of grant. No option may executive officers.be exercised prior to one year after the date of grant and
the optionee must be a director of the Company at the Contingencies: The Company is subject to legal
time of exercise except in certain cases as permitted by proceedings and claims which arise in the ordinary course
the Compensation Committee. Exercise periods are for of its business and/or which are covered by insurance.six years from the date of grant and terminate at a The Company believes that it has accrued adequate
stipulated period of time after an optionee ceases to be a reserves individually and in the aggregate for such legal
director. At December 31 2022 there were no proceedings. Should actual litigation results differ from
outstanding options to purchase shares. the Company’s estimates revisions to increase or
decrease the accrued reserves may be required. There are
As of December 31 2022 there was no unrecognized no open matters that the Company deems material.compensation cost related to non- options granted under
the Plans.
19. Related Party Transactions
The Company issued 280000 stock options to certain
employees on March 28 2022. The options vest on As of December 31 2022 Unilumin owns 52.0% of the
March 28 2023 and are then exercisable until March 28 Company’s Common Stock and beneficially owns 53.7%
2026 at a price of $0.40 per share. of the Company’s Common Stock. Nicholas J. Fazio
Yang Liu and Yantao Yu each directors of the Company
are each directors and/or officers of Unilumin. Mr. Fazio
17. Earnings (Loss) Per Share and Mr. Yu are both executive officers of the Company
but have not yet been added to the Company’s payroll as
The following table presents the calculation of earnings of December 31 2022; they have been compensated by
(loss) per share for the years ended December 31 2022 Unilumin with no charge to the Company. In 2023 Mr.and 2021: Fazio and Mr. Yu were added to the Company’s payroll at
annual rates of compensation of $125000 and $26000
In thousands except per share data 2022 2021 respectively. The Company purchased $6.0 million and
Numerator: $1.5 million of product from Unilumin in the years ended
Net income (loss) as reported $ 323 $(4968) December 31 2022 and 2021 respectively. The amount
Denominator: payable by the Company to Unilumin including accounts
Weighted average shares outstanding 13446 13580 payable accrued interest and long-term debt was $7.3
Basic and diluted earnings (loss) million and $3.7 million as of December 31 2022 and
per share $ 0.02 $ (0.37) 2021 respectively. In connection with the Unilumin
Guarantee in the CMA the Company issued Warrants to
At December 31 2022 and 2021 there were no dividends purchase 500000 shares of the Company’s Common
accumulated on the Company’s SBCPS. Stock to Unilumin USA at an exercise price of $1.00 per
32share (see Note 11). The Company occupies space in a Information about the Company’s operations in its two
New York office that is leased by Unilumin at no cost. business segments for the years ended December 31 2022
and 2021 and as of December 31 2022 and 2021 were as
follows:
20. Business Segment Data
In thousands 2022 2021
Operating segments are based on the Company’s business Revenues:
components about which separate financial information is Digital product sales $20386 $ 9418
available and are evaluated regularly by the Company’s Digital product lease & maintenance 1275 1932
chief operating decision-maker in deciding how to Total revenues $21661 $11350
Operating income (loss):
allocate resources and in assessing performance of the
Digital product sales $ 394 $ (4285)
business.Digital product lease & maintenance 799 1282
Corporate general and
The Company evaluates segment performance and administrative expenses (1582) (1230)
allocates resources based upon operating income. The Total operating loss (389) (4233)
Company’s operations are managed in two reportable Interest expense net (410) (578)
business segments: Digital product sales and Digital Gain (loss) on foreign currency
product lease and maintenance. Both design and produce remeasurement 191 (18)
large-scale multi-color real-time digital products. Both Gain on extinguishment of debt - 77
operating segments are conducted on a global basis Gain on forgiveness of PPP loan 824 -
Pension benefit (expense) 142 (181)
primarily through operations in the United States. The
Income (loss) before income taxes 358 (4933)
Company also has operations in Canada. The Digital
Income tax expense (35) (35)
product sales segment sells equipment and the Digital Net income (loss) $ 323 $(4968)
product lease and maintenance segment leases and Assets:
maintains equipment. Corporate general and Digital product sales $ 8221 $ 6379
administrative items relate to costs that are not directly Digital product lease &
identifiable with a segment. There are no intersegment maintenance 1143 1748
sales. Total identifiable assets 9364 8127
General corporate 48 524
Foreign revenues represent less than 10% of the Total assets $ 9412 $ 8651
Company’s revenues for 2022 and 2021. The foreign Depreciation and amortization:
Digital product sales $ 249
operation does not manufacture its own equipment; the $ 252
Digital product lease &
domestic operation provides the equipment that the
maintenance 186 245
foreign operation leases or sells. The foreign operation General corporate 1 1
operates similarly to the domestic operation and has Total depreciation and amortization $ 439 $ 495
similar profit margins. Foreign assets are immaterial. Capital expenditures:
Digital product sales $ 18 $ -
Digital product lease & - -
maintenance
General corporate - -
Total capital expenditures $ 18 $ -
21. Subsequent Events
The Company has evaluated events and transactions
subsequent to December 31 2022 and through the date
these Consolidated Financial Statements were included in
this Form 10-K and filed with the SEC.
33ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. As of the end of the period covered by this Annual
Report we carried out an evaluation under the supervision and with the participation of our management
including our Chief Executive Officer (our principal executive officer) and our Chief Accounting Officer
(our principal accounting officer) of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)).As a result of this evaluation our Chief Executive Officer and Chief Accounting Officer have concluded
that our disclosure controls and procedures are effective to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded processed summarized and
reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to our management (including
our Chief Executive Officer and Chief Accounting Officer) to allow timely decisions regarding required
disclosures. Based on such evaluation our Chief Executive Officer and Chief Accounting Officer have
concluded these disclosure controls are effective as of December 31 2022.(b) Changes in internal control over financial reporting. There has been no change in the Company’s internal
control over financial reporting that occurred in the fourth fiscal quarter that has materially affected or is
reasonably likely to materially affect the Company’s internal control over financial reporting.(c) Management’s Report on Internal Control Over Financial Reporting. The management of the Company is
responsible for establishing and maintaining adequate internal control over financial reporting for the
Company as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. A company’s internal
control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with GAAP. A company’s internal control over financial reporting includes policies and
procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with
GAAP and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition use or disposition of the Company’s
assets that could have a material effect on the financial statements. Our internal control system was
designed to provide reasonable assurance to our management and Board of Directors regarding the
preparation and fair presentation of published financial statements. Because of its inherent limitations
internal control over financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may
deteriorate. This annual report does not include an attestation report of the Company’s independent
registered public accounting firm regarding internal control over financial reporting. Management’s report
was not subject to attestation by the Company’s independent registered public accounting firm pursuant to
the Securities and Exchange Commission that permit the Company to provide only management’s report in
this annual report.The Company’s management assessed its internal control over financial reporting as of December 31 2022
using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO 2013). Management including the Company’s Chief Executive Officer and its Chief Accounting
Officer based on their evaluation of the Company’s internal control over financial reporting (as defined in
Securities Exchange Act Rule 13a-15(f)) have concluded that the Company’s internal control over
financial reporting was effective as of December 31 2022.
34ITEM 9B. OTHER INFORMATION
Not applicable.ITEM 9C. DISCLOSURE OF FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
Not applicable.PART III
ITEM 10. DIRECTORS EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Pursuant to the Certificate of Incorporation and Amended and Restated Bylaws the Company the Board of Directors is
divided into three separate classes of directors. The directors of the Corporation their ages and the expiration of their
respective terms are as follows:
Name Age Expiration of Term
Nicholas J. Fazio ………………...…… 43 2022
Yang Liu ……………………………… 33 2023
Yantao Yu ……………..….………….. 47 2022
Salvatore J. Zizza …………………….. 77 2021
Directors:
Nicholas J. Fazio was appointed a director of the Company on November 19 2018. Mr. Fazio was appointed Chief
Executive Officer of the Corporation on September 17 2020 and previously was appointed Interim Chief Executive Officer
on April 14 2020. Mr. Fazio has been Director and Chief Executive Officer of Unilumin USA since 2017. Previously he
was Senior Product Manager for Christie Digital Systems USA from 2014 to 2017 and Vice President of Engineering of
McCann Systems from 1997 to 2014. Mr. Fazio’s strong business knowledge and extensive history and resources in the LED
display arena allow him to provide valuable contributions to the Board.Yang Liu was appointed a director of the Company on November 19 2018. Mr. Liu has been Director of Unilumin Sports
since 2016. Previously he was Director of Unilumin Visual from 2016 to 2017 Sales Manager of the Unilumin Amsterdam
sales office from 2014 to 2016 and Sales Engineer for Unilumin Benelux from 2011 to 2013. Mr. Liu’s strong business
knowledge and extensive history and resources in the LED display arena allow him to provide valuable contributions to the
Board.Yantao Yu was elected as a director of the Company on July 30 2019. Mr. Yu was appointed Chief Operating Officer of the
Company on August 1 2021. Mr. Yu has been the Chief Financial Officer of Unilumin USA since September 2018. With
over 25 years of financial experience his background includes positions as Senior Accountant and/or Controller of The
Quaker Oats Company; Bostik China (a subsidiary of Total S.A [TOT]); Eton Electric; and Airwell Air-conditioning
