Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

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.)

115 East 34^th Street, #1900, New York, New York		10156
(Address of principal executive offices)		(Zip code)

	(800) 243-5544
(Registrant's telephone number, including area code)

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 No

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to file 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 growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ___	Accelerated filer ___
Non-accelerated filer X	Emerging growth company ___	Smaller reporting company _X

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 the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Date		Class		Shares Outstanding
11/13/24		Common Stock - $0.001 Par Value		13,496,276

TRANS-LUX CORPORATION AND SUBSIDIARIES

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		Page No.
Part I - Financial Information (unaudited)

Item 1.	Condensed Consolidated Balance Sheets – September 30, 2024 and December 31, 2023 (see Note 1)	1

	Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2024 and 2023	2

	Condensed Consolidated Statements of Comprehensive Loss – Three and Nine Months Ended September 30, 2024 and 2023	2

	Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Three and Nine Months Ended September 30, 2024 and 2023	3

	Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2024 and 2023	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4.	Controls and Procedures	25

Part II - Other Information

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults upon Senior Securities	25

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	27

Item 6.	Exhibits	27

Signatures		28

Exhibits

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Part I - Financial Information (unaudited)

Item 1.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	September 30 2024		December 31 2023
In thousands, except share data	September 30 2024		December 31 2023

ASSETS
Current assets:
Cash and cash equivalents	$	76	$	185
Receivables, net		1,455		1,531
Inventories		2,122		2,372
Prepaids and other assets		710		148
Total current assets		4,363		4,236
Long-term assets:
Rental equipment, net		68		111
Property, plant and equipment, net		1,586		1,778
Right of use assets		1,694		1,971
Restricted cash		200		200
Other assets		34		34
Total long-term assets		3,582		4,094
TOTAL ASSETS	$	7,945	$	8,330
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	9,527	$	8,420
Accrued liabilities		6,310		5,352
Current portion of long-term debt		3,776		3,776
Current lease liabilities		391		352
Customer deposits		1,339		213
Total current liabilities		21,343		18,113
Long-term liabilities:
Long-term debt, less current portion		529		535
Long-term lease liabilities		1,345		1,644
Deferred pension liability and other		2,062		2,248
Total long-term liabilities		3,936		4,427
Total liabilities		25,279		22,540
Stockholders' deficit:

Preferred Stock Series A - $20 stated value - 416,500 shares authorized; shares issued and outstanding: 0 in 2024 and 2023		-		-
Preferred Stock Series B - $200 stated value - 51,000 shares authorized; shares issued and outstanding: 0 in 2024 and 2023		-		-
Common Stock - $0.001 par value - 30,000,000 shares authorized; shares issued: 13,524,116 in 2024 and 2023 shares outstanding: 13,496,276 in 2024 and 2023		13		13
Additional paid-in-capital		41,508		41,508
Accumulated deficit		(49,796)		(46,719)
Accumulated other comprehensive loss		(5,996)		(5,949)
Treasury stock - at cost - 27,840 common shares in 2024 and 2023		(3,063)		(3,063)
Total stockholders' deficit		(17,334)		(14,210)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	7,945	$	8,330

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

In thousands, except per share data	3 Months Ended September 30				9 Months Ended September 30
In thousands, except per share data	2024		2023			2024		2023
Revenues:
Digital product sales	$	2,491	$	3,933		$	8,193	$	10,821
Digital product lease and maintenance		174		209			559		656
Total revenues		2,665		4,142			8,752		11,477

Cost of revenues:
Cost of digital product sales		2,326		3,698			7,825		10,118
Cost of digital product lease and maintenance		88		111			287		331
Total cost of revenues		2,414		3,809			8,112		10,449

Gross income		251		333			640		1,028
General and administrative expenses		(956)		(995)			(3,146)		(2,889)
Operating loss		(705)		(662)			(2,506)		(1,861)
Interest expense, net		(161)		(183)			(450)		(521)
(Loss) gain on foreign currency remeasurement		(28)		60			48		1
Pension expense		(50)		(62)			(150)		(187)
Loss before income taxes		(944)		(847)			(3,058)		(2,568)
Income tax expense		(6)		(7)			(19)		(19)
Net loss	$	(950)	$	(854)		$	(3,077)	$	(2,587)

The accompanying notes are an integral part of these condensed consolidated financial statements.

TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

In thousands	3 Months Ended September 30				9 Months Ended September 30
	3 Months Ended September 30				9 Months Ended September 30
	2024		2023		2024		2023
Net loss	$	(950)	$	(854)	$	(3,077)	$	(2,587)
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss)		25		(57)		(47)		(3)
Total other comprehensive income (loss), net of tax		25		(57)		(47)		(3)
Comprehensive loss	$	(925)	$	(911)	$	(3,124)	$	(2,590)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (unaudited)

														Accumulated Other Comprehensive (Loss) Gain				Total Stock- holders' Deficit
	Preferred Stock									Add'l Paid-in Capital
	Series A			Series B			Common Stock					Accumulated Deficit				Treasury Stock
In thousands, except share data	Shares	Amt		Shares	Amt		Shares	Amt				Accumulated Deficit				Treasury Stock
For the 9 months ended September 30, 2024
Balance January 1, 2024	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(46,719)	$	(5,949)	$	(3,063)	$	(14,210)
Net loss	-		-	-		-	-		-		-		(3,077)		-		-		(3,077)
Other comprehensive loss, net of tax:
Unrealized foreign currency translation loss	-		-	-		-	-		-		-		-		(47)		-		(47)
Balance September 30, 2024	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(49,796)	$	(5,996)	$	(3,063)	$	(17,334)

