Singing Machine Announces 25% Increase Net Sales in 3rd Quarter Earnings Release

FORT LAUDERDALE, Fla., Feb. 10, 2012 /PRNewswire/ -- The Singing Machine Company, Inc.  ("Singing Machine" or the "Company") (OTC Bulletin Board: SMDM) announces the results for its third fiscal quarter ended December 31, 2011.

For the quarter, the Company reported net sales of approximately $8.6 million compared to $6.9 million in the same period last year, an increase of approximately $1.7 million (approximately 25% increase). Operating expenses for the December 31, 2011 quarter increased slightly due to the increased net sales, however as a percentage of net sales, operating expenses dropped to 19.2% as compared with 22.2% in the same period last year.  As a result, the Company reported net income for the quarter of approximately $134,000, compared to net income of approximately $81,000 over the same period last year.  

For the nine month period ended December 31, 2011, the Company reported net sales of approximately $24.6 million as compared to approximately $17.4 million in the same period last year. Net income for the nine months ended December 31, 2011 grew to approximately $1.1 million as compared to a net loss of approximately $100,000 in the same period last year.

"We're thrilled with our year-to-date results and strong sales of our Singing Machines this past holiday season," commented Gary Atkinson, CEO. "We're achieving a milestone we haven't met in many, many years which is to show a strong profit through the first three quarters." Atkinson continued, "With some new products and services in the pipeline, we're optimistic about our future growth potential."  

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.

The Singing Machine Company, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS






December 31, 2011


March 31, 2011




(Unaudited)


(Audited)

Assets

Current Assets






Cash

$

1,976,985

$

674,712


Accounts receivable, net of allowances of $229,865 and      






  $175,804, respectively


3,293,972


1,205,209


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


85,650


73,348


Due from related party - Other Starlight Group Companies


500


-


Inventories, net


3,608,023


3,016,945


Prepaid expenses and other current assets


54,866


59,310


          Total Current Assets


9,019,996


5,029,524







Property and equipment, net


273,490


333,851

Other non-current assets


159,674


164,678


         Total Assets

$

9,453,160

$

5,528,053







Liabilities and Shareholders' Equity (Deficit)

Current Liabilities






Accounts payable

$

1,193,793

$

1,118,674


Due to related party - Starlight Marketing Development, Ltd.


1,942,431


2,063,213


Due to related party - Starlight Electronics Company, Ltd.


303,552


-


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.


232,996


217,493


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


1,736,855


132,386


Due to related parties - Other Starlight Group Companies


9,534


88,249


Accrued expenses


816,807


256,535


Short-term loan - bank


253,750


-


Current portion of long-term financing obligation


-


4,547


Obligations to clients for returns and allowances


291,294


435,341


Warranty provisions


488,792


144,022


       Total Current Liabilities


9,384,424


6,575,080







Shareholders' Equity (Deficit)






Preferred stock, $1.00 par value; 1,000,000 shares authorized; no  






 shares issued and outstanding


-


-


Common stock, Class A, $0.01 par value;  100,000 shares






 authorized; no shares issued and outstanding


-


-


Common stock, $0.01 par value;  100,000,000 shares authorized;  






37,960,794 and 37,835,793 shares issued and outstanding, respectively


379,607


378,357


Additional paid-in capital


19,139,448


19,116,318


Accumulated deficit


(19,450,319)


(20,541,702)


       Total Shareholders' Equity (Deficit)


68,736


(1,047,027)


       Total Liabilities and Shareholders' Equity (Deficit)

$

9,453,160

$

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


For Nine Months Ended





December 31, 2011


December 31, 2010


December 31, 2011


December 31, 2010























Net Sales


$          8,650,557


$           6,935,843


$        24,588,167


$         17,385,142












Cost of Goods Sold

6,854,398


5,303,075


19,169,982


13,483,805












Gross Profit

1,796,159


1,632,768


5,418,185


3,901,337












Operating Expenses









Selling expenses

841,591


816,375


2,231,655


1,710,385


General and administrative expenses

760,198


628,642


1,970,802


1,938,251


Depreciation and amortization

55,159


98,090


116,550


339,858

Total Operating Expenses

1,656,948


1,543,107


4,319,007


3,988,494












Income (Loss) from Operations

139,211


89,661


1,099,178


(87,157)












Other Expenses









Interest expense

(5,452)


(8,992)


(7,796)


(19,981)












Income (Loss) before provision for income taxes

133,759


80,669


1,091,382


(107,138)












Provision for income taxes

-


-


-


-












Net Income (Loss)

$             133,759


$               80,669


$          1,091,382


$             (107,138)












Income (Loss) per Common Share









Basic and Diluted

$                  0.00


$                   0.00


$                  0.03


$                  (0.00)












Weighted Average Common and Common









Equivalent Shares:









Basic and Diluted

37,877,002


37,835,793


37,849,479


37,697,107












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 Nine Months Ended






December 31, 2011


December 31, 2010

















Cash flows from operating activities






Net Income (Loss)

$

1,091,382

$

(107,138)


Adjustments to reconcile net income (loss) to net cash and cash  






equivalents provided by operating activities:






   Depreciation and amortization


116,550


339,858


   Inventory reserve charge


301,999


-


   Change in allowance for bad debts


54,061


27,452


   Disposal of property and equipment


31,028


-


   Stock based compensation


24,380


13,000


   Warranty provisions


344,770


260,798


   Changes in assets and liabilities:






     (Increase) Decrease in:







  Accounts receivable


(2,142,824)


(951,213)



  Inventories


(893,077)


(643,398)



  Prepaid expenses and other current assets


4,444


47,217



  Other non-current assets


5,003


(34)


      Increase (Decrease) in:







  Accounts payable  


75,119


1,059,576



  Net due to related parties


1,711,226


1,955,914



  Accrued expenses


560,272


305,730



  Customer credits on account


(144,047)


(124,252)




  Net cash provided by operating activities


1,140,286


2,183,510

Cash flows from investing activities






Purchase of property and equipment


(87,216)


(27,000)




  Net cash used in investing activities


(87,216)


(27,000)

Cash flows from financing activities






Borrowings from factor, net


-


14,987


Net repayments pursuant to factoring facility


-


(619,567)


Net proceeds (repayments) from short-term bank loan  


253,750


(1,091,828)


Payments on long-term financing obligation


(4,547)


(13,640)




  Net cash provided by (used in) financing activities


249,203


(1,710,048)

Change in cash and cash equivalents


1,302,273


446,462









Cash and cash equivalents at beginning of period


674,712


865,777

Cash and cash equivalents at end of period

$

1,976,985

$

1,312,239









Supplemental Disclosures of Cash Flow Information:






Cash paid for Interest

$

7,796

$

19,981









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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