2014

Singing Machine Announces 1st Quarter Earnings Release

COCONUT CREEK, Fla., Aug. 9, 2011 /PRNewswire/ -- The Singing Machine Company, Inc.  ("Singing Machine" or the "Company") (OTCBB: SMDM) announces the results for its first fiscal quarter ended June 30, 2011.

The Company announced net sales of approximately $1.78 million in the first quarter as compared with approximately $2.09 million over the same period last year (decrease of approximately 14.8%). The decrease in net sales is primarily a result of the Company taking a risk-adverse approach to carrying inventory in the first quarter. As a result of lack of inventory, the Company had to cancel some orders. The Company reported gross margin of approximately 24% as compared to approximately 27.5% in the same period of the prior year. This decline in gross margin is attributable to the Company offering aggressive pricing to European customers to grow its international distribution.

During the first quarter, selling expenses increased by approximately 7.6% as compared to the same period last year as the Company reached a cash settlement with MGA Entertainment, Inc. regarding their respective lawsuits against each other involving the "Bratz" license. Despite this, the Company reported Total Operating Expenses of approximately $936,000, a decline of approximately $100,000 as compared to the same period last year. As a result of reduced sales, the MGA settlement, and lower gross margin, the Company reported a net loss of approximately $500,000, a slight increase over last year's first quarter net loss of $470,000.

"Despite the slow first quarter, we feel confident about this fiscal-year," commented Gary Atkinson, Interim CEO.  "This year Singing Machine will be coming out with thirteen new items for the fall. Due to this large investment in new product, we will be able to offer a broad and diverse product line-up to our growing distribution channels." Atkinson added, "We believe we are well-positioned to grow our market share this year."

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 forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forwardlooking 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, 2011.  You should review our risk factors in our SEC filings which are incorporated herein by reference.  Such forwardlooking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forwardlooking 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, 2011


March 31, 2011




(Unaudited)


(Audited)

Assets

Current Assets






Cash and cash equivalents

$

755,682

$

674,712


Accounts receivable, net of allowances of $169,765 and      






  $175,804, respectively


851,747


1,205,209


Due from related party - Starlight Consumer Electronics USA, Inc.


119,431


73,348


Due from related party - Starlight Electronics Co., Ltd.


61,234


-


Inventories, net


2,976,674


3,016,945


Prepaid expenses and other current assets


40,705


59,310


          Total Current Assets


4,805,473


5,029,524







Property and Equipment, net


379,074


333,851

Other Non-Current Assets


164,678


164,678


         Total Assets

$

5,349,225

$

5,528,053







Liabilities and Shareholders' Deficit

Current Liabilities






Accounts payable

$

1,598,217

$

1,118,674


Due to related party - Starlight Marketing Development, Ltd.


2,011,470


2,063,213


Due to related party - Ram Light Management, Ltd.


1,683,247


1,683,247


Due to related party - Starlight R&D, Ltd.


431,373


431,373


Due to related party - Cosmo Communications USA, Inc.


237,994


217,493


Due to related party - Starlight Electronics Co., Ltd.


91,477


132,386


Due to related parties - Other Starlight Group Companies


9,534


88,249


Accrued expenses


247,702


256,535


Current portion of long-term financing obligation


-


4,547


Obligations to clients for returns and allowances


522,730


435,341


Warranty provisions


63,333


144,022


       Total Current Liabilities


6,897,077


6,575,080








         Total Liabilities


6,897,077


6,575,080







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;  






37,835,793 and 37,835,793 shares issued and outstanding, respectively


378,357


378,357


Additional paid-in capital


19,123,410


19,116,318


Accumulated deficit


(21,049,619)


(20,541,702)


       Total Shareholders' Deficit


(1,547,852)


(1,047,027)


       Total Liabilities and Shareholders' Deficit

$

5,349,225

$

5,528,053







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, 2011


June 30, 2010









Net Sales



$              1,788,046


$              2,091,627











Cost of Goods Sold


1,359,503


1,515,734











Gross Profit


428,543


575,893











Operating Expenses







Selling expenses


348,676


249,089



General and administrative expenses


555,612


675,576



Depreciation and amortization


32,078


122,052


Total Operating Expenses


936,366


1,046,717











Loss  from Operations


(507,823)


(470,824)











Other Expenses







Interest expense


(94)


(8,636)











Net Other (Expenses)


(94)


(8,636)











Loss before provision for income taxes


(507,917)


(479,460)











Provision for  income taxes


-


-











Net Loss




$                (507,917)


$                (479,460)











Loss per Common Share







Basic  and Diluted


$                     (0.01)


$                     (0.01)











Weighted Average Common and Common







Equivalent Shares:







Basic and Diluted


37,835,793


37,585,794











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, 2011


June 30, 2010




















Cash flows from operating activities







Net Loss

$

(507,917)

$

(479,460)



Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities:








Depreciation and amortization


32,078


122,052




Change in inventory reserve


1,004


-




Change in allowance for bad debts


(6,039)


22,150




Stock compensation


7,092


370




Warranty provisions


(80,690)


(3,296)



Changes in assets and liabilities:







 (Increase) Decrease in:








Accounts receivable


359,502


50,590




Inventories


39,267


(19,364)




Prepaid expenses and other current assets


18,605


19,788



 Increase (Decrease) in:








Accounts payable


479,543


767,730




Accounts payable - related party


(258,182)


264,341




Accrued expenses


(8,833)


(35,019)




Obligations to clients for returns and allowances


87,388


(38,656)





Net cash provided by operating activities


162,818


671,226


Cash flows from investing activities







Purchase of property and equipment


(77,301)


-





Net cash used in investing activities


(77,301)


-


Cash flows from financing activities







Retention by factor, net


-


(132,440)



Net payments pursuant to factoring facility


-


(533,929)



Net repayment of short-term bank loan


-


(811,295)



Payments on long-term financing obligation


(4,547)


(3,031)



Net loan proceeds from related parties


-


225,752





Net cash used in financing activities


(4,547)


(1,254,943)


Change in cash and cash equivalents


80,970


(583,717)











Cash and cash equivalents at beginning of period


674,712


865,777


Cash and cash equivalents at end of period

$

755,682

$

282,060











Supplemental Disclosures of Cash Flow Information:







Cash paid for Interest

$

94

$

8,636




















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




SOURCE The Singing Machine Company, Inc.



RELATED LINKS
http://www.singingmachine.com

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