Singing Machine Announces 25% Increase in Net Sales, $3.1 Million Profit in Fiscal 2013 Annual Report

News provided by

The Singing Machine Company, Inc.

Jun 28, 2013, 01:30 ET

FORT LAUDERDALE, Fla., June 28, 2013 /PRNewswire/ -- The Singing Machine Company, Inc.  ("Singing Machine" or the "Company") (OTCBB: SMDM) today announced financial results for its fiscal year ended March 31, 2013.

For the 2013 fiscal year, the Company reported net sales of $34.4 million compared to $25.9 million in the same period last year, an increase of $8.5 million (25% increase). Gross margin also improved to 23.2% compared to 21.8% in the same period last year. As a result of these improvements, the Company reported a significant increase in income from operations of approximately $1.6 million. The Company also determined that it is more than likely that it will continue to utilize its deferred tax assets to offset future income taxes on profits. Consequently, the Company reversed 50% of its reserve on its deferred tax asset which resulted in an income tax benefit of $1.6 million.

As a result, the Company reported net income for fiscal 2013 of $3.1 million, or $0.08 cents per share, compared to net income of $460,000 in the last fiscal year (an improvement of approximately $2.6 million). The Company's balance sheet also improved significantly as stockholder equity increased to $2.6 million, compared to -$550,000 in the prior year.

The significant improvement in net sales over last year is directly attributed to the Company gaining new retail accounts and growing its dot com distribution to end consumers, which grew by 144% and accounted for 25% of the Company's overall net sales increase.

"Fiscal 2013 was an absolutely unreal year," commented Gary Atkinson, Singing Machine CEO.  "In Fiscal 2013 we saw the Company ship a total of almost 1 million karaoke machines or accessories to almost every single major big box retailer in North America. We look forward to building on our success as our team is hard at work on some new, amazing product for the coming year."  

Bernardo Melo, VP of Sales & Marketing commented, "We have successfully positioned the Singing Machine brand to be synonymous with home entertainment – an area which is continuing to grow in U.S. homes. With major retailers giving this category more retail shelf space, the Singing Machine brand will continue to play a major role in the future. We will continue to innovate with our product assortment, so stay tuned to see some incredible new things."

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, 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

CONSOLIDATED BALANCE SHEETS 





March 31, 2013

 March 31, 2012 

Assets

Current Assets




Cash 

$

1,652,996

$

267,465

Accounts receivable, net of allowances of $180,306 and      




   $168,554, respectively

1,100,475

785,490

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

291,343

36,036

Due from related party - Starlight Electronics USA, Inc.

50,501

58,536

Due from related party - Cosmo Communications Canada, Ltd

61,310

68,291

Inventories, net

4,123,407

4,008,392

Prepaid expenses and other current assets

84,441

53,233

Deferred tax asset, net

421,340

-

           Total Current Assets

7,785,813

5,277,443






Property and Equipment, net

482,777

296,222

Other Non-Current Assets

159,956

159,674

Deferred Tax Asset, net Non-Current Portion

1,198,119

-

          Total Assets

$

9,626,665

$

5,733,339






Liabilities and Shareholders' Equity (Deficit)

Current Liabilities




Accounts payable

$

1,135,125

$

1,303,395

Due to related party - Starlight Marketing Development, Ltd.

1,107,678

1,924,431

Due to related party - Ram Light Management, Ltd.

-

1,683,247

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

419,600

416,026

Due to related party - Cosmo Communications USA, Inc.

-

226,747

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

585,125

103,545

Due to related parties - Other Starlight Group Companies

3,534

3,534

Accrued expenses

686,012

168,156

Obligations to clients for returns and allowances

376,289

242,379

Warranty provisions

215,471

219,760

        Total Current Liabilities

4,528,834

6,291,220






Subordinated related party debt - Starlight Marketing Development, Ltd.,



net of current portion

816,753

-

Subordinated related party debt - Ram Light Management, Ltd.

