Singing Machine Announces 25% Increase in Net Sales, $3.1 Million Profit in Fiscal 2013 Annual Report
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(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, 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
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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
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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
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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.
The Singing Machine Company, Inc.
CONTACT: Gary Atkinson, (954) 596 - 1000 ext. 101,
www.singingmachine.com
Web Site:
http://www.singingmachine.com
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