Technology (China) Co. Ltd. and Airwell Fedders North America Inc (subsidiaries of Elco Holdings Ltd. [TASE: ELCO]).From 1994 through 2012 he served as Chief Financial Officer of Lover Group and served as its Secretary of the Board from
2013 through August 2018. Mr. Yu holds an Executive Master of Business Administration (EMBA) degree from the
University of Minnesota and his professional certifications include CPA CGA CMA and FCCA. Mr. Yu’s extensive
financial experience allows him to provide valuable contributions to the Board.Salvatore J. Zizza has served as an independent director since December 2009 and was elected Chairman of the Board (a
non-executive position) of the Company on September 28 2018. He had served as Vice Chairman of the Board (a non-
executive position) of the Company since September 29 2010. He currently serves as the Chairman of Zizza & Associates
LLC. and previously served as Chairman of Bethlehem Advanced Materials until 2018. Additionally Mr. Zizza serves as a
Director of GAMCO Westwood Funds. He has been an Independent Trustee of GAMCO Global Gold Natural Resources &
Income Trust by Gabelli since November 2005 and serves as a Director/trustee of 26 funds in the fund complex of Gabelli
Funds LLC. He had been Director of General Employment Enterprises Inc. from 2010 until 2012 and has been an
Independent Trustee of Gabelli Dividend & Income Trust since 2003. Mr. Zizza has been Independent Director of Gabelli
Convertible & Income Securities Fund Inc. since April 24 1991 and has been a Director of Gabelli Equity Trust Inc. since
351986 and a Trustee of Gabelli Utility Trust since 1999. Mr. Zizza has previously served as Chief Executive Officer and
Chairman of the Board of General Employment Enterprises Inc. from December 23 2009 until December 26 2012. Mr.Zizza had served as President and Chief Operating Officer of Bion Environmental Technologies Inc. from January 13 2003
until December 31 2005. He served as Lead Independent Director of Hollis-Eden Pharmaceuticals from March 2006 to
March 2009 and as a Director of Earl Scheib Inc. from March 1 2004 to April 2009. Mr. Zizza received his Bachelor of Arts
in Political Science and his Master of Business Administration in Finance from St. John's University which also has awarded
him an Honorary Doctorate in Commercial Sciences. Mr. Zizza’s extensive experience and service to numerous other boards
of directors allow him to provide valuable contributions to the Board. In addition Mr. Zizza also serves as Chairman of the
Audit Committee and is the “audit committee financial expert” as required under the rules of the United States Securities and
Exchange Commission.Meetings of the Board of Directors and Certain Committees:
The Board of Directors did not hold any meetings during 2022. All directors attended 75% or more of such meetings and of
the committee meetings for which they were members. From time to time the Board acts by Unanimous Written Consent.All directors attended the last Annual Meeting of Stockholders in 2020. The Corporation does not have a formal policy
regarding directors’ attendance at the Board meetings or the Annual Meeting of Stockholders but strongly encourages and
prefers that directors attend regular and special Board meetings as well as the Annual Meeting of Stockholders in person
although attendance by teleconference is considered adequate. The Corporation recognizes that attendance of the board
members at all meetings may not be possible and excuses absences for good cause.There are currently no fees paid to board members. Fees for members of the Board and Committees are determined annually
by the entire Board of Directors based on review of compensation paid by other similar size companies the amounts
currently paid by the Company the overall policy for determining compensation paid to officers and employees of the
Company and the general financial condition of the Company.Corporate Governance Policies and Procedures
The Board of Directors has adopted a Code of Business Conduct and Ethics Guidelines (the “Ethics Code”) that applies
specifically to board members and executive officers. The Ethics Code is designed to promote compliance with applicable
laws and regulations to promote honest and ethical conduct including full fair accurate and timely disclosure in reports and
communications with the public. The Ethics Code is available for viewing on the Corporation’s website at www.trans-
lux.com. Any amendments to or waivers from the Ethics Code will be posted on the website. In addition the Board of
Directors adopted a Whistle Blowing policy which provides procedures for the receipt retention and treatment of complaints
received by the Corporation regarding accounting internal accounting controls and auditing matters as well as the
confidential anonymous submission of concerns regarding questionable accounting or auditing practices.Corporate Leadership Structure
The roles of Chairman and Chief Executive Officer are separate positions. Mr. Zizza serves as our Chairman and Mr. Fazio
serves as our Chief Executive Officer. We separate the roles of Chairman and Chief Executive Officer in recognition of the
differences between the two roles. The Chief Executive Officer is responsible for setting our strategic direction and our day-
to-day leadership and performance while the Chairman of the Board provides guidance to the Chief Executive Officer and
