Singing Machine Announces 1st Quarter Earnings Release

Singing Machine Announces 1st Quarter Earnings Release

FT. LAUDERDALE, Fla., Aug. 19, 2013 /PRNewswire/ -- The Singing Machine Company, Inc. ("Singing Machine" or the "Company") (OTCBB: SMDM) announces the results for its first fiscal quarter ended June 30, 2013.

The Company announced net sales of approximately $1.4 million in the first quarter which is slightly down from approximately $1.7 million reported for the same period last year. The reduction in net sales is attributable to retail inventory carryover from the preceding holiday season. G&A expenses grew by over $200,000 due mainly to reduced volume through the Company's 3(rd) party logistics division and increased marketing expenses related to the new Singing Machine Home project. Due to a slight decrease in gross margin and increased G&A expenses, the Company reported a larger 1(st) quarter loss of $541,000 as compared to a net loss of $480,000 in the same period last year.

Gary Atkinson, CEO, commented, "Despite our larger first quarter loss, we're confident we can continue the momentum generated from last fiscal year. We've made investments this year on one-time development and marketing costs related to the Home project. We're excited to show the world this new groundbreaking product later this year." Atkinson added, "We're also expanding our traditional karaoke product offerings and we will have many new and exciting karaoke items available this fall with our regular retailers. Additionally, we are introducing a new line of Bluetooth speakers under our SoundX brand which so far are receiving extremely positive feedback."

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 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

CONDENSED CONSOLIDATED BALANCE SHEETS


June 30, 2013 March 31, 2013
------------- --------------

(Unaudited) (Audited)

Assets
------

Current Assets

Cash $270,788 $1,652,996

Restricted cash 137,967 -

Accounts receivable, net of allowances of $189,143 and

$180,306, respectively 802,873 1,100,475

Due from Crestmark Bank 120,196 -

Due from related party - Starlight Consumer Electronics USA, Inc. 334,293 291,343

Due from related party - Starlight Electronics USA, Inc. 88,676 50,501

Due from related party - Cosmo Communications Canada, Ltd. 26,975 61,310

Inventories, net 4,316,779 4,123,407

Prepaid expenses and other current assets 174,058 84,441

Deferred tax asset, net 747,681 421,340

Total Current Assets 7,020,286 7,785,813


Property and equipment, net 609,545 482,777

Other non-current assets 17,630 159,956

Deferred Tax Asset, net of current portion 1,198,119 1,198,119

Total Assets $8,845,580 $9,626,665



Liabilities and Shareholders' Equity
------------------------------------

Current Liabilities

Accounts payable $1,490,628 $1,135,125

Due to related party - Starlight Marketing Development, Ltd., current portion 1,107,678 1,107,678

Due to related party - Starlight R&D, Ltd. 422,106 419,600

Due to related party - Cosmo Communications USA, Inc. 12,495 -

Due to related party - Starlight Consumer Electronics Co., Ltd. 24,178 585,125

Due to related parties - Other Starlight Group Companies 3,534 3,534

Accrued expenses 674,265 686,012

Current portion of long-term capital lease 11,679 -

Obligations to clients for returns and allowances 382,815 376,289

Warranty provisions 134,270 215,471
------- -------

Total Current Liabilities 4,263,648 4,528,834


Long-term capital lease, net of current portion 22,813

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

net of current portion 816,753 816,753

Subordinated related party debt - Ram Light Management, Ltd. 1,683,247 1,683,247
--------- ---------

Total Liabilities 6,786,461 7,028,834
--------- ---------


Shareholders' Equity

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 shares issued and outstanding 380,289 380,289

Additional paid-in capital 19,157,547 19,155,193

Accumulated deficit (17,478,717) (16,937,651)
----------- -----------

Total Shareholders' Equity 2,059,119 2,597,831

Total Liabilities and Shareholders' Equity $8,845,580 $9,626,665



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





The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



For Three Months Ended
----------------------

June 30, 2013 June 30, 2012
------------- -------------



Net Sales $1,413,567 $1,762,705


Cost of Goods Sold 1,112,143 1,318,627
--------- ---------


Gross Profit 301,424 444,078
------- -------


Operating Expenses

Selling
expenses 280,774 248,648

General and
administrative
expenses 859,771 643,118

Depreciation 27,318 32,775

Total Operating Expenses 1,167,863 924,541
--------- -------


Loss from Operations (866,439) (480,463)


Other Expenses

Interest
expense (968) -
---------


Loss before income tax benefit (867,407) (480,463)


Income tax benefit 326,341 -
------- ---


Net Loss $(541,066) $(480,463)
========= =========


Loss per Common Share

Basic and
diluted $(0.01) $(0.01)


Weighted Average Common and Common

Equivalent
Shares:

Basic and
diluted 38,028,975 37,960,794


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





The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For Three Months Ended
----------------------

June 30, 2013 June 30, 2012
------------- -------------



Cash flows from
operating activities

Net Loss $(541,066) $(480,463)

Adjustments to
reconcile net
loss to net
cash (used in)
provided by

operating
activities:

Depreciation 27,318 32,775

Change in
inventory
reserve 47,551 (40,709)

Change in
allowance for
bad debts 8,837 2,143

Disposal of
property and
equipment 4,479 -

Stock based
compensation 2,355 1,642

Warranty
provisions (81,201) (158,279)

Change in net
deferred tax
assets (326,341) -

Changes in
operating
assets and
liabilities:

(Increase)
Decrease in:

Accounts
receivable 288,765 (16,587)

Due from
Crestmark Bank (120,196) -

Inventories (240,923) 461,386

Prepaid expenses
and other
current assets (89,617) 9,799

Other non-
current assets 142,325 (282)

Increase
(Decrease) in:

Accounts payable 355,503 241,987

Net due to
related parties (592,736) 62,796

Accrued expenses (11,747) 39,316

Obligations to
clients for
returns and
allowances 6,526 (76,307)

Net cash (used in)
provided by
operating activities (1,120,168) 79,217
---------- ------

Cash flows from
investing activities

Purchase of
property and
equipment (122,177) (43,262)

Deposit of
restricted cash (137,967) -

Net cash used in
investing activities (260,144) (43,262)
-------- -------

Cash flows from
financing activities

Payment of long-
term capital
lease (1,896) -

Net cash used in
financing activities (1,896) -
------ ---

Change in cash (1,382,208) 35,955


Cash at beginning of
period 1,652,996 267,465
--------- -------

Cash at end of
period $270,788 $303,420



Supplemental
Disclosures of Cash
Flow Information:

Cash paid for
interest $968 $ -
===

Supplemental
Disclosures of Non-
cash Investing
Activities:

Property and
equipment
purchased
under
capital
lease $36,388 $ -
===


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




SOURCE The Singing Machine Company, Inc.

The Singing Machine Company, Inc.

CONTACT: Gary Atkinson, (954) 596-1000, GaryAtkinson at singingmachine.com, www.singingmachine.com

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


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