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(TM) 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(TM) and SoundX(TM) 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
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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.
SOURCE The Singing Machine Company, Inc.
The Singing Machine Company, Inc.
CONTACT: Gary Atkinson, +1-954-596-1000 ext. 101
Web Site:
http://www.singingmachine.com
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