presides over meetings of the Board. We do not have a lead independent director.Risk Management
Our Board of Directors and its Audit Committee are actively involved in risk management. Both the Board and Audit
Committee regularly review the financial position of the Corporation and its operations and other relevant information
including cash management and the risks associated with the Corporation’s financial position and operations. The Board
regularly receives reports from senior management on areas of material risk to our Company including our liquidity
operational and legal and regulatory risks. Pursuant to its charter the Audit Committee reviews our major financial risk
exposures and the steps management has taken to monitor and control such exposures and it also meets periodically with
management to discuss policies with respect to risk assessment and risk management.Communication with the Board of Directors
Security holders are permitted to communicate with the members of the Board by forwarding written communications to the
Corporation’s Chief Accounting Officer at the Corporation’s headquarters in New York New York. The Chief Accounting
36Officer will present all communications as received and without screening to the Board at its next regularly scheduled
meeting.Committees of the Board of Directors
The Board of Directors has appointed a Compensation Committee an Audit Committee an Executive Committee and a
Nominating Committee. Each committee operates under a charter approved by our Board. Copies of each committee’s
charter are posted on the Investor Relations section of our website at www.trans-lux.com.Compensation Committee
The members of the Compensation Committee of the Board of Directors are Messrs. Fazio Yu and Zizza with Mr. Zizza
serving as Chairman. The Compensation Committee operates under a formal written charter approved by the Compensation
Committee and adopted by the Board of Directors. The Compensation Committee reviews compensation and other benefits.The Compensation Committee did not hold any meetings in 2022. Messrs. Yu and Zizza are not and have not been an officer
or employee of the Corporation. There are no Compensation Committee interlock relationships with respect to the
Corporation. Members of the Compensation Committee do not receive any fees for their participation.Audit Committee
Our Audit Committee consists of Messrs. Yu and Zizza with Mr. Zizza serving as Chairman. Our Board has determined that
Mr. Zizza is an “audit committee financial expert” as defined in applicable SEC rules. The Audit Committee held four
meetings in 2022. Members of the Audit Committee do not receive any fees for their participation. Our Audit Committee’s
responsibilities include:
* appointing compensating retaining and overseeing the work of any public accounting firm engaged by us
for the purpose of preparing or issuing an audit report or performing other audit review or attest services;
* reviewing and discussing with management and the external auditors our audited financial statements;
* considering the effectiveness of our internal control system;
* reviewing and discussing with management the Company’s major financial risk exposures and steps
management has taken to monitor and control such exposures and liabilities;
* establishing our policy regarding our hiring of employees or former employees of the external auditors and
procedures for the receipt retention and treatment of accounting related complaints and concerns;
* meeting independently with our external auditors and management;
* reviewing and updating the Audit Committee Charter; and
* preparing the Audit Committee report required by the proxy rules of the SEC.Executive Committee
The members of the Executive Committee of the Board of Directors are Messrs. Fazio Yu and Zizza. The Executive
Committee operates under a formal written charter approved by the Committee and adopted by the Board of Directors. Mr.Zizza is independent meeting the requirements of Section 952 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act. Mr. Zizza qualifies as a "non-employee director" for the purposes of Rule 16b-3 under the Securities
Exchange Act of 1934 as amended and qualifies as an "outside director" for the purposes of Section 162(m) of the Internal
Revenue Code as amended. The primary purpose of the Executive Committee is to provide the Chief Executive Officer of
the Company with a confidential sounding board for insights and advice and to provide the Board with a more active formal
interface with management and its day to day policy and actions. Additionally the secondary objective of the Executive
Committee is to exercise the powers and authority of the Board subject to certain limitations set forth in the charter during
the intervals between meetings of the Board when based on the business needs of the Company it is desirable for the Board
to meet but the convening of a special board meeting is not warranted as determined by the Chairman of the Board. It is the
general intention that all substantive matters in the ordinary course of business be brought before the full Board for action
but the Board recognizes the need for flexibility to act on substantive matters where action may be necessary between Board
meetings which in the opinion of the Chairman of the Board should not be postponed until the next previously scheduled
meeting of the Board. The Executive Committee held four meetings in 2022. Members of the Executive Committee do not
receive any fees for their participation.
