[
X
]
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended September 30, 2007
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|
[ ]
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
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For
the transition period from ________________ to
_________________
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|
Commission
file number 0-50742
|
SIGN
MEDIA SYSTEMS, INC.
_____________________________________________________________________________
(Exact
name of small business issuer as specified in its
charter)
|
|
FLORIDA
________________________________________________
(State
or other jurisdiction of incorporation or organization)
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02-0555904
____________________________
(IRS
Employer Identification No.)
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2100
19th
Street, Sarasota FL 34234
_____________________________________________________________________________
(Address
of principal executive offices)
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|
(941)
330-0336
_____________________________________________________________________________
(Issuer's
telephone number)
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|
_____________________________________________________________________________
(Former
name, former address and former fiscal year, if changed since last
report)
|
2007
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$ |
277
|
||
Accounts
receivable, net
|
946
|
|||
Prepaid
expenses
|
100,000
|
|||
Total
current assets
|
101,223
|
|||
PROPERTY
AND EQUIPMENT - Net
|
68,254
|
|||
OTHER
ASSETS
|
||||
Due
from related parties
|
608,240
|
|||
Total
other assets
|
608,240
|
|||
TOTAL
ASSETS
|
$ |
777,717
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Current
portion of long-term debt
|
$ |
5,121
|
||
Accounts
payable and accrued expenses
|
128,931
|
|||
Due
to related parties
|
42,767
|
|||
Total
current liabilities
|
176,819
|
|||
TOTAL
LIABILITIES
|
176,819
|
|||
STOCKHOLDERS'
EQUITY
|
||||
Common
stock, no par value, 100,000,000 shares authorized,
|
||||
12,026,355
shares issued and outstanding
|
||||
at
September 30, 2007
|
1,757,400
|
|||
Additional
paid-in capital
|
671,700
|
|||
Accumulated
deficit
|
(1,828,202 | ) | ||
Total
stockholders' equity
|
600,898
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ |
777,717
|
NINE
MONTHS ENDED
|
THREE
MONTHS ENDED
|
|||||||||||||||
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
REVENUE
|
||||||||||||||||
Sales
Income
|
$ |
24,784
|
$ |
734,494
|
$ |
71
|
$ |
5,816
|
||||||||
Total
revenue
|
24,784
|
734,494
|
71
|
5,816
|
||||||||||||
COST
OF GOODS SOLD
|
3,446
|
26,929
|
46
|
11,109
|
||||||||||||
GROSS
PROFIT
|
21,338
|
707,565
|
25
|
(5,293 | ) | |||||||||||
OPERATING
EXPENSES
|
||||||||||||||||
Professional
fees and administrative payroll
|
1,366,092
|
40,976
|
95,304
|
10,277
|
||||||||||||
General
and administrative expenses
|
552,111
|
276,815
|
57,764
|
63,178
|
||||||||||||
Depreciation
|
30,498
|
48,938
|
10,166
|
16,000
|
||||||||||||
Total
operating expenses
|
1,948,701
|
366,729
|
163,234
|
89,455
|
||||||||||||
INCOME
(LOSS) BEFORE OTHER INCOME (EXPENSE)
|
(1,927,363 | ) |
340,836
|
(163,209 | ) | (94,748 | ) | |||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Impairment
of inventory
|
(7,462 | ) |
-
|
-
|
-
|
|||||||||||
Interest
income and other
