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Friday, February 10, 2012

Singing Machine Announces 25% Increase Net Sales in 3rd Quarter Earnings Release

Singing Machine Announces 25% Increase Net Sales in 3rd Quarter Earnings Release

FORT LAUDERDALE, Fla., Feb. 10, 2012 /PRNewswire/ -- The Singing Machine Company, Inc. ("Singing Machine" or the "Company") (OTC Bulletin Board: SMDM) announces the results for its third fiscal quarter ended December 31, 2011.

For the quarter, the Company reported net sales of approximately $8.6 million compared to $6.9 million in the same period last year, an increase of approximately $1.7 million (approximately 25% increase). Operating expenses for the December 31, 2011 quarter increased slightly due to the increased net sales, however as a percentage of net sales, operating expenses dropped to 19.2% as compared with 22.2% in the same period last year. As a result, the Company reported net income for the quarter of approximately $134,000, compared to net income of approximately $81,000 over the same period last year.

For the nine month period ended December 31, 2011, the Company reported net sales of approximately $24.6 million as compared to approximately $17.4 million in the same period last year. Net income for the nine months ended December 31, 2011 grew to approximately $1.1 million as compared to a net loss of approximately $100,000 in the same period last year.

"We're thrilled with our year-to-date results and strong sales of our Singing Machines this past holiday season," commented Gary Atkinson, CEO. "We're achieving a milestone we haven't met in many, many years which is to show a strong profit through the first three quarters." Atkinson continued, "With some new products and services in the pipeline, we're optimistic about our future growth potential."

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), SMDigital(TM), SoundX(TM), and 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. 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 forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forwardlooking 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. You should review our risk factors in our SEC filings which are incorporated herein by reference. Such forwardlooking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forwardlooking statement to reflect events or circumstances after the date of this release.

The Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS

December 31, March 31,
2011 2011
------------- ---------
(Unaudited) (Audited)
Assets
------
Current Assets
Cash $1,976,985 $674,712
Accounts receivable, net
of allowances of
$229,865 and
$175,804, respectively 3,293,972 1,205,209
Due from related party -
Starlight Consumer
Electronics USA, Inc. 85,650 73,348
Due from related party -
Other Starlight Group
Companies 500 -
Inventories, net 3,608,023 3,016,945
Prepaid expenses and
other current assets 54,866 59,310
Total Current Assets 9,019,996 5,029,524

Property and equipment,
net 273,490 333,851
Other non-current assets 159,674 164,678
------- -------
Total Assets $9,453,160 $5,528,053


Liabilities and Shareholders' Equity (Deficit)
----------------------------------------------
Current Liabilities
Accounts payable $1,193,793 $1,118,674
Due to related party -
Starlight Marketing
Development, Ltd. 1,942,431 2,063,213
Due to related party -
Starlight Electronics
Company, Ltd. 303,552 -
Due to related party -
Ram Light Management,
Ltd. 1,683,247 1,683,247
Due to related party -
Starlight R&D, Ltd. 431,373 431,373
Due to related party -
Cosmo Communications
USA, Inc. 232,996 217,493
Due to related party -
Starlight Consumer
Electronics Co., Ltd. 1,736,855 132,386
Due to related parties -
Other Starlight Group
Companies 9,534 88,249
Accrued expenses 816,807 256,535
Short-term loan - bank 253,750 -
Current portion of long-
term financing
obligation - 4,547
Obligations to clients
for returns and
allowances 291,294 435,341
Warranty provisions 488,792 144,022
------- -------
Total Current Liabilities 9,384,424 6,575,080
--------- ---------

Shareholders' Equity
(Deficit)
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;
37,960,794 and 37,835,793
shares issued and
outstanding,
respectively 379,607 378,357
Additional paid-in
capital 19,139,448 19,116,318
Accumulated deficit (19,450,319) (20,541,702)
----------- -----------
Total Shareholders'
Equity (Deficit) 68,736 (1,047,027)
Total Liabilities and
Shareholders' Equity
(Deficit) $9,453,160 $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
(Unaudited)


