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19.08.2013 20:22:00
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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.
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