Company Provides First Quarter 2024 Results of Operations

Fort Lauderdale, FL, May 16, 2024 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. ("Singing Machine") (NASDAQ: MICS) – the worldwide leader in consumer karaoke products, today announced its results of operations for the three-months ended March 31, 2024.

"We are pleased to report our first quarter results of operations," commented Gary Atkinson, CEO of the Singing Machine. "We have focused on three core areas of operations, which we believe will lead to overall improved profitability in the coming quarters:

1) Improved product sales mix. We are focused on selling more of our higher price-point, best-in-class karaoke products that support our music subscription model. This is expected to improve sell-through rates, reduce marketing expenses, and improve gross margins going forward.

2) Reduce fixed overhead. With the closure of our California warehouse lease and our shift to a fully outsourced 3PL model, we were able to reduce headcount, eliminate our occupancy costs in California, and switch to a more variable operating structure.

3) Strict Cost Control. We have aggressively worked to identify areas where we can reduce recurring operating expenses, particularly in the areas of IT infrastructure, headcount, and occupancy.

"With three aggressive financial initiatives, we are actively looking to optimize our immediate financial profile. We have sought to eliminate virtually all non-working capital liabilities. We have streamlined our operations. At this point, our Board of Directors is asking us to consider all strategic options and we are open to this path as a management team. We anticipate providing meaningful updates on this development in the near term," concluded Mr. Atkinson.

Results of operations for the first quarter are summarized as follows:

  • Revenues: Net sales of approximately $2.43 million for the three-months ended March 31, 2024. This represents a $1.0 million (29%) decrease from approximately $3.38 million in sales for the same period in 2023. Primary factors for the decline are as follows:
    • Holiday sell through results at our largest customer were lower in Q4 2023 than in the same period in 2022. As a result, restocking demand in Q1 2024 was negatively impacted.
    • The Company has also shifted its sales focus to dedicate more resources to its higher margin top-tier product lines. This is expected to lower overall unit sales but improve gross margins and operating margins over the next year.
  • Gross Profits: Gross profits were approximately $0.50 million for the first quarter of 2024, as compared to approximately $0.82 million for the same period in 2023. This represents a decrease of $0.3 million, or 39% for the three months ended March 31, 2024 as compared to March 31, 2023.
    • Gross margins were 20.7% for Q1 2024, as compared to 24.2% for Q1 2023.
    • Margins in Q1 2024 were negatively impacted by approximately $0.7 million in allowances for repairs under the Companies new outsourced logistics model. In prior years, repairs were handled in house at the Company’s in-house logistics hub in Ontario, CA. Since September of 2023, all repairs are now the responsibility of our contract manufacturers in China.
  • Operating Expenses: Total operating expenses were approximately $2.79 million for the three months ended March 31, 2024, as compared to approximately $2.97 million for the same period in 2023.
    • Selling expenses were approximately $0.63 million in Q1 2024, as compared to approximately $0.81 million in Q1 2023.
    • General and administrative expenses were approximately $2.2 million for Q1 2024, which was flat compared to the same period in 2023.
    • General and administrative expenses are expected to decrease modestly going forward. The Company has taken steps to reduce payroll, reduce IT expenses, and reduce certain aspects of occupancy costs.
  • Net Income: The Company reported a net loss of approximately $2.37 million, which represents approximately a $0.62 million improvement year over year.

About The Singing Machine

The Singing Machine Company, Inc. (NASDAQ: MICS) is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry's widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world's first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to

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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "may", "could", "expects", "projects," "intends", "plans", "believes", "predicts", "anticipates", "hopes", "estimates" and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon several assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the Company's control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in the Company's filings with the Securities and Exchange Commission. The forward-looking statements are applicable only as of the date on which they are made, and the Company does not assume any obligation to update any forward-looking statements.

The Singing Machine Company, Inc.

