COCONUT CREEK, Fla., June 29, 2011 /PRNewswire/ -- The Singing Machine Company ("Singing Machine" or the "Company") (OTC BB: SMDM) today announced financial results for fiscal year ended March 31, 2011.
Year-End Highlights:
For fiscal year-ended 2011, the Singing Machine reported net sales of approximately $19.2 million as compared to $21.3 million over the same period last year (a decline of approximately 9.8%). Despite less net sales, the Company significantly reduced its expenses, improved gross margin, and consequently reported a net loss of $619,548 as compared to a net loss of approximately $3.0 million in the same period last year.
The Company cut total operating expenses by approximately $2.1 million from $6.9 million in the same period last year to $4.8 million for the fiscal year-ended March 31, 2011 (a decline of approximately 30%). Gross margin improved over the same period by 3.4% from 18.7% to 22.1%. The result was that the Company was able to generate more gross profit from less sales compared to the preceding year.
Gary Atkinson, interim C.E.O. stated, "Our goal for the year was simple: stop the bleeding. Our plans were to reduce selling and overhead expenses, be conservative with inventory, and improve gross margin with the goal of finishing the year EBITDA neutral (earnings before interest, taxes, depreciation and amortization). I'm happy to announce that the Company has taken many positive strides this year and has substantially succeeded on our goals for Fiscal 2011. I'm confident the Company is restructured now to properly grow in the coming years. For fiscal 2012 our goals are to grow our distribution, maintain our expenses and innovate on our product lines."
Bernardo Melo, VP of Sales added, "Singing Machine is still the market leader in home karaoke. This past year our products sold extremely well over the retail counter, putting us in great shape going into this current season. For the 2011-2012 year, our initiatives are to leverage our logistics warehouse to grow our dot com distribution and to increase our market share. Given the current karaoke landscape, we are confident we can do that. So far, we have been successful maintaining our existing key customers like Costco, Toys"R"Us, and Kohl's. We're also in process of gaining new distribution into major accounts like Target, Radioshack, Walmart Canada, Sears/Kmart, Walmart.com, Costco.com and many others. Look out for Singing Machine on the shelves of many new major retailers this coming season!"
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', SoundX', Sound X Kids' 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.
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, 2011. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the risks that our vendors in China may not ship our products on the scheduled basis and that we will have sufficient cash flow to finance our working capital needs in the remaining periods of this fiscal year. In addition, 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, 2011 | March 31, 2010 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 674,712 | $ | 865,777 | ||||
Accounts receivable, net of allowances of $175,804 and $185,407, respectively | 1,205,209 | 983,791 | ||||||
Due from factor | - | 14,987 | ||||||
Due from related party - Starlight Consumer Electronics USA, Inc. | 73,348 | 73,918 | ||||||
Due from related party - Starlight Electronics Co., Ltd. | - | 75,316 | ||||||
Inventories,net | 3,016,945 | 2,804,848 | ||||||
Prepaid expenses and other current assets | 59,310 | 118,465 | ||||||
Total Current Assets | 5,029,524 | 4,937,102 | ||||||
Property and Equipment, net | 333,851 | 736,966 | ||||||
Other Non-Current Assets | 164,678 | 164,644 | ||||||
Total Assets | $ | 5,528,053 | $ | 5,838,712 | ||||
Liabilities and Shareholders' (Deficit) Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,118,674 | $ | 895,713 | ||||
Due to related party - Starlight Marketing Development, Ltd. | 2,063,213 | 860,355 | ||||||
Due to related party - Ram Light Management, Ltd. | 1,683,247 | 1,683,747 | ||||||
Due to related party - Starlight R&D, Ltd. | 431,373 | 431,653 | ||||||
Due to related party - Cosmo Communications USA, Inc. | 217,493 | 199,996 | ||||||
Due to related party - Starlight Electronics Co., Ltd. | 132,386 | - | ||||||
Due to related parties - Other Starlight Group Companies | 88,249 | 7,284 | ||||||
Accrued expenses | 256,535 | 227,257 | ||||||
Short-term loan - bank | - | 1,091,828 | ||||||
Current portion of long-term financing obligation | 4,547 | 18,186 | ||||||
Obligations to clients for returns and allowances | 435,341 | 742,009 | ||||||
Warranty provisions | 144,022 | 123,708 | ||||||
Total Current Liabilities | 6,575,080 | 6,281,736 | ||||||
Long-term financing obligation, less current portion | - | 4,547 | ||||||
Total Liabilities | 6,575,080 | 6,286,283 | ||||||