For the 3 months ended September 30, 2024
Balance July 1, 2024	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(48,846)	$	(6,021)	$	(3,063)	$	(16,409)
Net loss	-		-	-		-	-		-		-		(950)		-		-		(950)
Other comprehensive income, net of tax:
Unrealized foreign currency translation gain	-		-	-		-	-		-		-		-		25		-		25
Balance September 30, 2024	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(49,796)	$	(5,996)	$	(3,063)	$	(17,334)

For the 9 months ended September 30, 2023
Balance January 1, 2023	-	$	-	-	$	-	13,474,116	$	13	$	41,444	$	(42,652)	$	(6,066)	$	(3,063)	$	(10,324)
Net loss	-		-	-		-	-		-		-		(2,587)		-		-		(2,587)
Stock issued to directors/officers	-		-	-		-	50,000		-		26		-		-		-		26
Issuance of options	-		-	-		-	-		-		38		-		-		-		38
Other comprehensive loss, net of tax:
Unrealized foreign currency translation loss	-		-	-		-	-		-		-		-		(3)		-		(3)
Balance September 30, 2023	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(45,239)	$	(6,069)	$	(3,063)	$	(12,850)

For the 3 months ended September 30, 2023
Balance July 1, 2023	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(44,385)	$	(6,012)	$	(3,063)	$	(11,939)
Net loss	-		-	-		-	-		-		-		(854)		-		-		(854)
Other comprehensive loss, net of tax:
Unrealized foreign currency translation loss	-		-	-		-	-		-		-		-		(57)		-		(57)
Balance September 30, 2023	-	$	-	-	$	-	13,524,116	$	13	$	41,508	$	(45,239)	$	(6,069)	$	(3,063)	$	(12,850)


The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRANS-LUX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	9 Months Ended September 30
In thousands	2024		2023
Cash flows from operating activities
Net loss	$	(3,077)	$	(2,587)
Adjustment to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		239		278
Amortization of right of use assets		277		320
Gain on foreign currency remeasurement		(48)		(1)
Issuance of common stock for compensation		-		26
Amortization of stock options		-		38
Allowance for credit losses		(4)		(36)
Changes in operating assets and liabilities:
Accounts receivable		80		425
Inventories		250		(284)
Prepaids and other assets		(562)		660
Accounts payable		1,107		1,867
Accrued liabilities		704		606
Operating lease liabilities		(260)		(335)
Customer deposits		1,126		(99)
Deferred pension liability and other		69		(441)
Net cash (used in) provided by operating activities		(99)		437
Cash flows from investing activities
Purchases of property, plant and equipment		(4)		(277)
Net cash used in investing activities		(4)		(277)
Cash flows from financing activities
Proceeds of long-term debt		-		200
Payments of long-term debt		(5)		(200)
Net cash used in financing activities		(5)		-
Effect of exchange rate changes		(1)		(2)
Net (decrease) increase in cash, cash equivalents and restricted cash		(109)		158
Cash, cash equivalents and restricted cash at beginning of year		385		48
Cash, cash equivalents and restricted cash at end of period	$	276	$	206
Supplemental disclosure of cash flow information:
Interest paid	$	14	$	23
Income taxes paid		6		10
Reconciliation of cash, cash equivalents and restricted cash to amounts reported in the Consolidated Balance Sheets at end of period:
Current assets
Cash and cash equivalents	$	76	$	6
Long-term assets
Restricted cash		200		200
Cash, cash equivalents and restricted cash at end of period	$	276	$	206

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRANS-LUX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(unaudited)

Note 1 – Basis of Presentation

As used in this report, “Trans-Lux,” the “Company,” “we,” “us,” and “our” refer to Trans-Lux Corporation and its subsidiaries.

Financial information included herein is unaudited, however, such information reflects all adjustments (of a normal and recurring nature), which are, in the opinion of management, necessary for the fair presentation of the Condensed Consolidated Financial Statements for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”) and therefore do not include all information and footnote disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). The Condensed Consolidated Financial Statements included herein should be read in conjunction with the Consolidated Financial Statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Condensed Consolidated Balance Sheet at December 31, 2023 is derived from the December 31, 2023 audited financial statements.

Significant Accounting Policies

For a discussion of our significant accounting policies, see Note 1, Summary of significant accounting policies, within Part II, Item 8 “Financial Statements and Supplementary Data” in our 2023 Form 10-K. There have been no changes to our significant accounting policies since the 2023 Form 10-K.

The following new accounting pronouncements, and related impacts on adoption, are being evaluated by the Company:

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends ASC 280. The intent of ASU 2023-07 is to improve the disclosures around a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses, by requiring entities to disclose on an annual and interim basis: (i) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss and (ii) an amount for other segment items by reportable segment and a description of its composition, which represents the difference between segment revenue less segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. Furthermore, entities will be required to: (i) provide all annual disclosures about a segment’s profit or loss and assets currently required under ASC 280 on an interim basis as well, (ii) clarify that an entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, and (iii) disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2023-07 on its condensed consolidated financial statements and disclosures.

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Note 2 – Liquidity and Going Concern

A fundamental principle of the preparation of financial statements in accordance with GAAP is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. This principle is applicable to all entities except for entities in liquidation or entities for which liquidation appears imminent. In accordance with this requirement, the Company has prepared its accompanying Condensed Consolidated Financial Statements assuming the Company will continue as a going concern.

The Company has incurred recurring operating losses and continues to have a working capital deficiency including being in default on several debt obligations. The Company recorded a loss of $3.1 million in the nine months ended September 30, 2024, and had a working capital deficiency of $17.0 million as of September 30, 2024. As of December 31, 2023, the Company had a working capital deficiency of $13.9 million.

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, including the impact of the current economic environment, the spread of major epidemics (including coronavirus), increases in interest rates and other related uncertainties such as government-imposed travel restrictions, interruptions to supply chains, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn delayed certain deliveries to our customers.

