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. |
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SOURCE The Singing Machine Company, Inc.
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