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; | ||||||||
37,835,793 and 37,585,794 shares issued and outstanding | 378,357 | 375,857 | ||||||
Additional paid-in capital | 19,116,318 | 19,098,726 | ||||||
Accumulated deficit | (20,541,702) | (19,922,154) | ||||||
Total Shareholders' Deficit | (1,047,027) | (447,571) | ||||||
Total Liabilities and Shareholders' Deficit | $ | 5,528,053 | $ | 5,838,712 | ||||
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, 2011 | March 31, 2010 | March 31, 2009 | ||||||
Net Sales | $ 19,165,979 | $ 21,277,370 | $ 31,780,709 | |||||
Cost of Goods Sold | 14,921,289 | 17,291,011 | 25,836,586 | |||||
Gross Profit | 4,244,690 | 3,986,359 | 5,944,123 | |||||
Operating Expenses | ||||||||
Selling expenses | 1,838,217 | 3,114,552 | 3,160,950 | |||||
General and administrative expenses | 2,575,032 | 3,388,203 | 4,346,627 | |||||
Depreciation and amortization | 430,115 | 439,432 | 459,354 | |||||
Total Operating Expenses | 4,843,364 | 6,942,187 | 7,966,931 | |||||
Loss from Operations | (598,674) | (2,955,828) | (2,022,808) | |||||
Other Expenses | ||||||||
Interest expense | (20,874) | (94,979) | (131,755) | |||||
Net Other Expenses | (20,874) | (94,979) | (131,755) | |||||
Loss before provision for income taxes | (619,548) | (3,050,807) | (2,154,563) | |||||
Provision for income taxes | - | - | (36,652) | |||||
Net Loss | $ (619,548) | $ (3,050,807) | $ (2,191,215) | |||||
Loss per Common Share | ||||||||
Basic | $ (0.016) | $ (0.081) | $ (0.067) | |||||
Diluted | $ (0.016) | $ (0.081) | $ (0.067) | |||||
Weighted Average Common and Common | ||||||||
Equivalent Shares: | ||||||||
Basic | 37,731,684 | 37,519,668 | 32,712,191 | |||||
Diluted | 37,751,773 | 37,519,668 | 32,712,191 | |||||
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, 2011 | March 31, 2010 | March 31, 2009 | |||||||||||
Cash flows from operating activities | |||||||||||||
Net Loss | $ | (619,548) | $ | (3,050,807) | $ | (2,191,215) | |||||||
Adjustments to reconcile net loss to net cash and cash equivalents provided by (used in) operating activities: | |||||||||||||
Depreciation and amortization | 430,115 | 439,432 | 459,354 | ||||||||||
Change in inventory reserve | 101,932 | (396,320) | 247,404 | ||||||||||
Change in allowance for bad debts | (9,603) | (76,572) | 141,081 | ||||||||||
Stock compensation | 20,092 | 24,339 | 32,826 | ||||||||||
Warranty provisions | 20,314 | (164,331) | 70,227 | ||||||||||
Changes in assets and liabilities: | |||||||||||||
(Increase) Decrease in: | |||||||||||||
Accounts receivable | (211,815) | 244,671 | 49,182 | ||||||||||
Inventories | (314,029) | 2,321,139 | (1,462,087) | ||||||||||
Prepaid expenses and other current assets | 59,156 | 408,098 | (114,011) | ||||||||||
Other non-current assets | (34) | 14,718 | (10,000) | ||||||||||
Increase (Decrease) in: | |||||||||||||
Accounts payable | 222,961 | (1,693,056) | 1,670,341 | ||||||||||
Accounts payable - related party | 1,508,811 | 1,535,410 | 1,992,407 | ||||||||||
Accrued expenses | 29,278 | (195,003) | 12,845 | ||||||||||
Obligations to clients for returns and allowances | (306,668) | (166,440) | 129,456 | ||||||||||
Net cash provided by (used in) operating activities | 930,962 | (754,722) | 1,027,810 | ||||||||||
Cash flows from investing activities | |||||||||||||
Purchase of property and equipment | (27,000) | (291,276) | (747,844) | ||||||||||
Proceeds from disposal of property and equipment | - | 1,648 | - | ||||||||||
Net cash used in investing activities | (27,000) | (289,628) | (747,844) | ||||||||||
Cash flows from financing activities | |||||||||||||
Borrowings from factor, net | 14,987 | 58,867 | 57,597 | ||||||||||
Net (payments on) proceeds from short-term bank obligation | (1,091,828) | 1,091,828 | - | ||||||||||
(Payments) proceeds persuant to factoring facility | - | (179,545) | 799,113 | ||||||||||
Net (payments on) proceeds from long-term financing obligation | (18,186) | (18,186) | 40,919 | ||||||||||
Net payments on advances from related parties | - | - | (668,248) | ||||||||||
Net cash (used in) provided by financing activities | (1,095,027) | 952,964 | 229,381 | ||||||||||
Change in cash and cash equivalents | (191,065) | (91,386) | 509,347 | ||||||||||
Cash and cash equivalents at beginning of period | 865,777 | 957,163 | 447,816 | ||||||||||
Cash and cash equivalents at end of period | $ | 674,712 | $ | 865,777 | $ | 957,163 | |||||||
Supplemental Disclosures of Cash Flow Information: | |||||||||||||
Cash paid for Interest | $ | 20,874 | $ | 94,979 | $ | 136,826 | |||||||
Cash paid (refunded) for Income Taxes | $ | 1,600 | $ | (23,520) | $ | 60,322 | |||||||
Non-Cash Financing Activities: | |||||||||||||
Conversion of trade payable to equity | $ | - | $ | - | $ | 669,222 | |||||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||||||
www.singingmachine.com
SOURCE The Singing Machine Company