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 our outstanding 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) and 9½% Subordinated debentures due 2012 (the “Debentures”), (iv) repay our obligations under our Loan Agreement (hereinafter defined) with Unilumin and/or (v) repay our obligations under our loan agreements with Carlisle, there would be a significant adverse impact on our financial position and operating results. The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements and fund potential new opportunities. Due to the above, there is substantial doubt as to whether we will have adequate liquidity, including access to the debt and equity capital markets, to continue as a going concern over the next 12 months from the date of issuance of this Form 10-Q.

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Note 3 – Revenue Recognition

We recognize revenue in accordance with two different accounting standards: 1) Accounting Standards Codification (“ASC”) Topic 606 and 2) ASC Topic 842. Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. Our contracts with customers generally do not include multiple performance obligations. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. None of the Company’s contracts contained a significant financing component as of September 30, 2024. Revenue from the Company’s digital product and maintenance service is recognized ratably over the lease term in accordance with ASC Topic 842.

Disaggregated Revenues

The following table represents a disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2024 and 2023, along with the reportable segment for each category:

	Three months ended				Nine months ended
In thousands	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Digital product sales:
Catalog and small customized products	$	2,491	$	3,933	$	8,193	$	10,821
Large customized products		-		-		-		-
Subtotal		2,491		3,933		8,193		10,821
Digital product lease and maintenance:
Operating leases		92		113		290		361
Maintenance agreements		82		96		269		295
Subtotal		174		209		559		656
Total	$	2,665	$	4,142	$	8,752	$	11,477

The Company has two primary revenue streams which are Digital product sales and Digital product lease and maintenance.

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Digital Product Sales

The Company recognizes net revenue on digital product sales to its distribution partners and to end users related to digital display solutions and fixed digit scoreboards. For 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 may be upon shipment or upon delivery based on the contractual shipping terms of a contract. For the Company’s customized products, revenue is either recognized at a point in time or over time depending on the length of the contract. For those customized product contracts that are smaller in size, revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. For those customized product contracts that are larger in size, revenue is recognized over time based on incurred costs as compared to projected costs using the input method, as this best reflects the Company’s progress in transferring control of the customized product to the customer. The Company may also contract with a customer to perform installation services of digital display products. Similar to the larger customized products, the Company recognizes the revenue associated with installation services using the input method, whereby the basis is the total contract costs incurred to date compared to the total expected costs to be incurred.

Revenue on sales to distribution partners are recorded net of prompt-pay discounts, if offered, and other deductions. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method to which the Company expects to be entitled. In the case of prompt-pay discounts, there are only two possible outcomes: either the customer pays on-time or does not. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company believes that the estimates it has established are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the estimated amounts to vary. The Company offers an assurance-type warranty that the digital display products will conform to the published specifications. Returns may only be made subject to this warranty and not for convenience.

Digital Product Lease and Maintenance

Digital product lease revenues represent revenues from leasing equipment that we own. We do not generally provide an option for the lessee to purchase the rented equipment at the end of the lease and do not generate material revenue from sales of equipment under such options. Our lease revenues do not include material amounts of variable payments. Digital product maintenance revenues represent revenues from maintenance agreements for equipment that we do not own. Lease and maintenance contracts generally run for periods of one month to 10 years. A contract entered into by the 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 to the customer when and if needed. As there is no discernable pattern of efforts other than evenly over the lease and maintenance terms, the Company will recognize revenue straight-line over the lease and maintenance terms of service.

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The Company has an enforceable right to payment for performance completed to date, as evidenced by the requirement that the customer pay upfront for each month of services. Lease and maintenance service amounts billed ahead of revenue recognition are recorded in deferred revenue and are included in accrued liabilities in the Condensed Consolidated Financial Statements.

Revenues from equipment lease and maintenance contracts are recognized during the term of the respective agreements. At September 30, 2024, the future minimum lease payments due to the Company under operating leases that expire at varying dates through 2030 for its rental equipment and maintenance contracts, assuming no renewals of existing leases or any new leases, aggregating $992,000 are as follows: $75,000 – remainder of 2024, $359,000 – 2025, $272,000 – 2026, $202,000 – 2027, $62,000 – 2028 and $22,000 thereafter.

Contract Balances with Customers

Contract assets primarily relate to rights to consideration for goods or services transferred to the customer when the right is conditional on something other than the passage of time. The contract assets are transferred to the receivables when the rights become unconditional. As of September 30, 2024 and December 31, 2023, the Company had no contract assets. The contract liabilities primarily relate to the advance consideration received from customers for contracts prior to the transfer of control to the customer and therefore revenue is recognized on completion of delivery. Contract liabilities are classified as deferred revenue by the Company and are included in customer deposits and accrued liabilities in the Condensed Consolidated Balance Sheets.

The following table presents the balances in the Company’s receivables and contract liabilities with customers:

In thousands	September 30, 2024		December 31, 2023
Gross receivables	$	1,542	$	1,685
Allowance for credit loss		87		154
Net receivables		1,455		1,531
Contract liabilities		1,396		225

During the three and nine months ended September 30, 2024 and 2023, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods:

	Three months ended				Nine months ended
In thousands	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period	$	286	$	382	$	144	$	1,128
Performance obligations satisfied in previous periods (for example, due to changes in transaction price)		-		-		-		-

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Transaction Price Allocated to Future Performance Obligations

As of September 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations for digital product sales was $3.5 million and digital product lease and maintenance was $992,000.

The Company expects to recognize revenue on approximately 86%, 11% and 3% of the remaining performance obligations over the next 12 months, 13 to 36 months and 37 or more months, respectively.

