Singing Machine Announces 1st Quarter Earnings Release
COCONUT CREEK, Fla., Aug. 23 /PRNewswire-FirstCall/ -- The Singing Machine Company, Inc. ("Singing Machine" or the "Company") (OTC Bulletin Board: SMDM) announces the results for its first fiscal quarter ended June 30, 2010.
The Company announced net sales of approximately $2.09 million in the first quarter as compared with approximately $814,000 over the same period last year (increase of approximately 257%). The substantial increase to first quarter sales is primarily due to increasing year-round demand from the Company's largest customer and earlier commitments from all customers, resulting in earlier shipments. The Company also reported gross margin of 27.1%, a significant improvement from -35.1% gross margin reported in the same period last year. This improvement to gross margin is related to improved sell-through at the retail-level. Due to exceptional sell-through success with all customers at the end of last year, the Company was not forced to give markdown concessions or take one-time inventory write-downs.
Selling expenses and general & administrative expenses have also decreased significantly as compared with the same quarter ended June 30, 2009. Selling expenses, as a percentage of net sales, have been reduced to 11.9%, down from 37.4% in the same period last year. G&A expenses were reduced to approximately $675,000 as compared with approximately $860,000 in the first quarter last year (reduction of approximately 21.5%). Both reductions can be attributed to more efficient operations, improved freight programs with all major customers, staff reductions, and general cost cutting. Due to these improvements, the Company reported a net loss of approximately $479,000 for the quarter ended June 30, 2010 as compared with a net loss of approximately $1,553,000 in the same period last year.
"All things considered, we've gotten out of the gate to a strong start," commented Gary Atkinson, Interim CEO. "Since the end of the last fiscal year, the Company has been working with tremendous focus to cut costs, improve freight efficiency, and improve gross margin. This first quarter gives a glimpse into the work we've been doing and the strides we've made so far. While we still reported a net loss, historically, due to the high seasonality of our business the Company has always had a slow first quarter." Added Atkinson, "There are still many more challenges to face and obstacles to overcome but I'm happy to say the Company appears to be on the right track. In addition to our cost-cutting efforts we are also progressing on a new line of product and features for next year which will be consistent with the Company's long history of karaoke innovation."
About The Singing Machine
Incorporated in 1982, The Singing Machine Company develops and distributes a full line of consumer-oriented karaoke machines and music under The Singing Machine™, SMDigital™, SoundX™, and Sound X Kids™ and other brand names. The first to provide karaoke systems for home entertainment in the United States, The Singing Machine sells its products in North America, Europe and Australia. The Singing Machine is also the first to offer digital music downloads for play on home karaoke machines. See www.singingmachine.com for more details.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management and include, but are not limited to statements about our financial statements for the fiscal year ended March 31, 2010. You should review our risk factors in our SEC filings which are incorporated herein by reference. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
(Financial statements attached)
The Singing Machine Company, Inc. and Subsidiaries |
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
June 30, 2010 |
March 31, 2010 |
|||||
(Unaudited) |
(Audited) |
|||||
Assets |
||||||
Current Assets |
||||||
Cash and cash equivalents |
$ |
282,060 |
$ |
865,777 |
||
Accounts receivable, net of allowances of $207,557 and |
||||||
$185,407, respectively |
1,444,981 |
983,791 |
||||
Due from factor |
147,427 |
14,987 |
||||
Inventories, net |
2,824,212 |
2,804,848 |
||||
Prepaid expenses and other current assets |
98,677 |
118,465 |
||||
Total Current Assets |
4,797,357 |
4,787,868 |
||||
Property and Equipment, net |
614,915 |
736,966 |
||||
Other Non-Current Assets |
164,644 |
164,644 |
||||
Total Assets |
$ |
5,576,916 |
$ |
5,689,478 |
||
Liabilities and Shareholders' Deficit |
||||||
Current Liabilities |
||||||
Accounts payable |
$ |
1,663,443 |
$ |
895,713 |
||
Due to related parties - net |
3,523,895 |
3,033,801 |
||||
Accrued expenses |
192,239 |
227,257 |
||||
Short-term loan - bank |
280,533 |
1,091,828 |
||||
