FORT LAUDERDALE, FL--(Marketwired - Aug 15, 2016) - The Singing Machine Company, Inc. ("Singing Machine" or the "Company") (
First Quarter Highlights:
- Net sales for the June 30, 2016 quarter increased by 40% from $3.5 million to $4.9 million, compared to the same period from last year.
- EBITDA for the period improved by approximately $0.2 million compared to the same period last year.
- Related party debt paid down by $1.3 million compared to the same period last year.
Singing Machine reports net sales of approximately $4.9 million for the quarter-ended June 30, 2016 period, an increase of 40% from the prior year ($3.5 million). The increase in net sales is attributable to an increase in sales to one major retailer for a new holiday program.
Gross profit increased by approximately $0.3 million to $1.1 million, or 23.5% of net sales compared to approximately $0.85 million or 24.8% of net sales reported in the prior year. The decrease in gross profit margin is due to one retailer taking delivery of their holiday promotional goods earlier than usual.
Total operating expenses increased to $1.7 million compared to $1.6 million in the prior year.
As a result, the Company reported a decrease of $167,000 in loss from operations to $571,000 compared to a loss from operations of approximately $739,000 in the same period in the prior year. Loss before income taxes improved by approximately $200,000 compared to the prior year due to the increase in sales and the aforementioned reasons. Net loss for the period decreased to $437,000 compared to $495,000 in the prior year representing a loss of $0.01 per share on a fully diluted basis.
Management Commentary:
Gary Atkinson, Singing Machine CEO commented, "The Company continues to see strong growth in in our first quarter -- which is historically one of our slowest quarters. We grew sales 40% year over year in our first quarter and reduced our loss before taxes by approximately $200,000. Last year, first quarter sales represented approximately 7% of overall sales for the fiscal year ended March 31, 2016."
Atkinson added, "As we look toward our upcoming holiday season, we continue to have the best and biggest names of retail partners and the largest market share for consumer karaoke products in North America. We also anticipate to ship 500% more digital download machines than we did in the prior year with 99% of our total product fleet to include Bluetooth® access to our mobile karaoke app. Additionally, our backlog of purchase indications from our customers exceeds those held at this same time last year."
Earnings Call Information:
The Company will host a conference call today, Monday, August 15, beginning at 10:00 am Eastern time to discuss these results and answer questions. If you would like to participate on the call, please dial 877-876-9175 and use conference ID: SMDM.
An audio rebroadcast of the call will be available later in the day after the earnings call and can be heard at: www.singingmachine.com/investors.
About The Singing Machine
Based in the U.S., Singing Machine® is the North American leader in consumer karaoke products. The first to provide karaoke systems for home entertainment in the United States, the Company sells its products worldwide through major mass merchandisers and on-line retailers. We offer the industry's widest line of at-home karaoke entertainment products, which allow consumers to find a machine that suits their needs and skill level. As the most recognized brand in karaoke, Singing Machine products incorporate the latest technology for singing practice, music listening, entertainment and social sharing. The Singing Machine provides consumers the best warranties in the industry and access to over 12,000 songs for streaming and download. Singing Machine products are sold through most major retailers in North America and also internationally. 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, 2016. 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 | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
June 30, 2016 | March 31, 2016 | ||||||||
(Unaudited) | |||||||||
Assets | |||||||||
Current Assets | |||||||||
Cash | $ | 444,515 | $ | 2,116,490 | |||||
Accounts receivable, net of allowances of $74,498 and $51,179, respectively | 3,451,300 | 1,381,789 | |||||||
Due from PNC Bank | 861 | 184,392 | |||||||
Accounts receivable related party - Cosmo Communications Canada, Ltd | 154,247 | 19,077 | |||||||
Accounts receivable related party - Winglight Pacific, Ltd | 192,976 | - | |||||||
Accounts receivable related parties - other | 4,262 | 7,075 | |||||||
Inventories, net | 8,367,957 | 3,690,975 | |||||||
Prepaid expenses and other current assets | 148,806 | 115,601 | |||||||
Deferred financing costs | 74,077 | 74,077 | |||||||
Total Current Assets | 12,839,001 | 7,589,476 | |||||||
Property and equipment, net | 452,338 | 430,602 | |||||||
Other non-current assets | 11,523 | 11,394 | |||||||
Deferred financing costs | 3,087 | 21,606 | |||||||
Deferred tax asset | 2,607,119 | 2,408,531 | |||||||
Total Assets | $ | 15,913,068 | $ | 10,461,609 | |||||
Liabilities and Shareholders' Equity | |||||||||
Current Liabilities | |||||||||
Accounts payable | $ | 6,326,737 | $ | 722,213 | |||||
Note payable related party - Ram Light Management, Ltd. | 558,075 | 696,612 | |||||||
Due to related party - Ram Light Management, Ltd | 201,000 | 400,000 | |||||||