Costs to Obtain or Fulfill a Customer Contract

The Company capitalizes incremental costs of obtaining customer contracts. Capitalized commissions are amortized based on the transfer of the products or services to which the assets relate. Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in General and administrative expenses.

The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. When shipping and handling costs are incurred after a customer obtains control of the products, the Company also has elected to account for these as costs to fulfill the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of finished products to customers are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer.

Note 4 – Inventories

Inventories consist of the following:

	September 30 2024		December 31 2023
In thousands	September 30 2024		December 31 2023
Raw materials	$	1,941		2,102
Work-in-progress		-		18
Finished goods		181		252
	$	2,122	$	2,372

Note 5 – Rental Equipment, net

Rental equipment consists of the following:

	September 30 2024		December 31 2023
In thousands	September 30 2024		December 31 2023
Rental equipment	$	1,049	$	1,049
Less accumulated depreciation		981		938
Net rental equipment	$	68	$	111

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Depreciation expense for rental equipment for the nine months ended September 30, 2024 and 2023 was $42,000 and $86,000, respectively. Depreciation expense for rental equipment for the three months ended September 30, 2024 and 2023 was $13,000 and $29,000, respectively.

Note 6 – Property, Plant and Equipment, net

Property, plant and equipment consists of the following:

	September 30 2024		December 31 2023
In thousands	September 30 2024		December 31 2023
Machinery, fixtures and equipment	$	3,181	$	3,177
Leaseholds and improvements		23		23
		3,204		3,200
Less accumulated depreciation		1,618		1,422
Net property, plant and equipment	$	1,586	$	1,778

The Company’s net property, plant and equipment was pledged as collateral under various financing agreements.

Depreciation expense for property, plant and equipment for the nine months ended September 30, 2024 and 2023 was $196,000 and $192,000, respectively. Depreciation expense for property, plant and equipment for the three months ended September 30, 2024 and 2023 was $65,000 and $67,000, respectively.

Note 7 – Long-Term Debt

Long-term debt consists of the following:

In thousands	September 30 2024		December 31 2023
8¼% Limited convertible senior subordinated notes due 2012	$	302	$	302
9½% Subordinated debentures due 2012		220		220
Revolving credit line – related party		2,247		2,247
Term loans – related party		1,000		1,000
Term loans		536		542
Total debt		4,305		4,311
Less portion due within one year		3,776		3,776
Net long-term debt	$	529	$	535

On September 16, 2019, the Company entered into a loan agreement (the “Loan Agreement”) with MidCap. On June 3, 2020, March 23, 2021 and May 31, 2021, the Company and MidCap entered into modification agreements to the Loan Agreement. On July 30, 2021, MidCap assigned the loan to Unilumin. On March 20, 2023, the Company and Unilumin entered into a modification agreement to the Loan Agreement effective December 31, 2022. The Loan Agreement matured on December 31, 2023, as such the Company is currently in default. The Loan Agreement allowed the Company to borrow up to an aggregate of $2.2 million at an interest rate of the Prime Rate as published in the Wall Street Journal plus 4.75%, capped at 9.50% as of May 1, 2024 (9.50% at September 30, 2024) on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. As of September 30, 2024, the balance outstanding under the Loan Agreement was $2.2 million. As of September 30, 2024 and December 31, 2023, the Company had accrued $745,000 and $557,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. The Loan Agreement is secured by substantially all of the Company’s assets.

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The Company entered into a loan note (the “Loan Note”) with the SBA (“Lender”) as lender under their Economic Injury Disaster Loan (“EIDL”) program, dated as of December 10, 2021. Under the Loan Note, the Company borrowed $500,000 from Lender under the EIDL Program. As of September 30, 2024, $500,000 was outstanding. The loan matures on December 10, 2051 and carries an interest rate of 3.75%. As of September 30, 2024 and December 31, 2023, the Company had accrued $42,000 and $38,000, respectively, of interest related to the Loan Note, which is included in Accrued liabilities in the Consolidated Balance Sheets.

The Company has a $500,000 loan from Carlisle Investments Inc. (“Carlisle”) at a fixed interest rate of 12.00%, which matured on April 27, 2019 with a bullet payment of all principal due at such time (the “Carlisle Agreement”). Interest is payable monthly. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020, and has not made any such demands as of the date of this filing. As of September 30, 2024, the entire amount was outstanding and is included in current portion of long-term debt in the Consolidated Balance Sheets. As of September 30, 2024 and December 31, 2023, the Company had accrued $405,000 and $360,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Marco Elser, a director of the Company, exercises voting and dispositive power as investment manager of Carlisle.

The Company has an additional $500,000 loan from Carlisle at a fixed interest rate of 12.00%, which matured on December 10, 2017 with a bullet payment of all principal due at such time (the “Second Carlisle Agreement”). Interest is payable monthly. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020, and has not made any such demands as of the date of this filing. As of September 30, 2024, the entire amount was outstanding and is included in current portion of long-term debt Consolidated Balance Sheets. As of September 30, 2024 and December 31, 2023, the Company had accrued $405,000 and $360,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Under the Second Carlisle Agreement, the Company granted a security interest to Carlisle in accounts receivable, materials and intangibles relating to a certain purchase order for equipment issued in April 2017.

As of September 30, 2024 and December 31, 2023, the Company had outstanding $302,000 of Notes. The Notes matured as of March 1, 2012 and are currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $376,000 and $357,000, respectively, of interest related to the Notes, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Notes outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.

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As of September 30, 2024 and December 31, 2023, the Company had outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $310,000 and $294,000, respectively, of interest related to the Debentures, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.

Note 8 – Pension Plan

As of December 31, 2003, the benefit service under the pension plan had been frozen and, accordingly, there is no service cost. As of April 30, 2009, the compensation increments had been frozen and, accordingly, no additional benefits are being accrued under the pension plan.

