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Singing Machine Announces 1st Quarter (June 30) Earnings Release - KOAM TV 7

Singing Machine Announces 1st Quarter (June 30) Earnings Release

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SOURCE The Singing Machine Company, Inc.

FORT LAUDERDALE, Fla., Aug. 14, 2014 /PRNewswire/ -- The Singing Machine Company, Inc.  ("Singing Machine" or the "Company") (OTCQB: SMDM) announces the results for its first fiscal quarter ended June 30, 2014.

The Company announced net sales of approximately $2.5 million in the quarter ended June 30, 2014, up from approximately $1.4 million reported for the same period last year (an increase of 80%). The increase in net sales is attributable to inventory replenishment by retailers due to favorable retail sell-through of the Company's products, the move by several retailers to carry and promote Singing Machine products on a year-around basis, and increased sales to distributors in Mexico and the United Kingdom. Gross profit for the quarter ended June 30, 2014 was similarly up 71% from the prior year quarter.   Primarily due to the overall increase in net sales and gross profits, the Company reported a net loss for the first quarter of approximately $500,000 as compared to a net loss of approximately $541,000 reported in the same period last year.  Singing Machine's quarter ended June 30 is historically its lowest sales quarter, with that quarter representing 4% of total sales in the fiscal year ended March 31, 2014. 

Gary Atkinson, CEO, commented, "We've made a lot of accomplishments so far this fiscal year which have not yet reflected in the financial numbers.  Today, we already have a backlog of purchase orders that exceed purchase orders on-hand at this same time last year. We anticipate that Singing Machine products will be carried in over 8,000 retail locations nationwide this coming holiday season." Atkinson added, "From a new product perspective, we've developed significant technological improvements to our Singing Machine Home™ product which should bolster the quality of the product to make it an everyday Bluetooth speaker with built-in karaoke capability with access to the world's largest karaoke music library.  While the late timing in completing the development may delay the roll-out of this product with some retailers, we expect Singing Machine Home™ version 2.0 to be ready for shipping this coming fall and contribute to our hardware and music sales for years to come."

About The Singing Machine
Based in the US, Singing Machine is the North American leader in consumer karaoke products.  We offer the widest line of at-home karaoke entertainment products, which allow consumers to find a machine that suits their needs and skill level.  As the most recognized brand in karaoke, Singing Machine has over 32 years of history offering quality products that incorporate the latest technology for singing practice, music listening, entertainment and social sharing. The Singing Machine sells its products through major retailers in North America and also internationally.  For more information on Singing Machine, visit www.singingmachine.com.

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, 2014.  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, 2014


 March 31, 2014 




 (Unaudited) 


 (Audited) 

Assets

Current Assets






Cash 

$

364,830

$

1,354,099


Restricted cash


138,042


138,042


Accounts receivable, net of allowances of $148,708 and      






   $172,465, respectively


1,049,795


955,551


Due from Crestmark Bank


-


19,638


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


224,534


233,004


Due from related party - Starlight Electronics USA, Inc.


51,196


51,196


Due from related party - Starlight Electronics Co., Ltd


-


83,320


Due from related party - Cosmo Communications Canada, Ltd


53,197


-


Inventories, net


11,528,668


5,827,613


Prepaid expenses and other current assets


171,701


91,088


Deferred tax asset, net


894,175


604,284


           Total Current Assets


14,476,138


9,357,835







Property and equipment, net


564,907


561,225

Other non-current assets


18,289


17,630

Deferred tax asset, net of non-current portion


1,793,972


1,793,972


          Total Assets

$

16,853,306

$

11,730,662







Liabilities and Shareholders' Equity 

Current Liabilities






Accounts payable

$

6,797,582

$

1,918,076


Due to related party - Starlight Marketing Development, Ltd.


-


1,107,678


Subordinated related party debt - Starlight Marketing Development, Ltd.


-


816,753


Note payable related party - Ram Light Management, Ltd.


393,039


-


Subordinated related party debt - Ram Light Management, Ltd.