37Nominating Committee
The members of the Nominating Committee of the Board of Directors are Messrs. Fazio Yu and Zizza with Mr. Fazio
serving as Chairman. The Nominating Committee operates under a formal written charter approved by the Committee and
adopted by the Board of Directors. The Nominating Committee recommends for consideration by the Board of Directors
nominees for election of directors at the Corporation’s Annual Meeting of Stockholders. Director nominees are considered
on the basis of among other things experience expertise skills knowledge integrity understanding the Corporation’s
business and willingness to devote time and effort to Board responsibilities. The Nominating Committee did not hold any
meetings in 2022. Members of the Nominating Committee do not receive any fees for their participation. The Nominating
Committee does not have a separate policy regarding diversity of the Board.Corporate Governance Committee
The Board of Directors has not established a corporate governance committee. The Board of Directors acts as the corporate
governance committee.Independence of Non-Employee Directors
While the Corporation’s Common Stock is traded on the OTCQB the Corporation follows the NYSE MKT Company Guide
regarding the independence of directors. A director is considered independent if the Board of Directors determines that the
director does not have any direct or indirect material relationship with the Corporation. Messrs. Liu Yu and Zizza are non-
employee directors of the Corporation. The Board of Directors has determined that Mr. Zizza is an “independent director”
since they had no relationship with the Corporation other than their status and payment as non-employee directors and as
stockholders. The Board of Directors has determined that its two Audit Committee members Messrs. Yu and Zizza are
“independent directors”.Stockholder Communication with the Board
The Board maintains a process for stockholders to communicate with the Board or with individual directors. Stockholders
who wish to communicate with the Board or with individual directors should direct written correspondence to our Corporate
Secretary at our Company’s headquarters located at 254 West 31st Street 12th Floor New York New York 10001. Any such
communication must contain:
a representation that the stockholder is a holder of record of our capital stock;
the name and address as they appear on our books of the stockholder sending such communication; and
the class and number of shares of our capital stock that are beneficially owned by such stockholder.The Corporate Secretary will forward such communications to our Board or the specified individual director to whom the
communication is directed unless such communication is unduly hostile threatening illegal or similarly inappropriate in
which case the Corporate Secretary has the authority to discard the communication or to take the appropriate legal action
regarding such communication.Delinquent Section 16(a) Reports
The Corporation’s executive officers directors and 10% stockholders are required under Section 16(a) of the Securities
Exchange Act of 1934 to file reports of ownership and changes in ownership with the SEC. Copies of those reports must also
be furnished to the Corporation. Based solely on a review of the copies of reports furnished to the Corporation for the year
ended December 31 2022 John Hammock and Yang Liu still needed to make their Form 3 filings Salvatore Zizza still
needed to make his Form 4 filing related to the warrants he received and Unilumin still needed to make their Form 4 filing
related to the warrants they received. All of the Corporation’s other executive officers directors and 10% stockholders have
complied with the Section 16(a) filing requirements.
38Executive Officers
The Corporation’s executive officers are as follows:
Name Office Age
Nicholas J. Fazio Chief Executive Officer 43
Yantao Yu Chief Operating Officer 47
John Hammock Senior Vice President and Chief Sales & Marketing Officer 60
Todd Dupee Senior Vice President and Chief Accounting Officer 50
Mr. Fazio’s and Mr. Yu’s biographical information can be found at the beginning of Item 10 – Directors Executive Officers
and Corporate Governance.Mr. Hammock became Senior Vice President and Chief Sales and Marketing Officer of the Corporation on September 28
2018. He had been Chief Sales Officer since he had started with the Corporation in 2016. Mr. Hammock has extensive
experience in international business development and sales with Fortune 500 accounts. Previously he was an Executive Vice
President of Sales & Marketing at Niagara Streaming Media. Mr. Hammock has held numerous high profile Senior Vice
President roles in telecom software and manufacturing companies including Newbridge Networks Corvis and Voxpath
Networks. As Vice President of Corvis his team’s sales efforts were responsible for $238 million during the two-year period
preceding a successful $1.6 billion IPO. He has received numerous President Club and Circle of Excellence awards.Mr. Dupee became Senior Vice President and Chief Accounting Officer of the Corporation effective October 1 2018. He
had been Interim Chief Accounting Officer of the Corporation from April 26 2018 until October 8 2018 and Vice President
of the Corporation from 2009 until October 8 2018. He had previously been Controller since 2004 (except when he served
as Chief Financial Officer and Interim Chief Financial Officer from December 3 2012 to May 29 2014) and has been with
the Corporation since 1994.ITEM 11. EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table provides certain summary information for the last two fiscal years of the Corporation concerning
compensation paid or accrued by the Corporation and its subsidiaries to or on behalf of the Corporation’s Chief Executive
Officer and the Company’s two most highly compensated executive officers other than the Chief Executive Officer:
Summary Compensation Table
Annual Compensation
Change in
Pension Value All
Non-Equity of Nonqualified Other
Stock Option Incentive Plan Deferred Compen
Name and Principal Salary Bonus Awards Awards Compensation Compensation -sation Total
Position Year ($) ($) ($) ($) ($) Earnings ($) ($) (1) ($)
Nicholas J. Fazio (2).. 2022 - - - 27175 - - - 27175
Chief Executive 2021 - - - - - - - -
Officer
John Hammock ……... 2022 208394 - - 13588 - - - 221982
Senior Vice President 2021 182434 - - - - - - 182434
and Chief Sales and
Marketing Officer
Todd Dupee …….…... 2022 151591 - - 10870 - - 6000 168461
Senior Vice President 2021 146333 - - - - - 6000 152333
and Chief Accounting
Officer
(1) See “All Other Compensation” for further details.