The following table presents the components of net periodic pension cost:

	Three months ended September 30				Nine months ended September 30
In thousands	2024		2023		2024		2023
Interest cost	$	129	$	134	$	387	$	402
Expected return on plan assets		(155)		(145)		(463)		(436)
Amortization of net actuarial loss		76		73		226		221
Net periodic pension expense	$	50	$	62	$	150	$	187

As of September 30, 2024 and December 31, 2023, the Company had recorded a current pension liability of $1.2 million and $840,000, respectively, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. As of September 30, 2024 and December 31, 2023, the Company had recorded a long-term pension liability of $2.1 million and $2.2 million, respectively, which is included in deferred pension liability and other in the Condensed Consolidated Balance Sheets. The minimum required pension plan contribution for 2024 is $840,000, none of which has been paid yet.

Note 9 – Leases

The Company leases administrative and manufacturing facilities through operating lease agreements. The Company has no finance leases as of September 30, 2024. Our leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common area or other maintenance costs). The facility leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion, therefore, the renewals to extend the lease terms are not included in our right of use (“ROU”) assets or lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and, when they are reasonably certain of exercise, we include the renewal period in our lease term.

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Operating leases result in the recognition of ROU assets and lease liabilities on the Condensed Consolidated Balance Sheets. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate at the commencement date to determine the present value of lease payments. Most real estate leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. The primary leases we enter into with initial terms of 12 months or less are for equipment.

Supplemental information regarding leases:

In thousands, unless otherwise noted	September 30 2024
Balance Sheet:
ROU assets	$	1,694
Current lease liabilities – operating		391
Non-current lease liabilities - operating		1,345
Total lease liabilities		1,736
Weighted average remaining lease term (years)		3.6
Weighted average discount rate		10.5%
Future minimum lease payments:
Remainder of 2024	$	137
2025		560
2026		577
2027		452
2028		414
Thereafter		-
Total		2,140
Less: Imputed interest		404
Total lease liabilities		1,736
Less: Current lease liabilities		391
Long-term lease liabilities	$	1,345

Supplemental cash flow information regarding leases:

	For the three months ended		For the nine months ended
In thousands	September 30, 2024		September 30, 2024
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	136	$	408
Non-cash activity:
ROU assets obtained in exchange for lease liabilities		-		-

Total operating lease expense was $420,000 and $355,000 for the nine months ended September 30, 2024 and 2023, respectively. Total operating lease expense was $140,000 and $118,000 for the three months ended September 30, 2024 and 2023, respectively. There was no short-term lease expense for the nine months ended September 30, 2024 and 2023. There was no short-term lease expense for the three months ended September 30, 2024 and 2023.

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Note 10 – Stockholders’ Deficit and Loss Per Share

The following table presents the calculation of loss per share for the three and nine months ended September 30, 2024 and 2023:

	Three months ended September 30				Nine months ended September 30
In thousands, except per share data	2024		2023		2024		2023
Numerator:
Net loss, as reported	$	(950)	$	(854)	$	(3,077)	$	(2,587)
Denominator:
Weighted average shares outstanding – basic and diluted		13,496		13,496		13,496		13,478
Loss per share – basic and diluted	$	(0.07)	$	(0.06)	$	(0.23)	$	(0.19)

Basic loss per common share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted loss per common share is computed by dividing net loss attributable to common shares, by the weighted average number of common shares outstanding, adjusted for shares that would be assumed outstanding after warrants and stock options vested under the treasury stock method.

As of September 30, 2024 and 2023, the Company excluded the effects of the outstanding stock options to purchase 280,000 shares in the calculation of diluted loss per share since their inclusion would have been anti-dilutive. The Company had other warrants to purchase 1.1 million and 1.6 million shares of Common Stock outstanding as of September 30, 2024 and 2023, respectively, which were excluded from the calculation of diluted loss per share because their exercise price was greater than the average stock price for the period and their inclusion would have been anti-dilutive.

A summary of the status of the Company’s stock options as of September 30, 2024 and the changes during the nine months then ended is presented below:

	Number of Options	Weighted Average Exercise Price		Weighted average remaining contractual life (in years)	Average intrinsic value
Outstanding at December 31, 2023	280,000	$	0.40	2.3	$	0.19
Granted	-		-
Expired	-		-		$	0.19
Outstanding at September 30, 2024	280,000	$	0.40	1.5	$	0.19
Exercisable at the end of the period	280,000	$	0.40	1.5	$	0.19

There was no equity based compensation for the three or nine months ended September 30, 2024. Equity based compensation was $38,000 for the nine months ended September 30, 2023. There was no equity based compensation for the three months ended September 30, 2023. There is no more unrecognized equity based compensation cost related to unvested stock options as of September 30, 2024.

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Note 11 – Contingencies

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.

Note 12 – Related Party Transactions

The Company has the following related party transactions:

As of September 30, 2024, Unilumin owns and beneficially owns 51.8% of the Company’s Common Stock. Naibin (Robin) Tang, Xe (Breeze) He and Yantao Yu, each directors of the Company, are each directors and/or officers of Unilumin. Mr. Tang and Mr. Yu are both executive officers of the Company. Mr. Tang is compensated directly from Unilumin. Mr. Yu receives per annum compensation of $26,000 from the Company and also continues to receive some compensation directly from Unilumin. The Company purchased $1.5 million and $2.7 million of product from Unilumin in the nine months ended September 30, 2024 and 2023, respectively. The Company purchased $772,000 and $1.7 million of product from Unilumin in the three months ended September 30, 2024 and 2023, respectively. Beginning January 1, 2023, the Company has accrued interest payable to Unilumin based on the Company’s accounts payable to Unilumin. The total amount payable by the Company to Unilumin, including accounts payable, accrued interest and long-term debt, was $11.5 million and $10.0 million as of September 30, 2024 and December 31, 2023, respectively. In connection with the Unilumin Guarantee in the Contract Manufacturing Agreement with Craftsmen Industries Inc. in June 2020, the Company issued Warrants to purchase 500,000 shares of the Company’s Common Stock to Unilumin USA at an exercise price of $1.00 per share (see Note 10), which Warrants expired in June 2024. Through July 2024, the Company occupied space at no cost in a New York office that was leased by Unilumin.