Due to related party - Starlight Electronics Co., Ltd | 707,819 | - | |||||||
Due to related party - Merrygain Holding Co., Ltd | 12,829 | - | |||||||
Accrued expenses | 734,276 | 650,115 | |||||||
Current portion of capital lease | - | 1,078 | |||||||
Obligations to customers for returns and allowances | 22,414 | 121,092 | |||||||
Warranty provisions | 193,263 | 292,500 | |||||||
Total Current Liabilities | 8,756,413 | 2,883,610 | |||||||
Subordinated related party debt - Starlight Marketing Development, Ltd. | 1,924,431 | 1,924,431 | |||||||
Total Liabilities | 10,680,844 | 4,808,041 | |||||||
Commitments and Contingencies | - | - | |||||||
Shareholders' Equity | |||||||||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding | - | - | |||||||
Common stock, Class A, $0.01 par value; 100,000 shares authorized; no shares issued and outstanding | - | - | |||||||
Common stock, Class B, $0.01 par value; 100,000,000 shares authorized; 38,181,635 and 38,161,635 shares issued and outstanding, respectively | 381,816 | 381,816 | |||||||
Additional paid-in capital | 19,347,268 | 19,337,939 | |||||||
Subscriptions receivable | - | (6,400 | ) | ||||||
Accumulated deficit | (14,496,860 | ) | (14,059,787 | ) | |||||
Total Shareholders' Equity | 5,232,224 | 5,653,568 | |||||||
Total Liabilities and Shareholders' Equity | $ | 15,913,068 | $ | 10,461,609 |
See notes to the condensed consolidated financial statements. |
The Singing Machine Company, Inc. and Subsidiaries | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
For Three Months Ended | ||||||||
June 30, 2016 | June 30, 2015 | |||||||
Net Sales | $ | 4,859,392 | $ | 3,466,874 | ||||
Cost of Goods Sold | 3,715,709 | 2,608,453 | ||||||
Gross Profit | 1,143,683 | 858,421 | ||||||
Operating Expenses | ||||||||
Selling expenses | 424,878 | 457,727 | ||||||
General and administrative expenses | 1,246,851 | 1,101,981 | ||||||
Depreciation | 43,795 | 37,333 | ||||||
Total Operating Expenses | 1,715,524 | 1,597,041 | ||||||
Loss from Operations | (571,841 | ) | (738,620 | ) | ||||
Other Expenses | ||||||||
Interest expense | (16,027 | ) | (50,112 | ) | ||||
Financing costs | (18,519 | ) | (18,519 | ) | ||||
Total Other Expenses | (34,546 | ) | (68,631 | ) | ||||
Loss Before Income Tax Benefit | (606,387 | ) | (807,251 | ) | ||||
Income Tax Benefit | 169,314 | 312,325 | ||||||
Net Loss | $ | (437,073 | ) | $ | (494,926 | ) | ||
Loss per Common Share | ||||||||
Basic and Diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Weighted Average Common and Common Equivalent Shares: | ||||||||
Basic and Diluted | 38,181,635 | 38,117,517 | ||||||
See notes to the condensed consolidated financial statements. | ||||||||
The Singing Machine Company, Inc. and Subsidiaries | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(Unaudited) | |||||||||||
For Three Months Ended | |||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net Loss | $ | (437,073 | ) | $ | (494,926 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation | 43,795 | 37,333 | |||||||||
Amortization of deferred financing costs | 18,519 | 18,519 | |||||||||
Change in inventory reserve | 66,000 | (37,560 | ) | ||||||||
Change in allowance for bad debts | 23,319 | (127,433 | ) | ||||||||
Stock based compensation | 9,329 | 2,001 | |||||||||
Change in net deferred tax asset | (198,588 | ) | (312,325 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||
(Increase) decrease in: | |||||||||||
Accounts receivable | (2,092,830 | ) | (80,027 | ) | |||||||
Due from PNC Bank | 183,531 | 137,415 | |||||||||
Accounts receivable related parties | (325,333 | ) | (94,252 | ) | |||||||
Inventories | (4,742,982 | ) | (624,621 | ) | |||||||
Prepaid expenses and other current assets | (33,205 | ) | 1,914 | ||||||||
Other non-current assets | (129 | ) | - | ||||||||
Increase (decrease) in: | |||||||||||
Accounts payable | 5,604,524 | 258,092 | |||||||||
Due to related parties | 521,648 | 35,456 | |||||||||
Accrued expenses | 84,161 | 182,533 | |||||||||
Customer deposits | - | 287,110 | |||||||||
Obligations to clients for returns and allowances | (98,678 | ) | (389,058 | ) | |||||||
Warranty provisions | (99,237 | ) | (44,799 | ) | |||||||
Net cash used in operating activities | (1,473,229 | ) | (1,244,628 | ) | |||||||
Cash flows from investing activities: | |||||||||||
Purchase of property and equipment | (65,531 | ) | (42,157 | ) | |||||||
Net cash used in investing activities | (65,531 | ) | (42,157 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Net proceeds from revolving line of credit | - | 1,537,014 | |||||||||
Net proceeds from subscription receivable | 6,400 | - | |||||||||
Payment on note payable related party - Ram Light Management, Ltd. | (138,537 | ) | - | ||||||||
Payments on capital lease | (1,078 | ) | (3,105 | ) | |||||||
Net cash (used in) provided by financing activities | (133,215 | ) | 1,533,909 | ||||||||
Net change in cash | (1,671,975 | ) | 247,124 | ||||||||
Cash at beginning of period | 2,116,490 | 116,286 | |||||||||
Cash at end of period | $ | 444,515 | $ | 363,410 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for interest | $ | 15,027 | $ | 9,665 | |||||||
See notes to the condensed consolidated financial statements. | |||||||||||
Contact Information:
Investor Relations Contact:
Brendan Hopkins
(407) 645-5295
investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors