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

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

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(TM) 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(TM) 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.




SOURCE The Singing Machine Company, Inc.

The Singing Machine Company, Inc.

CONTACT: Gary Atkinson, (954) 596-1000, Gary Atkinson at singingmachine.com, www.singingmachine.com

Web Site: http://www.singingmachine.com


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