Marco Elser, a director of the Company, exercises voting and dispositive power as investment manager of Carlisle. The total amount payable by the Company to Carlisle, including accrued interest and long-term debt, was $1.8 million and $1.7 million as of September 30, 2024 and December 31, 2023, respectively.

Note 13 – Business Segment Data

Operating segments are based on the Company’s business components for which separate financial information is available and are evaluated regularly by the Company’s chief operating decision makers in deciding how to allocate resources and in assessing performance of the business.

The Company evaluates segment performance and allocates resources based upon operating income (loss). The Company’s operations are managed in two reportable business segments: Digital product sales and Digital product lease and maintenance. Both design and produce large-scale, multi-color, real-time digital displays. Both operating segments are conducted on a global basis, primarily through operations in the United States. The Company also has operations in Canada. The Digital product sales segment sells equipment and the Digital product lease and maintenance segment leases and maintains equipment. Corporate general and administrative items relate to costs that are not directly identifiable with a segment. There are no intersegment sales.

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Foreign revenues represented less than 10% of the Company’s revenues in the nine months ended September 30, 2024 and 2023. The Company’s foreign operation does not manufacture its own equipment; the domestic operation provides the equipment that the foreign operation leases or sells. The foreign operation operates similarly to the domestic operation and has similar profit margins. Foreign assets are immaterial.

Information about the Company’s operations in its two business segments for the three and nine months ended September 30, 2024 and 2023 is as follows:

	Three months ended September 30				Nine months ended September 30
In thousands	2024		2023		2024		2023
Revenues:
Digital product sales	$	2,491	$	3,933	$	8,193	$	10,821
Digital product lease and maintenance		174		209		559		656
Total revenues	$	2,665	$	4,142	$	8,752	$	11,477
Operating (loss) income:
Digital product sales	$	(324)	$	(357)	$	(1,349)	$	(839)
Digital product lease and maintenance		86		98		272		330
Corporate general and administrative expenses		(467)		(403)		(1,429)		(1,352)
Total operating loss		(705)		(662)		(2,506)		(1,861)
Interest expense, net		(161)		(183)		(450)		(521)
(Loss) gain on foreign currency remeasurement		(28)		60		48		1
Pension expense		(50)		(62)		(150)		(187)
Loss before income taxes		(944)		(847)		(3,058)		(2,568)
Income tax expense		(6)		(7)		(19)		(19)
Net loss	$	(950)		(854)	$	(3,077)		(2,587)

	September 30 2024		December 31 2023
	September 30 2024		December 31 2023
Assets
Digital product sales	$	7,455	$	7,502
Digital product lease and maintenance		414		643
Total identifiable assets		7,869		8,145
General corporate		76		185
Total assets	$	7,945	$	8,330

Note 14 – Subsequent Events

The Company has evaluated events and transactions subsequent to September 30, 2024 and through the date these Condensed Consolidated Financial Statements were included in this Form 10-Q and filed with the SEC.

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Item 2. 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 Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience along with other assumptions that we believe are reasonable in formulating our bases for making judgements regarding the carrying amounts of assets and liabilities that are not readily apparent elsewhere. Estimates are adjusted as new information becomes available. Actual results could differ from those estimates. Our critical accounting estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on April 1, 2024.

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Results of Operations

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following table presents our Statements of Operations data, expressed as a percentage of revenue for the nine months ended September 30, 2024 and 2023:

In thousands, except percentages	Nine months ended September 30
In thousands, except percentages	2024				2023
Revenues:
Digital product sales	$	8,193	93.6	%	$	10,821	94.3	%
Digital product lease and maintenance		559	6.4	%		656	5.7	%
Total revenues		8,752	100.0	%		11,477	100.0	%
Cost of revenues:
Cost of digital product sales		7,825	89.4	%		10,118	88.1	%
Cost of digital product lease and maintenance		287	3.3	%		331	2.9	%
Total cost of revenues		8,112	92.7	%		10,449	91.0	%
Gross profit		640	7.3	%		1,028	9.0	%
General and administrative expenses		(3,146)	(35.9)	%		(2,889)	(25.2)	%
Operating loss		(2,506)	(28.6)	%		(1,861)	(16.2)	%
Interest expense, net		(450)	(5.1)	%		(521)	(4.5)	%
Gain on foreign currency remeasurement		48	0.5	%		1	-	%
Pension expense		(150)	(1.7)	%		(187)	(1.6)	%
Loss before income taxes		(3,058)	(34.9)	%		(2,568)	(22.3)	%
Income tax expense		(19)	(0.3)	%		(19)	(0.2)	%
Net loss	$	(3,077)	(35.2)	%	$	(2,587)	(22.5)	%

Total revenues for the nine months ended September 30, 2024 decreased $2.7 million or 23.7% to $8.8 million from $11.5 million for the nine months ended September 30, 2023, primarily due to a decrease in Digital product sales.

Digital product sales revenues decreased $2.6 million or 24.3% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to the non-recurrence of a couple large sales that were delivered in the nine months ended September 30, 2023.

