June 29, 2012 at 13:06 PM EDT
Singing Machine Announces 26% Increase in Net Sales, Profit in Fiscal 2012 Annual Report

FORT LAUDERDALE, Fla., June 29, 2012 /PRNewswire/ -- The Singing Machine Company, Inc.  ("Singing Machine" or the "Company") (OTCBB: SMDM) today announced financial results for its fiscal year ended March 31, 2012.

For the 2012 fiscal year, the Company reported net sales of approximately $25.9 million compared to $19.1 million in the same period last year, an increase of approximately $6.8 million (approximately 26% increase). Gross margin dipped slightly to 21.8% compared to 22.1% in the same period last year, however G&A expenses held steady at approximately $2.5 million. Due to the increase in net sales and no change to the overhead structure, the Company reported net income of approximately $463,000 compared to a net loss of approximately $599,000 in the last fiscal year (an improvement of approximately $1.1 million). The significant improvement in net sales over last year is directly attributed to the Company gaining new retail accounts and the overall resurgence of karaoke popularity.  

"I'm thrilled with the positive turnaround the Company was able to achieve this fiscal year," commented Gary Atkinson, Singing Machine CEO.  "Our Management Team did an impressive job growing sales and holding gross margin, while maintaining our overhead. I believe the Company is well positioned for the coming year with our experienced management team, seasoned manufacturing relationships in China, and recent success coming off a strong holiday season at retail."

Bernardo Melo, VP of Global Sales and Marketing, commented, "I'm hopeful the Company's turnaround success will continue with the support of our new and existing retail partners. We continue to look for more top line revenue growth without compromising gross margin. Additionally, we continue to develop and diversify our karaoke assortment to appeal to a wide base of consumers. We're broadening our entry-level assortment, adding rich features to our Pedestal line of karaoke machines, and developing more iOS-compatible hardware to support the popularity of Apple™ devices. This coming year will be an exciting year for karaoke with Singing Machine positioned as the market leader."  

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™ and SoundX™ brand names.  The first to provide karaoke systems for home entertainment in the United States, The Singing Machine sells its products in North America and Europe. 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, 2012.  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.

The Singing Machine Company, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS 






March 31, 2012


 March 31, 2011 

Assets

Current Assets






Cash 

$

267,465

$

674,712


Accounts receivable, net of allowances of $168,554 and $175,804, respectively    


785,490


1,205,209


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


36,036


73,348


Due from related party - Starlight Electronics USA, Inc.


58,536


-


Due from related party - Cosmo Communications Canada, Ltd


68,291


-


Inventories,net


4,008,392


3,016,945


Prepaid expenses and other current assets


53,233


59,310


           Total Current Assets


5,277,443


5,029,524







Property and Equipment,net


296,222


333,851

Other Non-Current Assets


159,674


164,678


          Total Assets

$

5,733,339

$

5,528,053







Liabilities and Shareholders' Deficit

Current Liabilities






Accounts payable

$

1,303,395

$

1,118,674


Due to related party - Starlight Marketing Development, Ltd.


1,924,431


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.


416,026


431,373


Due to related party - Cosmo Communications USA, Inc.


226,747


217,493


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


103,545


132,386


Due to related parties - Other Starlight Group Companies


3,534


88,249


Accrued expenses


168,156


256,535


Current portion of long-term financing obligation


-


4,547


Obligations to clients for returns and allowances


242,379


435,341


Warranty provisions


219,760


144,022


        Total Current Liabilities


6,291,220


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


379,607


378,357


Additional paid-in capital


19,141,098


19,116,318


Accumulated deficit


(20,078,586)


(20,541,702)


        Total Shareholders' Deficit


(557,881)


(1,047,027)


        Total Liabilities and Shareholders' Deficit

$

5,733,339

$

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 





























For the Years Ended






March 31, 2012


March 31, 2011


March 31, 2010





















Net Sales



$       25,943,832


$       19,165,979


$     21,277,370











Cost of Goods Sold


20,292,738


14,921,289


17,291,011











Gross Profit


5,651,094


4,244,690


3,986,359











Operating Expenses








Selling expenses


2,470,985


1,838,217


3,114,552


General and administrative expenses


2,537,379


2,575,032


3,388,203


Depreciation and amortization


171,818


430,115


439,432

Total Operating Expenses


5,180,182


4,843,364


6,942,187











Net Income (Loss) from Operations


470,912


(598,674)


(2,955,828)











Other Expenses








Interest expense


(7,796)


(20,874)


(94,979)











Net Income (Loss) before provision for income taxes


463,116


(619,548)


(3,050,807)











Provision for  income taxes


-


-


-











Net Income (Loss)


$            463,116


$           (619,548)


$      (3,050,807)











Net Income (Loss) per Common Share








Basic 



$               0.012


$              (0.016)


$            (0.081)


Diluted


$               0.012


$              (0.016)


$            (0.081)











Weighted Average Common and Common 








Equivalent Shares:








Basic 



37,877,460


37,731,684


37,519,668


Diluted


37,877,460


37,751,773


37,519,668











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


The Singing Machine Company, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS









For the Years Ended






March 31, 2012


March 31, 2011


March 31, 2010





















Cash flows from operating activities








Net Income (Loss)

$

463,116

$

(619,548)

$

(3,050,807)


Adjustments to reconcile net income (loss) to net cash and cash equivalents (used in) provided by operating activities:









Depreciation and amortization


171,818


430,115


439,432



Loss on disposal of property and equipment


31,027


-


-



Change in inventory reserve 


211,999


101,932


(396,320)



Change in allowance for bad debts


(7,250)


(9,603)


(76,572)



Stock compensation


26,030


20,092


24,339



Warranty provisions


75,738


20,314


(164,331)


Changes in assets and liabilities:








  (Increase) Decrease in:









Accounts receivable


426,969


(211,815)


244,671



Inventories


(1,203,446)


(314,029)


2,321,139



Prepaid expenses and other current assets


6,077


59,156


408,098



Other non-current assets


5,004


(34)


14,718


  Increase (Decrease) in:









Accounts payable 


184,721


222,961


(1,693,056)



Accounts payable - related party


(347,946)


1,508,811


1,535,410



Accrued expenses


(88,379)


29,278


(195,003)



Obligations to clients for returns and allowances


(192,962)


(306,668)


(166,440)




Net cash (used in) provided by operating activities


(237,484)


930,962


(754,722)

Cash flows from investing activities








Purchase of property and equipment


(165,216)


(27,000)


(291,276)


Proceeds from disposal of property and equipment


-


-


1,648




Net cash used in investing activities


(165,216)


(27,000)


(289,628)

Cash flows from financing activities








Borrowings from factor, net


-


14,987


58,867


Net (payments on) proceeds from short-term bank obligation


-


(1,091,828)


1,091,828


Payments pursuant to factoring facility


-


-


(179,545)


Payments on long-term financing obligation


(4,547)


(18,186)


(18,186)




Net cash (used in) provided by financing activities


(4,547)


(1,095,027)


952,964

Change in cash and cash equivalents


(407,247)


(191,065)


(91,386)











Cash and cash equivalents at beginning of period


674,712


865,777


957,163

Cash and cash equivalents at end of period

$

267,465

$

674,712

$

865,777











Supplemental Disclosures of Cash Flow Information:








Cash paid for Interest

$

7,796

$

20,874

$

94,979


Cash paid (refunded) for Income Taxes

$

4,332

$

1,600

$

(23,520)











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


SOURCE The Singing Machine Company, Inc.

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