Singing Machine Announces 1st Quarter Earnings Release

FT. LAUDERDALE, Fla., Aug. 19, 2013 /PRNewswire/ -- The Singing Machine Company, Inc.  ("Singing Machine" or the "Company") (OTCBB: SMDM) announces the results for its first fiscal quarter ended June 30, 2013.

The Company announced net sales of approximately $1.4 million in the first quarter which is slightly down from approximately $1.7 million reported for the same period last year. The reduction in net sales is attributable to retail inventory carryover from the preceding holiday season. G&A expenses grew by over $200,000 due mainly to reduced volume through the Company's 3rd party logistics division and increased marketing expenses related to the new Singing Machine Home project. Due to a slight decrease in gross margin and increased G&A expenses, the Company reported a larger 1st quarter loss of $541,000 as compared to a net loss of $480,000 in the same period last year.

Gary Atkinson, CEO, commented, "Despite our larger first quarter loss, we're confident we can continue the momentum generated from last fiscal year.  We've made investments this year on one-time development and marketing costs related to the Home project.  We're excited to show the world this new groundbreaking product later this year." Atkinson added, "We're also expanding our traditional karaoke product offerings and we will have many new and exciting karaoke items available this fall with our regular retailers. Additionally, we are introducing a new line of Bluetooth speakers under our SoundX brand which so far are receiving extremely positive feedback."

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, 2013.  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

CONDENSED CONSOLIDATED BALANCE SHEETS 






June 30, 2013


 March 31, 2013 




 (Unaudited) 


 (Audited) 

Assets

Current Assets






Cash 

$

270,788

$

1,652,996


Restricted cash


137,967


-


Accounts receivable, net of allowances of $189,143 and      






   $180,306, respectively


802,873


1,100,475


Due from Crestmark Bank


120,196


-


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


334,293


291,343


Due from related party - Starlight Electronics USA, Inc.


88,676


50,501


Due from related party - Cosmo Communications Canada, Ltd.


26,975


61,310


Inventories, net


4,316,779


4,123,407


Prepaid expenses and other current assets


174,058


84,441


Deferred tax asset, net


747,681


421,340


           Total Current Assets


7,020,286


7,785,813







Property and equipment, net


609,545


482,777

Other non-current assets


17,630


159,956

Deferred Tax Asset, net of current portion


1,198,119


1,198,119


          Total Assets

$

8,845,580

$

9,626,665







Liabilities and Shareholders' Equity 

Current Liabilities






Accounts payable

$

1,490,628

$

1,135,125


Due to related party - Starlight Marketing Development, Ltd., current portion


1,107,678


1,107,678


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


422,106


419,600


Due to related party - Cosmo Communications USA, Inc.


12,495


-


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


24,178


585,125


Due to related parties - Other Starlight Group Companies


3,534


3,534


Accrued expenses


674,265


686,012


Current portion of long-term capital lease


11,679


-


Obligations to clients for returns and allowances


382,815


376,289


Warranty provisions


134,270


215,471


        Total Current Liabilities


4,263,648


4,528,834







Long-term capital lease, net of current portion


22,813



Subordinated related party debt - Starlight Marketing Development, Ltd.,





net of current portion


816,753


816,753

Subordinated related party debt - Ram Light Management, Ltd.


1,683,247


1,683,247


          Total Liabilities


6,786,461


7,028,834







Shareholders' Equity 






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;   






 38,028,975 shares issued and outstanding


380,289


380,289


Additional paid-in capital


19,157,547


19,155,193


Accumulated deficit


(17,478,717)


(16,937,651)


        Total Shareholders' Equity 


2,059,119


2,597,831


        Total Liabilities and Shareholders' Equity 

$

8,845,580

$

9,626,665







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

 

The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

(Unaudited)



















For Three Months Ended





June 30, 2013


June 30, 2012















Net Sales


$         1,413,567


$         1,762,705








Cost of Goods Sold

1,112,143


1,318,627








Gross Profit

301,424


444,078








Operating Expenses





Selling expenses

280,774


248,648


General and administrative expenses

859,771


643,118


Depreciation

27,318


32,775

Total Operating Expenses

1,167,863


924,541








Loss from Operations

(866,439)


(480,463)








Other Expenses





Interest expense

(968)


-








Loss before income tax benefit

(867,407)


(480,463)








Income tax benefit

326,341


-








Net Loss 


$           (541,066)


$           (480,463)








Loss per Common Share





Basic and diluted

$                (0.01)


$                (0.01)








Weighted Average Common and Common 





Equivalent Shares:





Basic and diluted

38,028,975


37,960,794








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

 

The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)






For Three Months Ended






June 30, 2013


June 30, 2012

















Cash flows from operating activities






 Net Loss 

$

(541,066)

$

(480,463)


 Adjustments to reconcile net loss to net cash (used in) provided by  






 operating activities: 







   Depreciation 


27,318


32,775



   Change in inventory reserve 


47,551


(40,709)



   Change in allowance for bad debts 


8,837


2,143



   Disposal of property and equipment 


4,479


-



   Stock based compensation 


2,355


1,642



   Warranty provisions 


(81,201)


(158,279)



   Change in net deferred tax assets


(326,341)


-


    Changes in operating assets and liabilities: 







(Increase) Decrease in:







   Accounts receivable 


288,765


(16,587)



   Due from Crestmark Bank 


(120,196)


-



   Inventories 


(240,923)


461,386



   Prepaid expenses and other current assets 


(89,617)


9,799



   Other non-current assets 


142,325


(282)



Increase (Decrease) in:







   Accounts payable  


355,503


241,987



   Net due to related parties 


(592,736)


62,796



   Accrued expenses 


(11,747)


39,316



   Obligations to clients for returns and allowances 


6,526


(76,307)




 Net cash (used in) provided by operating activities 


(1,120,168)


79,217

 Cash flows from investing activities 






 Purchase of property and equipment 


(122,177)


(43,262)


 Deposit of restricted cash 


(137,967)


-




 Net cash used in investing activities 


(260,144)


(43,262)

 Cash flows from financing activities 






Payment of long-term capital lease


(1,896)


-




 Net cash used in financing activities 


(1,896)


-

 Change in cash  


(1,382,208)


35,955









 Cash at beginning of period 


1,652,996


267,465

 Cash at end of period 

$

270,788

$

303,420









 Supplemental Disclosures of Cash Flow Information: 






 Cash paid for interest 

$

968

$

-

 Supplemental Disclosures of Non-cash Investing Activities: 






 Property and equipment purchased under capital lease 

$

36,388

$

-









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

 

 

SOURCE The Singing Machine Company, Inc.



RELATED LINKS
http://www.singingmachine.com

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