Digital product lease and maintenance revenues decreased $97,000 or 14.8% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to the continued expected revenue decline in the older outdoor display equipment rental 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 nine months ended September 30, 2024 increased $645,000 to $2.5 million from $1.9 million for the nine months ended September 30, 2023, principally due to the decrease in revenues and an increase in general and administrative expenses.

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Digital product sales operating loss increased $510,000 to $1.4 million for the nine months ended September 30, 2024 compared to $839,000 for the nine months ended September 30, 2023, primarily due to the decrease in revenues and an increase in general and administrative expenses. The cost of Digital product sales decreased $2.3 million or 22.7%, primarily due to the decrease in revenues. The cost of Digital product sales represented 95.5% of related revenues in 2024 compared to 93.5% in 2023. This increase as a percentage of revenues is primarily due to the loss of some manufacturing efficiencies due to the decrease in revenues. General and administrative expenses for Digital product sales increased $175,000 or 11.3%, primarily due to increases in employees’ expenses, marketing expenses and the accrual for credit losses, partially offset by decreases in consulting expenses and supplies.

Digital product lease and maintenance operating income decreased $58,000 or 17.6% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily as a result of the decrease in revenues. The cost of Digital product lease and maintenance decreased $44,000 or 13.3%, primarily due to a decrease in depreciation expense. The cost of Digital product lease and maintenance revenues represented 51.3% of related revenues in 2024 compared to 50.5% in 2023. 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 increased $5,000, primarily due to an increase in the accrual for credit losses.

Corporate general and administrative expenses increased $77,000 or 5.7% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to increases in audit and insurance expenses, partially offset by a decrease in employees’ expenses.

Net interest expense decreased $71,000 or 13.6% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to a decrease in interest rates.

The effective tax rate for the nine months ended September 30, 2024 and 2023 was 0.6% and 0.7%, respectively. Both the 2024 and 2023 tax rates are being affected by the valuation allowance on the Company’s deferred tax assets as a result of reporting pre-tax losses.

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Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

The following table presents our Statements of Operations data, expressed as a percentage of revenue for the three months ended September 30, 2024 and 2023:

In thousands, except percentages	Three months ended September 30
In thousands, except percentages	2024				2023
Revenues:
Digital product sales	$	2,491	93.5	%	$	3,933	95.0	%
Digital product lease and maintenance		174	6.5	%		209	5.0	%
Total revenues		2,665	100.0	%		4,142	100.0	%
Cost of revenues:
Cost of digital product sales		2,326	87.3	%		3,698	89.3	%
Cost of digital product lease and maintenance		88	3.3	%		111	2.7	%
Total cost of revenues		2,414	90.6	%		3,809	92.0	%
Gross income		251	9.4	%		333	8.0	%
General and administrative expenses		(956)	(35.9)	%		(995)	(24.0)	%
Operating loss		(705)	(26.5)	%		(662)	(16.0)	%
Interest expense, net		(161)	(6.0)	%		(183)	(4.4)	%
(Loss) gain on foreign currency remeasurement		(28)	(1.1)	%		60	1.5	%
Pension expense		(50)	(1.9)	%		(62)	(1.5)	%
Loss before income taxes		(944)	(35.4)	%		(847)	(20.4)	%
Income tax expense		(6)	(0.2)	%		(7)	(0.2)	%
Net loss	$	(950)	(35.6)	%	$	(854)	(20.6)	%

Total revenues for the three months ended September 30, 2024 decreased $1.4 million or 35.7% to $2.7 million from $4.1 million for the three months ended September 30, 2023, primarily due to a decrease in Digital product sales.

Digital product sales revenues decreased $1.4 million or 36.7% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to decreased sales from the sports sector.

Digital product lease and maintenance revenues decreased $35,000 or 16.7% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to the continued expected revenue decline in the older outdoor display equipment rental 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 three months ended September 30, 2024 increased $43,000 or 6.5% to $705,000 from $662,000 for the three months ended September 30, 2023, principally due to the decrease in revenues, partially offset by a decrease in general and administrative expenses.

Digital product sales operating loss decreased $33,000 or 9.2% to $324,000 for the three months ended September 30, 2024 compared to $357,000 for the three months ended September 30, 2023, primarily due to a decrease in general and administrative expenses, partially offset by the decrease in revenues. The cost of Digital product sales decreased $1.4 million or 37.1%, primarily due to the decrease in revenue. The cost of Digital product sales represented 93.4% of related revenues in 2024 compared to 94.0% in 2023. This decrease as a percentage of revenues is primarily due to the increase of some cost saving measures that we have implemented, partially offset by the decrease in revenues. General and administrative expenses for Digital product sales decreased $103,000 or 17.4%, primarily due to decreases in consulting expenses and the accrual for credit losses, partially offset by an increase in employees’ expenses.

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Digital product lease and maintenance operating income decreased $12,000 or 12.2% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily as a result of the decrease in revenues. The cost of Digital product lease and maintenance remained level, primarily due to a decrease in depreciation expense. The cost of Digital product lease and maintenance revenues represented 50.6% of related revenues in 2024 compared to 53.1% in 2023. 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 remained level.

Corporate general and administrative expenses increased $64,000 or 15.9% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to increases in audit and employees’ expenses.

Net interest expense decreased $22,000 or 12.0% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a decrease in interest rates.

The effective tax rate for the three months ended September 30, 2024 and 2023 was 0.6% and 0.8%, respectively. Both the 2024 and 2023 tax rates are being affected by 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 significant recurring losses and continues to have a significant working capital deficiency including being in default on several debt obligations. The Company recorded a loss of $3.1 million in the nine months ended September 30, 2024. The Company had working capital deficiencies of $17.0 million and $13.9 million as of September 30, 2024 and December 31, 2023, respectively. The increase in the working capital deficiency was primarily affected by increases in accounts payable, accrued liabilities and customer deposits, as well as decreases in inventories, receivables and cash. These changes were partially offset by an increase in prepaids and other assets.