(2) Mr. Fazio has compensated directly by Unilumin.
39All Other Compensation
During 2022 and 2021 “All Other Compensation” consisted of director fees and other items. The following is a table of
amounts per named individual:
Director and/or Total All Other
Trustee Fees Other (1) Compensation
Name Year ($) ($) ($)
Nicholas J. Fazio 2022 - - -
2021---
John Hammock 2022 - - -
2021---
Todd Dupee 2022 - 6000 6000
2021-60006000
(1) Other consists of vehicle allowance.
Stock Option Plans and Stock Options
Defined Benefit Pension Plan
In 2022 the Company made the minimum requirement contribution of $138000 to the Company’s defined benefit pension
plan for all eligible employees and the eligible individuals listed in the Summary Compensation Table.The Company’s defined benefit pension plan prior to being frozen covered all salaried employees over age 21 with at least
one year of service who are not covered by a collective bargaining agreement to which the Company is a party. Retirement
benefits are based on the final average salary for the highest five of the ten years preceding retirement. For example
estimated annual retirement benefits payable at normal retirement date which normally is age 65 is approximately $15000
for an individual with ten years of credited service and with a final average salary of $100000; and approximately $120000
for an individual with 40 years of credited service and with a final average salary of $200000. Currently $305000 is the
legislated annual cap on determining the final average annual salary and $265000 is the maximum legislated annual benefit
payable from a qualified pension plan.Outstanding Equity Awards at Fiscal Year-End 2022
There were no unexercised options held by any of our Named Executive Officers as of December 31 2022.Employment Agreements
The Corporation has no employment agreements with any employees.Potential Payments Upon Severance or Change in Control
None.Director Compensation
Non-Employee Director Stock Option Plan
The Board of Directors has previously established a Non-Employee Director Stock Option Plan which as amended covers a
maximum of 1200 shares for grant. Such options are granted for a term of six years and are priced at fair market value on
the grant date. The determination as to the amount of options to be granted to directors is based on years of service and are
calculated on a yearly basis as follows: a minimum of 20 stock options are granted for each director; an additional 20 stock
options are granted if a director has served for five years or more; an additional 20 stock options are granted if a director has
served for ten years or more; and an additional 40 stock options are granted if a director has served for twenty years or more.Such options are exercisable at any time upon the first anniversary of the grant date. The Corporation grants additional stock
options upon the expiration or exercise of any such option if such exercise or expiration occurs no earlier than four years after
date of grant in an amount equal to the number of options that have been exercised or that have expired.
40Compensation of Directors
The following table represents director compensation for 2022:
Non-Equity
Incentive Nonqualifie
Plan d Deferred All Other
Fees Stock Option Compensati Compensati Compensatio
Earned Awards Awards on on Earnings n Total
Name Year ($) ($) ($) ($) ($) ($) ($)
Nicholas J. Fazio …... 2022 - - - - - - -
Yang Liu ……...…… 2022 - - - - - - -
Yantao Yu …............. 2022 - - - - - - -
Salvatore J. Zizza ….. 2022 - - - - - - -
41ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The following table sets forth information as of March 24 2023 (or such other date specified) with respect to (A) the
beneficial ownership of Common Stock or shares issuable within 60 days of such date by (i) each person known by the
Corporation to own more than 5% of the Common Stock and who is deemed to be such beneficial owner of Common Stock
under Rule 13d-3(a)(ii); (ii) each person who is a director of the Corporation; (iii) each named executive in the Summary
Compensation Table and (iv) all persons as a group who are executive officers and directors of the Corporation and (B) the
percentage of outstanding shares held by them on that date:
Number of Shares
Beneficially Percent Of
Name Status and Mailing Address Owned Class (%)
5% Stockholders:
Unilumin North America Inc. 7485892 (1) 53.7
254 West 31st Street
New York NY 10001
Gabelli Funds LLC 4092500 (2) 30.4
GAMCO Asset Management Inc.Teton Advisors Inc
One Corporate Center
Rye NY 10580-1434
Non-Employee Directors:
Yang Liu - (3) *
Salvatore J. Zizza 624970 (4) 4.5
Named Executive Officers:
Nicholas J. Fazio 7485892 (3) (5) 53.7
Yantao Yu - (3) (5) *
John Hammock 10000 (5) *
Todd Dupee 40000 (5) *
All directors and executive officers as a group 8160862 (6) 56.5
*Represents less than 1% of total number of outstanding shares.
(1) Unilumin owns 6985892 shares which is 52.0% of our outstanding shares. The stock ownership and percentage reflected in the
above table also includes warrants to purchase 500000 shares.
