The Singing Machine Releases Fiscal 2011 Financial Results

The Singing Machine Releases Fiscal 2011 Financial Results

COCONUT CREEK, Fla., June 29, 2011 /PRNewswire/ -- The Singing Machine Company ("Singing Machine" or the "Company") (OTC BB: SMDM) today announced financial results for fiscal year ended March 31, 2011.

Year-End Highlights:

For fiscal year-ended 2011, the Singing Machine reported net sales of approximately $19.2 million as compared to $21.3 million over the same period last year (a decline of approximately 9.8%). Despite less net sales, the Company significantly reduced its expenses, improved gross margin, and consequently reported a net loss of $619,548 as compared to a net loss of approximately $3.0 million in the same period last year.

The Company cut total operating expenses by approximately $2.1 million from $6.9 million in the same period last year to $4.8 million for the fiscal year-ended March 31, 2011 (a decline of approximately 30%). Gross margin improved over the same period by 3.4% from 18.7% to 22.1%. The result was that the Company was able to generate more gross profit from less sales compared to the preceding year.

Gary Atkinson, interim C.E.O. stated, "Our goal for the year was simple: stop the bleeding. Our plans were to reduce selling and overhead expenses, be conservative with inventory, and improve gross margin with the goal of finishing the year EBITDA neutral (earnings before interest, taxes, depreciation and amortization). I'm happy to announce that the Company has taken many positive strides this year and has substantially succeeded on our goals for Fiscal 2011. I'm confident the Company is restructured now to properly grow in the coming years. For fiscal 2012 our goals are to grow our distribution, maintain our expenses and innovate on our product lines."

Bernardo Melo, VP of Sales added, "Singing Machine is still the market leader in home karaoke. This past year our products sold extremely well over the retail counter, putting us in great shape going into this current season. For the 2011-2012 year, our initiatives are to leverage our logistics warehouse to grow our dot com distribution and to increase our market share. Given the current karaoke landscape, we are confident we can do that. So far, we have been successful maintaining our existing key customers like Costco, Toys"R"Us, and Kohl's. We're also in process of gaining new distribution into major accounts like Target, Radioshack, Walmart Canada, Sears/Kmart, Walmart.com, Costco.com and many others. Look out for Singing Machine on the shelves of many new major retailers this coming season!"

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(TM), SoundX(TM), Sound X Kids(TM) 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.

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, 2011. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the risks that our vendors in China may not ship our products on the scheduled basis and that we will have sufficient cash flow to finance our working capital needs in the remaining periods of this fiscal year. In addition, 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, March 31,
2011 2010
---------- ---------
Assets
--------
Current Assets
Cash $674,712 $865,777
Accounts receivable, net of
allowances of $175,804 and
$185,407, respectively 1,205,209 983,791
Due from factor - 14,987
Due from related party -
Starlight Consumer Electronics
USA, Inc. 73,348 73,918
Due from related party -
Starlight Electronics Co., Ltd. - 75,316
Inventories,net 3,016,945 2,804,848
Prepaid expenses and other
current assets 59,310 118,465
Total Current Assets 5,029,524 4,937,102

Property and Equipment, net 333,851 736,966
Other Non-Current Assets 164,678 164,644
------- -------
Total Assets $5,528,053 $5,838,712

Liabilities and Shareholders' (Deficit) Equity
----------------------------------------------
Current Liabilities
Accounts payable $1,118,674 $895,713
Due to related party -Starlight
Marketing Development, Ltd. 2,063,213 860,355
Due to related party -Ram Light
Management, Ltd. 1,683,247 1,683,747
Due to related party -Starlight
R&D, Ltd. 431,373 431,653
Due to related party -Cosmo
Communications USA, Inc. 217,493 199,996
Due to related party -Starlight
Electronics Co., Ltd. 132,386 -
Due to related parties -Other
Starlight Group Companies 88,249 7,284
Accrued expenses 256,535 227,257
Short-term loan - bank - 1,091,828
Current portion of long-term
financing obligation 4,547 18,186
Obligations to clients for
returns and allowances 435,341 742,009
Warranty provisions 144,022 123,708
------- -------
Total Current Liabilities 6,575,080 6,281,736

Long-term financing obligation,
less current portion - 4,547
--- -----
Total Liabilities 6,575,080 6,286,283
--------- ---------

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;
37,835,793 and 37,585,794 shares
issued and outstanding 378,357 375,857
Additional paid-in capital 19,116,318 19,098,726
Accumulated deficit (20,541,702) (19,922,154)
----------- -----------
Total Shareholders' Deficit (1,047,027) (447,571)
Total Liabilities and
Shareholders' Deficit $5,528,053 $5,838,712