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, 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, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn delayed certain deliveries to our customers.

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There is substantial doubt as to whether we will have adequate liquidity, including access to the debt and equity capital markets, to continue as a going concern over the next 12 months from the date of issuance of this Form 10-Q. The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements and fund potential new opportunities.

The Company used cash of $99,000 from operating activities and generated cash of $437,000 from operating activities for the nine months ended September 30, 2024 and 2023, respectively. The Company has implemented several initiatives to improve operational results and cash flows over future periods, including reducing head count, 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, cash equivalents and restricted cash decreased $109,000 in the nine months ended September 30, 2024 to $276,000 at September 30, 2024 from $385,000 at December 31, 2023. The decrease is primarily attributable to cash used in operating activities of $99,000, purchases of equipment of $4,000 and payments of long-term debt of $5,000. 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 current and long-term debt agreements, pension plan minimum required contributions, employment agreement payments and rent 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 2024 until the underlying debts mature. Interest rates had increased in 2023 but have decreased in 2024 so the amounts the Company pays for interest may need to be adjusted based on future interest rate changes.

The following table summarizes the Company’s fixed cash obligations as of September 30, 2024 for the remainder of 2024 and over the next four fiscal years:

In thousands	Remainder of 2024		2025		2026		2027		2028
Long-term debt, including interest	$	5,564	$	42	$	42	$	42	$	39
Pension plan payments		840		417		357		329		301
Estimated warranty liability		22		73		64		53		28
Operating lease payments		137		560		577		452		414
Total	$	6,563	$	1,092	$	1,040	$	876	$	782

As of September 30, 2024, the Company had outstanding $302,000 of Notes which matured as of March 1, 2012. The Company also had outstanding $220,000 of Debentures which matured on December 1, 2012. The Company continues to consider future exchanges of the Notes and Debentures, but has no agreements, commitments or understandings with respect to any further such exchanges.

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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.

For a further description of the Company’s long-term debt, see Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt.

Pension Plan Contributions

The expected minimum required pension plan contribution for 2024 is $840,000, of which no contributions have been made by the Company as of the date of this filing. See Note 8 to the Condensed Consolidated Financial Statements – Pension Plan for further details.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

The Company may, from time to time, provide estimates as to future performance. These forward-looking statements will be estimates and may or may not be realized by the Company. The Company undertakes no duty to update such forward-looking statements. Many factors could cause actual results to differ from these forward-looking statements, including loss of market share through competition, introduction of competing products by others, pressure on prices from competition or purchasers of the Company’s products, interest rate and foreign exchange fluctuations, the impact of inflation, terrorist acts and war.

Item 3. 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 7 to the Condensed Consolidated Financial Statements – Long-Term Debt. Every 1-percentage-point change in interest rates would result in an annual interest expense fluctuation of approximately $22,000. In addition, the Company is exposed to foreign currency exchange rate risk mainly as a result of its investment in its Canadian subsidiary. A 10% change in the Canadian dollar relative to the U.S. dollar would result in a currency remeasurement expense fluctuation of approximately $242,000, 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 September 30, 2024.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we have 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. 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 SEC and that such information is accumulated and communicated to our management (including our Chief Executive Officer and our Chief Accounting Officer) to allow timely decisions regarding required disclosures. Based on such evaluation, our Chief Executive Officer and Chief Accounting Officer have concluded that these disclosure controls are effective as of September 30, 2024.

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 quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II – Other Information

Item 1. Legal Proceedings

Item 1A. Risk Factors

The Company is subject to a number of risks including general business and financial risk factors. Any or all of such factors could have a material adverse effect on the business, financial condition or results of operations of the Company. You should carefully consider the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company had outstanding $2.2 million under the Loan Agreement. The Loan Agreement matured on December 31, 2023, so the Company is currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $745,000 and $557,000, respectively, of interest related to the Loan Agreement, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. The Loan Agreement is secured by substantially all of the Company’s assets.

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As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company had outstanding a $500,000 loan from Carlisle Investments Inc., which matured on April 27, 2019, so the Company is currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $405,000 and $360,000, respectively, of interest related to the Carlisle Loan, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets.

As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company had outstanding an additional $500,000 loan from Carlisle, which matured on December 10, 2017, so the Company is currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $405,000 and $360,000, respectively, of interest related to the Second Carlisle Loan, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. Under the Second Carlisle Agreement, the Company granted a security interest to Carlisle in accounts receivable, materials and intangibles relating to a certain purchase order for equipment issued in April 2017.

As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company had outstanding $302,000 of Notes which are no longer convertible into common shares. The Notes matured as of March 1, 2012 and are currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $376,000 and $357,000, respectively, of interest related to the Notes, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets.

As disclosed in Note 7 to the Condensed Consolidated Financial Statements – Long-Term Debt, the Company has outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of September 30, 2024 and December 31, 2023, the Company had accrued $310,000 and $294,000, respectively, of interest related to the Debentures, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

None.

Item 6. Exhibits

31.1 Certification of Naibin (Robin) Tang, 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 Naibin (Robin) Tang, 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 financial information from the Company’s Form 10-Q for the quarterly period ended September 30, 2024 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Deficit, and (v) Notes to Condensed Consolidated Financial Statements.

104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)

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SIGNATURES

Pursuant to the requirements 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
	(Registrant)

	by	/s/ Naibin (Robin) Tang
		Naibin (Robin) Tang
		Chief Executive Officer

	by	/s/ Todd Dupee
		Todd Dupee
		Senior Vice President and Chief Accounting Officer

Date: November 14, 2024