1,683,247

-

          Total Liabilities

7,028,834

6,291,220






Shareholders' Equity (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;   




38,028,975 and 37,960,794 shares issued and outstanding

380,289

379,607

Additional paid-in capital

19,155,193

19,141,098

Accumulated deficit

(16,937,651)

(20,078,586)

        Total Shareholders' Equity (Deficit)

2,597,831

(557,881)

        Total Liabilities and Shareholders' Equity (Deficit)

$

9,626,665

$

5,733,339






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, 2013

March 31, 2012

March 31, 2011




















Net Sales

$       34,437,774

$       25,943,832

$     19,165,979










Cost of Goods Sold

26,368,945

20,292,738

14,921,289










Gross Profit

8,068,829

5,651,094

4,244,690










Operating Expenses






Selling expenses

3,078,340

2,470,985

1,838,217

General and administrative expenses

3,310,325

2,537,379

2,575,032

Depreciation and amortization

110,267

171,818

430,115

Total Operating Expenses

6,498,932

5,180,182

4,843,364










Net Income (Loss) from Operations

1,569,897

470,912

(598,674)










Other Expenses






Interest expense

(48,421)

(7,796)

(20,874)










Net Income (Loss) before income tax benefit

1,521,476

463,116

(619,548)










Income tax benefit

1,619,459

-

-










Net Income (Loss)

$         3,140,935

$            463,116

$        (619,548)










Net Income (Loss) per Common Share






Basic 

$                 0.08

$                 0.01

$              (0.02)

Diluted

$                 0.08

$                 0.01

$              (0.02)










Weighted Average Common and Common 






Equivalent Shares:






Basic 

37,973,309

37,877,460

37,731,684

Diluted

38,360,324

37,877,460

37,731,684










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, 2013

March 31, 2012

March 31, 2011




















Cash flows from operating activities






Net Income (Loss)

$

3,140,935

$

463,116

$

(619,548)

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







Depreciation and amortization

110,267

171,818

430,115


Loss on disposal of property and equipment

-

31,027

-


Change in inventory reserve 

(160,000)

211,999

101,932


Change in allowance for bad debts

11,752

(7,250)

(9,603)


Stock compensation

14,777

26,030

20,092


Warranty provisions

(4,289)

75,738

20,314


Change in net deferred tax assets

(1,619,459)

-

-

Changes in operating assets and liabilities:






  (Increase) Decrease in:







Accounts receivable

(326,737)

426,969

(211,815)


Inventories

44,985

(1,203,446)

(314,029)


Prepaid expenses and other current assets

(31,208)

6,077

59,156


Other non-current assets

(282)

5,004

(34)

  Increase (Decrease) in:







Accounts payable 

(168,270)

184,721

222,961


Net due to related parties

18,116

(347,946)

1,508,811


Accrued expenses

517,856

(88,379)

29,278


Obligations to clients for returns and allowances

133,910

(192,962)

(306,668)



Net cash provided by (used in) operating activities

1,682,353

(237,484)

930,962

Cash flows from investing activities






Purchase of property and equipment

(296,822)

(165,216)

(27,000)



Net cash used in investing activities

(296,822)

(165,216)

(27,000)

Cash flows from financing activities






Borrowings from factor, net

-

-

14,987

Net payments on short-term bank obligation

-

-

(1,091,828)

Payments on long-term financing obligation

-

(4,547)

(18,186)



Net cash used in financing activities

-

(4,547)

(1,095,027)

Change in cash 

1,385,531

(407,247)

(191,065)










Cash at beginning of period

267,465

674,712

865,777

Cash at end of period

$

1,652,996

$

267,465

$

674,712










Supplemental Disclosures of Cash Flow Information:






Cash paid for interest

$

48,421

$

7,796

$

20,874

Cash paid for income taxes

$

3,988

$

4,332

$

1,600










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



SOURCE The Singing Machine Company, Inc.

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