2014

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
provided by (used in) operating activities:








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.



www.singingmachine.com

SOURCE The Singing Machine Company, Inc.



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