(2) Based on Schedule 13D as amended dated November 25 2020 by Mario J. Gabelli Gabelli Funds LLC Teton Advisors Inc.
Gamco Investors Inc. GGCP Inc. and Gamco Asset Management Inc. which companies are parent holding companies and/or registered
investment advisers. All securities are held as agent for the account of various investment company fund accounts managed by such
reporting person. Except under certain conditions Gabelli Funds LLC has beneficial ownership of such shares. Based on such Schedule
13D amendment and Schedule 13G dated January 17 2023 Gabelli Funds LLC beneficially owns 1625000 shares of Common Stock
GAMCO Asset Management Inc. beneficially owns 102.500 shares of Common Stock and Teton Advisors Inc. beneficially owns
2365000 shares of Common Stock.
(3) Mr. Fazio is Director and Chief Executive Officer of Unilumin North America Inc. which owns 6985892 shares and has
warrants to purchase 500000 shares so he may be deemed a beneficial owner of the shares owned by Unilumin North America Inc. Mr.Fazio has no pecuniary interest in these shares and disclaims any beneficial interest. The share ownership with respect to Messrs. Liu and
Yu does not include the shares held by Unilumin North America Inc.
(4) Mr. Zizza disclaims any interest in the shares set forth in footnote 2 above. This includes warrants to purchase 499970 shares.
(5) The share ownerships with respect to Messrs. Fazio Yu Hammock and Dupee do not include stock options to purchase 50000
50000 25000 and 20000 shares respectively because the options are not exercisable until March 28 2023.
(6) See footnotes 3 4 and 5 above.
42Equity Compensation Plan Information
Securities Weighted Securities
to be issued average available for
December 31 2022 upon exercise exercise price future issuance
Equity compensation plans approved by stockholders - - 800
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Certain Transactions
Except as described below there has not been nor is there currently proposed any transaction or series of similar
transactions to which we were or are a party in which the amount involved exceeded or exceeds the lesser of $120000 or 1%
of our total assets and in which any of our directors executive officers holders of more than 5% of any class of our voting
securities or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect
material interest other than compensation arrangements with directors and executive officers and the transactions described
or referred to below.For a description of the Company’s transactions with related parties please see Note 19 to the Consolidated Financial
Statements – Related Party Transactions.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Committee Pre-Approval of Independent Auditor Services: All audit services provided by Marcum LLP (“Marcum”)
for 2022 and 2021 were approved by the Audit Committee in advance of the work being performed.Audit Fees: Marcum audit fees were $180000 in 2022 and $180000 in 2021. Marcum audit fees include fees and expenses
associated with the annual audit of the Company’s financial statements.Audit-Related Fees: Marcum did not provide any audit-related serviced services in 2022 or 2021.Tax Fees: Marcum did not provide any tax services in 2022 or 2021.All Other Fees: Marcum did not provide any non-audit services in 2022 or 2021.PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
1 Consolidated Financial Statements of Trans-Lux Corporation:
Report of Independent Registered Public Accounting Firm as of December 31 2022
Consolidated Balance Sheets as of December 31 2022 and 2021
Consolidated Statements of Operations for the Years Ended December 31 2022 and 2021
Consolidated Statements of Comprehensive Loss for the Years Ended December 31 2022 and
2021
Consolidated Statements of Changes in Stockholders’ Deficit for the Years Ended December
31 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31 2022 and 2021
Notes to Consolidated Financial Statements
2 Financial Statement Schedules: Not applicable.
3 Exhibits:
433(a) Amended and Restated Certificate of Incorporation of the registrant (incorporated by reference to
Exhibit 3.1 of Form 8-K dated July 2 2012).(b) Amendment to Amended and Restated Certificate of Incorporation of the registrant (incorporated
by reference to Exhibit 3.1 of Form 8-K filed February 9 2019).(c) Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.2 of Form
8-K filed March 9 2012).
4(a) Indenture dated as of December 1 1994 (form of said indenture is incorporated by reference to
Exhibit 6 of Schedule 13E-4 Amendment No. 2 filed December 23 1994).(b) Indenture dated as of March 1 2004 (form of said indenture is incorporated by reference to
Exhibit 12(d) of Schedule TO filed March 2 2004).(c) Description of the Company’s securities registered pursuant to section 12 of the Securities
Exchange Act on 1934.
10.1 ** Form of Indemnity Agreement - Directors (form of said agreement is incorporated by reference to
Exhibit 10.1 of Registration No. 333-15481).
10.2 ** Form of Indemnity Agreement - Officers (form of said agreement is incorporated by reference to
Exhibit 10.2 of Registration No. 333-15481).