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, March 31, March 31,
2011 2010 2009
---------- ---------- ----------

Net Sales $19,165,979 $21,277,370 $31,780,709

Cost of Goods Sold 14,921,289 17,291,011 25,836,586
---------- ---------- ----------

Gross Profit 4,244,690 3,986,359 5,944,123
--------- --------- ---------

Operating Expenses
Selling expenses 1,838,217 3,114,552 3,160,950
General and
administrative
expenses 2,575,032 3,388,203 4,346,627
Depreciation and
amortization 430,115 439,432 459,354

Total Operating
Expenses 4,843,364 6,942,187 7,966,931
--------- --------- ---------

Loss from Operations (598,674) (2,955,828) (2,022,808)

Other Expenses
Interest expense (20,874) (94,979) (131,755)

Net Other Expenses (20,874) (94,979) (131,755)
------- ------- --------

Loss before provision
for income taxes (619,548) (3,050,807) (2,154,563)

Provision for income
taxes - - (36,652)
--- --- -------

Net Loss $(619,548) $(3,050,807) $(2,191,215)
========= =========== ===========

Loss per Common Share
Basic $(0.016) $(0.081) $(0.067)
Diluted $(0.016) $(0.081) $(0.067)

Weighted Average
Common and Common
Equivalent
Shares:
Basic 37,731,684 37,519,668 32,712,191
Diluted 37,751,773 37,519,668 32,712,191

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, March 31, March 31,
2011 2010 2009
---------- ---------- ----------

Cash flows from
operating activities
Net Loss $(619,548) $(3,050,807) $(2,191,215)
Adjustments to
reconcile net loss
to net cash and cash
equivalents provided
by (used in)
operating
activities:
Depreciation and
amortization 430,115 439,432 459,354
Change in inventory
reserve 101,932 (396,320) 247,404
Change in allowance
for bad debts (9,603) (76,572) 141,081
Stock compensation 20,092 24,339 32,826
Warranty provisions 20,314 (164,331) 70,227
Changes in assets and
liabilities:
(Increase) Decrease
in:
Accounts receivable (211,815) 244,671 49,182
Inventories (314,029) 2,321,139 (1,462,087)
Prepaid expenses and
other current assets 59,156 408,098 (114,011)
Other non-current
assets (34) 14,718 (10,000)
Increase (Decrease)
in:
Accounts payable 222,961 (1,693,056) 1,670,341
Accounts payable -
related party 1,508,811 1,535,410 1,992,407
Accrued expenses 29,278 (195,003) 12,845
Obligations to
clients for returns
and allowances (306,668) (166,440) 129,456
-------- -------- -------
Net cash provided by
(used in) operating
activities 930,962 (754,722) 1,027,810
------- -------- ---------
Cash flows from
investing activities
Purchase of property
and equipment (27,000) (291,276) (747,844)
Proceeds from
disposal of property
and equipment - 1,648 -
--- ----- ---
Net cash used in
investing activities (27,000) (289,628) (747,844)
------- -------- --------
Cash flows from
financing activities
Borrowings from
factor, net 14,987 58,867 57,597
Net (payments on)
proceeds from short-
term bank obligation (1,091,828) 1,091,828 -
(Payments) proceeds
persuant to
factoring facility - (179,545) 799,113
Net (payments on)
proceeds from long-
term financing
obligation (18,186) (18,186) 40,919
Net payments on
advances from
related parties - - (668,248)
--- --- --------
Net cash (used in)
provided by
financing activities (1,095,027) 952,964 229,381
---------- ------- -------
Change in cash and
cash equivalents (191,065) (91,386) 509,347

Cash and cash
equivalents at
beginning of period 865,777 957,163 447,816
------- ------- -------
Cash and cash
equivalents at end
of period $674,712 $865,777 $957,163
======== ======== ========

Supplemental
Disclosures of Cash
Flow Information:

Cash paid for
Interest $20,874 $94,979 $136,826
======= ======= ========
Cash paid (refunded)
for Income Taxes $1,600 $(23,520) $60,322
====== ======== =======
Non-Cash Financing
Activities:

Conversion of trade
payable to equity $ - $ - $669,222
=== === ========

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

www.singingmachine.com

SOURCE The Singing Machine Company

Photo:http://www.newscom.com/cgi-bin/prnh/20090408/FL96432
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The Singing Machine Company

CONTACT: Gary Atkinson, +1-954-596-1000, GaryAtkinson [at] singingmachine.com

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