For Three Months Ended For Nine Months Ended
---------------------- ---------------------
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
------------- ------------- ------------- -------------


Net Sales $8,650,557 $6,935,843 $24,588,167 $17,385,142

Cost of Goods Sold 6,854,398 5,303,075 19,169,982 13,483,805
--------- --------- ---------- ----------

Gross Profit 1,796,159 1,632,768 5,418,185 3,901,337

Operating Expenses
Selling expenses 841,591 816,375 2,231,655 1,710,385
General and administrative
expenses 760,198 628,642 1,970,802 1,938,251
Depreciation and amortization 55,159 98,090 116,550 339,858
------
Total Operating Expenses 1,656,948 1,543,107 4,319,007 3,988,494
--------- --------- --------- ---------

Income (Loss) from Operations 139,211 89,661 1,099,178 (87,157)

Other Expenses
Interest expense (5,452) (8,992) (7,796) (19,981)
-------

Income (Loss) before provision for
income taxes 133,759 80,669 1,091,382 (107,138)

Provision for income taxes - - - -
--- --- --- ---

Net Income (Loss) $133,759 $80,669 $1,091,382 $(107,138)
======== ======= ========== =========

Income (Loss) per Common Share
Basic and Diluted $0.00 $0.00 $0.03 $(0.00)

Weighted Average Common and Common
Equivalent Shares:
Basic and Diluted 37,877,002 37,835,793 37,849,479 37,697,107

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

The Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For Nine Months Ended
---------------------
December 31, December 31,
2011 2010
------------- -------------


Cash flows from
operating activities
Net Income (Loss) $1,091,382 $(107,138)
Adjustments to
reconcile net income
(loss) to net cash
and cash
equivalents provided
by operating
activities:
Depreciation and
amortization 116,550 339,858
Inventory reserve
charge 301,999 -
Change in allowance
for bad debts 54,061 27,452
Disposal of property
and equipment 31,028 -
Stock based
compensation 24,380 13,000
Warranty provisions 344,770 260,798
Changes in assets and
liabilities:
(Increase) Decrease
in:
Accounts receivable (2,142,824) (951,213)
Inventories (893,077) (643,398)
Prepaid expenses and
other current assets 4,444 47,217
Other non-current
assets 5,003 (34)
Increase (Decrease)
in:
Accounts payable 75,119 1,059,576
Net due to related
parties 1,711,226 1,955,914
Accrued expenses 560,272 305,730
Customer credits on
account (144,047) (124,252)
-------- --------
Net cash provided by
operating activities 1,140,286 2,183,510
--------- ---------
Cash flows from
investing activities
Purchase of property
and equipment (87,216) (27,000)
------- -------
Net cash used in
investing activities (87,216) (27,000)
------- -------
Cash flows from
financing activities
Borrowings from
factor, net - 14,987
Net repayments
pursuant to
factoring facility - (619,567)
Net proceeds
(repayments) from
short-term bank
loan 253,750 (1,091,828)
Payments on long-
term financing
obligation (4,547) (13,640)
------ -------
Net cash provided by
(used in) financing
activities 249,203 (1,710,048)
------- ----------
Change in cash and
cash equivalents 1,302,273 446,462

Cash and cash
equivalents at
beginning of period 674,712 865,777
------- -------
Cash and cash
equivalents at end
of period $1,976,985 $1,312,239
========== ==========

Supplemental
Disclosures of Cash
Flow Information:

Cash paid for
Interest $7,796 $19,981
====== =======

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

SOURCE The Singing Machine Company, Inc.

The Singing Machine Company, Inc.

CONTACT: Kelli Bodinizzo, +1-954-596-1000 ext. 103, KelliB@singingmachine.com

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


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