10.3 Amended and Restated Pension Plan dated January 1 2016 (incorporated by reference to Exhibit
10.3 of Form 10-K filed March 29 2016).
10.4 Promissory note in favor of Carlisle Investments Inc. (“Carlisle”) (incorporated by reference to
Exhibit 10.15 of Form 10-K/A filed April 29 2016).
10.5 Credit Agreement with Carlisle dated as of November 6 2017 (incorporated by reference to
Exhibit 10.5 of Form 10-Q filed November 9 2017).
10.6 Loan and Security Agreement with MidCap Business Credit LLC dated as of September 16 2019
(incorporated by reference to Exhibit 10.1 of Form 8-K filed September 20 2019).
10.7 1st Modification Agreement to Loan and Security Agreement with MidCap Business Credit LLC
dated as of June 3 2020 (incorporated by reference to Exhibit 10.1 of Form 8-K filed June 9
2020).
10.8 2nd Modification Agreement to Loan and Security Agreement with MidCap Business Credit LLC
dated as of December 16 2020 (incorporated by reference to Exhibit 10.1 of Form 8-K filed
December 21 2020).
10.9 Assignment Without Recourse of Loan Agreement with MidCap Business Credit LLC to
Unilumin USA dated as of July 30 2021 (incorporated by reference to Exhibit 10.2 of Form 10-Q
filed August 13 2021).
10.10 1st Modification Agreement to Loan and Security Agreement with Unilumin USA dated as of
March 20 2023 and effective December 31 2022 filed herewith.
10.11 Loan note with Enterprise Bank and Trust dated as of April 20 2020 (incorporated by reference to
Exhibit 10.1 of Form 8-K filed May 4 2020).
10.12 ** Form of stock options granted March 28 2022 (incorporated by reference to Exhibit 10.1 of Form
10-K filed April 14 2022).
21 List of Subsidiaries filed herewith.
4431.1 Certification of Nicholas J. Fazio Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-
14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.
31.2 Certification of Todd Dupee Senior Vice President and Chief Accounting Officer pursuant to
Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 filed herewith.
32.1 Certification of Nicholas J. Fazio Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.
32.2 Certification of Todd Dupee Senior Vice President and Chief Accounting Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed
herewith.
101 The following interactive data files pursuant to Rule 405 of Regulation S-T from Trans-Lux
Corporation’s Annual Report on Form 10-K for the annual period ended December 31 2022 are
formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets
as of December 31 2022 and 2021 (ii) Consolidated Statements of Operations for the Years
Ended December 31 2022 and 2021 (iii) Consolidated Statements of Comprehensive Loss for the
Years Ended December 31 2022 and 2021 (iv) Consolidated Statements of Changes in
Stockholders’ Deficit for the Years Ended December 31 2022 and 2021 (v) Consolidated
Statements of Cash Flows for the Years Ended December 31 2022 and 2021 and (vi) Notes to
Consolidated Financial Statements. *
104 Cover page interactive data file (formatted as online XBRL with applicable taxonomy extension
information contained in Exhibit 191.* Furnished herewith. Pursuant to Rule 406T of Regulation S-T the interactive data files in Exhibit
101 to this Annual Report on Form 10-K is deemed not filed or part of a registration statement or
prospectus for purposes of Section 11 or 12 of the Securities Act of 1933 as amended and is
deemed not filed for purpose of Section 18 of the Securities Exchange Act of 1934 as amended
and otherwise is not subject to liability under these sections.** Denotes management contract or compensatory plan or arrangement.ITEM 16. FORM 10-K SUMMARY
Not applicable.
45SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized:
TRANS-LUX CORPORATION
By: /s/ Nicholas J. Fazio
Nicholas J. Fazio
Chief Executive Officer
By: /s/ Todd Dupee
Todd Dupee
Senior Vice President and Chief Accounting Officer
Dated: March 27 2023
Trans-Lux Corporation and each of the undersigned do hereby appoint Nicholas J. Fazio and Todd Dupee and each of them
severally its or his/her true and lawful attorney to execute on behalf of Trans-Lux Corporation and the undersigned any and
all amendments to this Annual Report on Form 10-K and to file the same with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission; each of such attorneys shall have the power to act
hereunder with or without the other.Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the date indicated:
/s/ Salvatore J. Zizza March 27 2023
Salvatore J. Zizza Chairman of the Board
/s/ Nicholas J. Fazio March 27 2023
Nicholas J. Fazio Director and Chief Executive Officer
(Principal Executive Officer)
/s/ Yang Liu March 27 2023
Yang Liu Director
/s/ Yantao Yu March 27 2023
Yantao Yu Director and Chief Operating Officer
/s/ Todd Dupee March 27 2023
Todd Dupee Senior Vice President and Chief Accounting Officer
(Principal Financial Officer and Principal Accounting Officer)
46