  March 31, 2024  December 31, 2023 
Current Assets        
Cash $4,125,000  $6,703,000 
Accounts receivable, net of allowances of $275,000 and $174,000, respectively  3,305,000   7,308,000 
Accounts receivable related parties  133,000   269,000 
Inventory  6,493,000   6,871,000 
Returns asset  1,262,000   1,919,000 
Prepaid expenses and other current assets  214,000   136,000 
Total Current Assets  15,532,000   23,206,000 
Property and equipment, net  352,000   404,000 
Operating leases - right of use assets  3,841,000   3,926,000 
Other non-current assets  179,000   179,000 
Total Assets $19,904,000  $27,715,000 
Liabilities and Shareholders’ Equity        
Current Liabilities        
Accounts payable $3,947,000  $7,616,000 
Accrued expenses  2,315,000   2,614,000 
Refund due to customer  1,443,000   1,743,000 
Customer prepayments  408,000   687,000 
Reserve for sales returns  2,419,000   3,390,000 
Other current liabilities  58,000   75,000 
Current portion of operating lease liabilities  55,000   84,000 
Total Current Liabilities  10,645,000   16,209,000 
Other liabilities, net of current portion  -   3,000 
Operating lease liabilities, net of current portion  4,029,000   3,925,000 
Total Liabilities  14,674,000   20,137,000 
 Commitments and Contingencies        
Shareholders’ Equity        
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding  -   - 
Common stock $0.01 par value; 100,000,000 shares authorized; 6,418,061 issued and outstanding at March 31, 2024 and December 31, 2023, respectively  64,000   64,000 
Additional paid-in capital  33,448,000   33,429,000 
Accumulated deficit  (28,282,000)  (25,915,000)
Total Shareholders’ Equity  5,230,000   7,578,000 
Total Liabilities and Shareholders’ Equity $19,904,000  $27,715,000 

See notes to the condensed consolidated financial statements 

The Singing Machine Company, Inc.

  Three Months Ended 
  March 31, 2024  March 31, 2023 
Net Sales $2,426,000  $3,383,000 
Cost of Goods Sold  1,924,000   2,564,000 
Gross Profit  502,000   819,000 
Operating Expenses        
Selling expenses  630,000   812,000 
General and administrative expenses  2,159,000   2,153,000 
Total Operating Expenses  2,789,000   2,965,000 
Loss from Operations  (2,287,000)  (2,146,000)
Other (Expenses) Income        
Gain from Employee Retention Credit Program refund  -   704,000 
Other Expense  -   (1,000)
Interest expense  (28,000)  (40,000)
Total Other (Expenses) Income, net  (28,000)  663,000 
Loss Before Income Tax Provision  (2,315,000)  (1,483,000)
Income Tax Provision  (52,000)  (1,502,000)
Net Loss $(2,367,000) $(2,985,000)
Loss per Common Share        
Basic and Diluted $(0.37) $(0.96)
Weighted Average Common and Common Equivalent Shares:        
Basic and Diluted  6,418,061   3,114,397 

See notes to the condensed consolidated financial statements 

The Singing Machine Company, Inc.

  For the Three Months Ended  For the Three Months Ended 
  March 31, 2024  March 31, 2023 
Cash flows from operating activities        
Net loss $(2,367,000) $(2,985,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:        
Depreciation  52,000   55,000 
Provision for estimated cost of returns  658,000   1,380,000 
Provision for inventory obsolescence  -   139,000 
Credit losses  101,000   27,000 
Loss from disposal of property and equipment  -   3,000 
Stock based compensation  19,000   74,000 
Amortization of right of use assets  84,000   87,000 
Change in net deferred tax assets  -   1,399,000 
Changes in operating assets and liabilities:        
Accounts receivable  3,902,000   4,922,000 
Accounts receivable - related parties  136,000   43,000 
Inventories  379,000   (175,000)
Prepaid expenses and other current assets  (78,000)  40,000 
Other non-current assets  -   (156,000)
Accounts payable  (3,669,000)  (315,000)
Accrued expenses  (299,000)  (970,000)
Refunds due to customer  (300,000)  490,000 
Prepaids from customers  (279,000)  - 
Reserve for sales returns  (971,000)  (2,035,000)
Operating lease liabilities  75,000   (89,000)
Net cash (used in) provided by operating activities  (2,557,000)  1,934,000 
Cash flows from investing activities        
Purchase of property and equipment  -   (95,000)
Net cash used in investing activities  -   (95,000)
Cash flows from financing activities        
Proceeds from issuance of stock, net of offering costs  -   36,000 
Subscriptions receivable  -   (6,000)
Net payment on revolving lines of credit  -   (1,761,000)
Payments on installment notes  (21,000)  (19,000)
Proceeds from exercise of common stock warrants  -   14,000 
Payments on finance leases  -   (3,000)
Net cash used in financing activities  (21,000)  (1,739,000)
Net change in cash  (2,578,000)  100,000 
Cash at beginning of year  6,703,000   2,795,000 
Cash at end of period $4,125,000  $2,895,000 
Supplemental disclosures of cash flow information:        
Cash paid for interest $27,000  $24,000 
Non-Cash investing and financing cash flow information:        
Equipment purchased under capital lease $-  $55,000 

See notes to the condensed consolidated financial statements