|
22,744
|
25,001
|
7,284
|
7,001
|
||||||||||||
Interest
expense and penalty
|
(9,980 | ) | (1,280 | ) | (9,598 | ) |
-
|
|||||||||
Total
Other Income (Expense)
|
5,302
|
23,721
|
(2,314 | ) |
7,001
|
|||||||||||
NET
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
|
(1,922,061 | ) |
364,557
|
(165,523 | ) | (87,747 | ) | |||||||||
Provision
for income taxes
|
-
|
77,775
|
-
|
-
|
||||||||||||
NET
INCOME (LOSS) APPLICABLE TO COMMON SHARES
|
$ | (1,922,061 | ) | $ |
286,782
|
$ | (165,523 | ) | $ | (87,747 | ) | |||||
NET
INCOME (LOSS) PER BASIC AND DILUTED SHARES
|
$ | (0.17 | ) | $ |
0.03
|
$ | (0.01 | ) | $ | (0.01 | ) | |||||
WEIGHTED
AVERAGE NUMBER OF COMMON
|
||||||||||||||||
SHARES
OUTSTANDING
|
11,456,234
|
8,460,000
|
11,787,724
|
8,460,000
|
2007
|
2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income (loss)
|
$ | (1,922,061 | ) | $ |
286,782
|
|||
Adjustments
to reconcile net income (loss)
|
||||||||
to
net cash (used in) operating activities:
|
||||||||
Depreciation
|
30,498
|
48,938
|
||||||
Bad
debt expense
|
393,835
|
-
|
||||||
Issuance
of common stock for consulting
|
1,075,000
|
-
|
||||||
Issuance
of common stock for compensation
|
90,000
|
-
|
||||||
Impairment
of inventory
|
7,462
|
-
|
||||||
Changes
in assets and liabilities:
|
||||||||
(Increase)
in accounts receivable
|
(946 | ) | (752,823 | ) | ||||
Decrease
in inventory
|
-
|
17,538
|
||||||
Increase
in prepaid expenses and other current assets
|
(100,000 | ) |
-
|
|||||
Increase
(decrease) in accounts payable and accrued expenses
|
(63,471 | ) |
22,352
|
|||||
Total
adjustments
|
1,432,378
|
(663,995 | ) | |||||
Net
cash (used in) by operating activities
|
(489,683 | ) | (377,213 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisition
of property and equipment
|
(3,281 | ) | (5,612 | ) | ||||
Increase
in interest receivable - related party
|
-
|
407,821
|
||||||
Payments
to related parties
|
(192,109 | ) |
-
|
|||||
Net
cash provided by (used in) investing activities
|
(195,390 | ) |
402,209
|
|||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments
on long-term debt
|
(6,867 | ) | (21,632 | ) | ||||
Issuance
of common stock for cash
|
362,500
|
|||||||
Proceeds
from debt - related parties
|
25,590
|
-
|
||||||
Net
cash provided by (used in) financing activities
|
381,223
|
(21,632 | ) | |||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(303,850 | ) |
3,364
|
|||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
304,127
|
2,252
|
||||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$ |
277
|
$ |
5,616
|
||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the year for interest
|
$ |
9,980
|
$ |
1,280
|
||||
Cash
paid during the year for income taxes
|
$ |
-
|
$ |
1,280
|
||||
SUPPLEMENTAL
DISCLOSURE OF NON CASH INFORMATION:
|
||||||||
Common
stock issued for compensation
|
$ |
90,000
|
$ |
-
|
||||
Common
stock issued for consulting
|
$ |
1,075,000
|
$ |
-
|
||||
Bad
debt expense
|
$ |
393,835
|
$ |
-
|
Accounts
receivable
|
$ |
752,823
|
||
Fixed
assets, net of depreciation
|
131,468
|
|||
Other
assets
|
443,407
|
|||
Accounts
payable
|
(238,622 | ) | ||
Notes
payable
|
(32,765 | ) | ||
Other
payables
|
(230,008 | ) | ||
Total
|
$ |
826,303
|
(1)
|
The
sale and installation of their mounting
system;
|
(2)
|
The
printing of advertising images to be inserted on trucks utilizing
the
Company’s mounting systems; and
|
(3)
|
Third
party advertising.