-


1,683,247


Due to related party - Ram Light Management, Ltd


583,247


-


Due to related party - Starlight Electronics Co., Ltd


61,500


-


Due to related party - Starfair Electronics Company, Ltd.


17,738


17,738


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


169,911


194,678


Due to related party - Cosmo Communications USA, Inc.


-


50,441


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


1,669,568


1,051,913


Due to related parties - Other Starlight Group Companies


3,534


3,534


Accrued expenses


543,589


446,314


Due to Crestmark Bank


64,776


-


Current portion of capital lease


12,212


12,076


Obligations to customers for returns and allowances


495,426


469,838


Warranty provisions


156,824


235,172


        Total Current Liabilities


10,968,946


8,007,458







Long-term capital lease, net of current portion


10,601


13,706

Note payable related party debt - Ram Light Management, Ltd.






net of current portion


706,961


-

Subordinated related party debt - Starlight Marketing Development, Ltd.


1,924,431


-


          Total Liabilities


13,610,939


8,021,164







Shareholders' Equity 






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;   






   38,070,642 and 38,070,642 shares issued and outstanding, respectively


380,706


380,706


Additional paid-in capital


19,294,525


19,262,127


Accumulated deficit


(16,432,864)


(15,933,335)


        Total Shareholders' Equity 


3,242,367


3,709,498


        Total Liabilities and Shareholders' Equity 

$

16,853,306

$

11,730,662







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, 2014


June 30, 2013















Net Sales



$         2,544,959


$         1,413,567








Cost of Goods Sold

2,029,068


1,112,143








Gross Profit


515,891


301,424








Operating Expenses





Selling expenses

345,267


280,774


General and administrative expenses

928,871


859,771


Depreciation 

29,331


27,318

Total Operating Expenses

1,303,469


1,167,863








Loss from Operations

(787,578)


(866,439)








Other Expenses





Interest expense

(1,842)


(968)








Loss before income tax benefit

(789,420)


(867,407)








Income tax benefit

289,891


326,341








Net Loss 



$           (499,529)


$           (541,066)








Loss per Common Share





Basic and Diluted

$                 (0.01)


$                 (0.01)








Weighted Average Common and Common 





Equivalent Shares:





Basic and Diluted

38,070,642


38,028,975








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, 2014


June 30, 2013

















Cash flows from operating activities






Net Loss

$

(499,529)

$

(541,066)


Adjustments to reconcile net loss to net cash used in operating activities:







Depreciation 


29,331


27,318



Change in inventory reserve 


-


47,551



Change in allowance for bad debts


(23,757)


8,837



Loss from disposal of property and equipment


-


4,479



Stock based compensation


32,398


2,355



Warranty provisions


(78,348)


(81,201)



Change in net deferred tax assets


(289,891)


(326,341)


   Changes in operating assets and liabilities:






     (Increase) Decrease in:







 Accounts receivable


(70,487)


288,765



 Due from Crestmark Bank


-


(120,196)



 Inventories


(5,701,055)


(240,923)



 Prepaid expenses and other current assets


(80,613)


(89,617)



 Other non-current assets


(659)


142,325


      Increase (Decrease) in:







 Accounts payable 


4,879,506


355,503



 Net due to related parties


642,540


(592,736)



 Accrued expenses


97,275


(11,747)



 Obligations to customers for returns and allowances


25,588


6,526




Net cash used in operating activities


(1,037,701)


(1,120,168)

Cash flows from investing activities






Purchase of property and equipment


(33,013)


(122,177)


Deposit of restricted cash


-


(137,967)




Net cash used in investing activities


(33,013)


(260,144)

Cash flows from financing activities






Net proceeds from credit facility


84,414


-


Payments on long-term capital lease


(2,969)


(1,896)




Net cash provided by (used in) financing activities


81,445


(1,896)

Change in cash 


(989,269)


(1,382,208)









Cash at beginning of period


1,354,099


1,652,996

Cash at end of period

$

364,830

$

270,788









Supplemental Disclosures of Cash Flow Information:






Cash paid for interest

$

1,842

$

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.

©2012 PR Newswire. All Rights Reserved.

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