Current portion of long-term financing obligation |
18,186 |
18,186 |
||||
Customer credits on account |
703,353 |
742,009 |
||||
Deferred gross profit on estimated returns |
120,412 |
123,708 |
||||
Total Current Liabilities |
6,502,061 |
6,132,502 |
||||
Long-term financing obligation, less current portion |
1,516 |
4,547 |
||||
Total Liabilities |
6,503,577 |
6,137,049 |
||||
Shareholders' Deficit |
||||||
Preferred stock, $1.00 par value; 1,000,000 shares |
||||||
authorized, no shares issued and outstanding |
- |
- |
||||
Common stock, Class A, $.01 par value; 100,000 |
||||||
shares authorized; no shares issued and outstanding |
- |
- |
||||
Common stock, $0.01 par value; 100,000,000 shares authorized; |
||||||
37,585,794 and 37,585,794 shares issued and outstanding |
375,857 |
375,857 |
||||
Additional paid-in capital |
19,099,096 |
19,098,726 |
||||
Accumulated deficit |
(20,401,614) |
(19,922,154) |
||||
Total Shareholders' Deficit |
(926,661) |
(447,571) |
||||
Total Liabilities and Shareholders' Deficit |
$ |
5,576,916 |
$ |
5,689,478 |
||
The accompanying notes are an integral part of these consolidated financial statements. |
||||||
The Singing Machine Company, Inc. and Subsidiaries |
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||
(Unaudited) |
|||||||||
For Three Months Ended |
|||||||||
June 30, 2010 |
June 30, 2009 |
||||||||
Net Sales |
$ 2,091,627 |
$ 814,008 |
|||||||
Cost of Goods Sold |
1,515,734 |
1,099,630 |
|||||||
Gross (Loss) Profit |
575,893 |
(285,622) |
|||||||
Operating Expenses |
|||||||||
Selling expenses |
249,089 |
304,141 |
|||||||
General and administrative expenses |
675,576 |
860,254 |
|||||||
Depreciation and amortization |
122,052 |
99,752 |
|||||||
Total Operating Expenses |
1,046,717 |
1,264,147 |
|||||||
Loss from Operations |
(470,824) |
(1,549,769) |
|||||||
Other Expenses |
|||||||||
Interest expense |
(8,636) |
(3,268) |
|||||||
Net Loss |
$ (479,460) |
$ (1,553,037) |
|||||||
Loss per Common Share |
|||||||||
Basic and Diluted |
$ (0.01) |
$ (0.04) |
|||||||
Weighted Average Common and Common |
|||||||||
Equivalent Shares: |
|||||||||
Basic and Diluted |
37,585,794 |
37,449,432 |
|||||||
The accompanying notes are an integral part of these consolidated financial statements. |
|||||||||
The Singing Machine Company, Inc. and Subsidiaries |
|||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
(Unaudited) |
|||||||||
For Three Months Ended |
|||||||||
June 30, 2010 |
June 30, 2009 |
||||||||
Cash flows from operating activities |
|||||||||
Net Loss |
$ |
(479,460) |
$ |
(1,553,037) |
|||||
Adjustments to reconcile net loss to net cash and cash equivalents |
|||||||||
Depreciation and amortization |
122,052 |
99,751 |
|||||||
Change in allowance for bad debts |
22,150 |
65,313 |
|||||||
Change due to lower of cost or market write-off |
- |
(181,142) |
|||||||
Stock compensation |
370 |
3,939 |
|||||||
Deferred gross profit on estimated sales returns |
(3,296) |
(214,914) |
|||||||
Changes in assets and liabilities: |
|||||||||
(Increase) Decrease in: |
|||||||||
Accounts receivable |
50,590 |
950,861 |
|||||||
Inventories |
(19,364) |
698,890 |
|||||||
Prepaid expenses and other current assets |
19,788 |
105,739 |
|||||||
Increase (Decrease) in: |
|||||||||
Accounts payable |
767,730 |
(1,236,244) |
|||||||
Accounts payable - related party |
264,341 |
(878,822) |
|||||||
Accrued expenses |
(35,019) |
(74,028) |
|||||||
Customer credits on account |
(38,656) |
735,545 |
|||||||
Net cash provided by (used in) operating activities |
671,226 |
(1,478,149) |
|||||||
Cash flows from investing activities |
|||||||||
Purchase of property and equipment |
- |
(35,377) |
|||||||
Net cash used in investing activities |
- |
(35,377) |
|||||||
Cash flows from financing activities |
|||||||||
(Retention by)borrowings from factor, net |
(132,440) |
69,850 |
|||||||
Net payments pursuant to factoring facility |
(533,929) |
(635,731) |
|||||||
Net (repayment of) proceeds from short-term bank loan |
(811,295) |
1,742,140 |
|||||||
Payments on long-term financing obligation |
(3,031) |
(3,031) |
|||||||
Net loan proceeds from related parties |
225,752 |
- |
|||||||
Net cash (used in) provided by financing activities |
(1,254,943) |
1,173,228 |
|||||||
Change in cash and cash equivalents |
(583,717) |
(340,298) |
|||||||
Cash and cash equivalents at beginning of period |
865,777 |
957,163 |
|||||||
Cash and cash equivalents at end of period |
$ |
282,060 |
$ |
616,865 |
|||||
Supplemental Disclosures of Cash Flow Information: |
|||||||||
Cash paid for Interest |
$ |
8,636 |
$ |
3,268 |
|||||
The accompanying notes are an integral part of these consolidated financial statements. |
|||||||||
SOURCE The Singing Machine Company, Inc.
Share this article