|
|
Balance
|
Charged
|
|
Balance
|
|||||||||||||
|
at
Beginning
|
to
Costs and
|
|
at
End of
|
|||||||||||||
|
of
Period
|
Expenses
|
Deductions
|
Period
|
|||||||||||||
|
|
|
|
|
|||||||||||||
Nine
Months ended September 30, 2007
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
|||||||||
|
|
||||||||||||||||
Nine
Months ended September 30, 2006
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
September
30,
|
||||||||
2007
|
2006
|
|||||||
Net
income (loss)
|
$ | (1,922,061 | ) | $ |
286,782
|
|||
Weighted-average
common shares outstanding
|
||||||||
Basic
|
11,456,234
|
8,460,000
|
||||||
Weighted-average
common stock equivalents
|
||||||||
Stock
options
|
-
|
-
|
||||||
Warrants
|
-
|
-
|
||||||
Weighted-average
common shares outstanding
|
||||||||
Diluted
|
11,456,234
|
8,460,000
|
2007
|
||||
Accounts
receivable
|
$ |
946
|
||
Less
allownace for doubtful accounts
|
-
|
|||
Total
accounts receivable, net
|
$ |
946
|
2007
|
||||
Equipment
|
$ |
128,745
|
||
Furniture
and Fixtures
|
112,022
|
|||
Transportation
Equipment
|
24,621
|
|||
265,388
|
||||
Less:
Accumulated Depreciation
|
197,134
|
|||
Net
Book Value
|
$ |
68,254
|
2007
|
2006
|
|||||||
Total
Revenue
|
$ |
24,784
|
$ |
734,494
|
||||
Cost
of Goods Sold
|
3,446
|
26,929
|
||||||
Gross
profit
|
21,338
|
707,565
|
||||||
Total
Operating Expenses
|
1,948,701
|
366,729
|
||||||
Net
Income (Loss) Before
Other
Income (Expense)
|
(1,927,363 | ) |
340,836
|
|||||
Total
Other Income
(Expense)
|
5,302
|
23,721
|
||||||
Net
Income (Loss)Before
Provision
For Income
Taxes
|
(1,922,061 | ) |
364,557
|
|||||
Provision
For Income
Taxes
|
-
|
(77,775 | ) | |||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$ | (1,922,061 | ) | $ |
286,782
|
|||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$ | (0.17 | ) | $ |
0.03
|
|||
Weighted
Average
Number
OF Common
Shares
Outstanding
|
11,456,234
|
8,460,000
|
||||||
Gross
profit margin
|
86 | % | 96 | % |
2007
|
2006
|
|||||||
Revenue
|
$ |
71
|
$ |
5,816
|
||||
Cost
of Goods Sold
|
46
|
11,109
|
||||||
Gross
profit
|
25
|
(5,293 | ) | |||||
Total
Operating Expenses
|
163,234
|
89,455
|
||||||
Net
Income (Loss) Before
Other
Income (Expense)
|
(163,209 | ) | (94,748 | ) | ||||
Total
Other Income
(Expense)
|
(2,314 | ) |
7,001
|
|||||
Net
Income (Loss)Before
Provision
For Income
Taxes
|
(165,523 | ) | (87,747 | ) | ||||
Provision
For Income
Taxes
|
-
|
-
|
||||||
Net
Income (Loss)
Applicable
To Common
Shares
|
$ | (165,523 | ) | $ | (87,747 | ) | ||
Net
Income (Loss) Per
Basic
And Diluted Shares
|
$ | (0.01 | ) | $ |
0.01
|
|||
Weighted
Average
Number
OF Common
Shares
Outstanding
|
11,787,724
|
8,460,000
|
||||||
Gross
profit margin
|
35 | % | (91 | )% |
Date
|
Name
|
Number
of Shares
|
Consideration
in Dollars
|
January
24, 2007
|
Marcus
Faller
|
150,000
|
Services
75,000
|
February
8, 2007
|
Evelyn
P. Silva
|
300,000
|
Services
90,000
|
Total
|
$165,00
|
10.6
|
Promissory
Note described in Part I, Item 2, Management's Discussion and Analysis
or
Plan of Operation above which is incorporated herein by reference
from the
Company’s Second Amended Form 10-QSB, Quarterly Report under Section 13 or
15(d) of the Exchange Act for the period ended June 30, 2005 and
filed
with the Securities and Exchange Commission on November 22,
2005.
|
31.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
SIGN
MEDIA SYSTEMS, INC.
(Registrant)
|
|
Date:
November 19, 2007
|
/s/Antonio
F. Uccello, III
Antonio
F. Uccello, III
Chief
Executive Officer
Chairman
of the Board
|