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home / news releases / MICS - Singing Machine Announces Financial Results for Full Fiscal Year Ended 2023

MICS - Singing Machine Announces Financial Results for Full Fiscal Year Ended 2023

The Singing Machine Company Inc.

Fort Lauderdale, FL, July 14, 2023 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. ( the “Singing Machine” or the “Company”) (NASDAQ: MICS ) -- the worldwide leader in consumer karaoke products -- today released its results of operations for the fiscal year ended March 31, 2023. Financial highlights were as follows:

  • Revenues for the 12 months ended March 31, 2023 were $39.3 million, as compared to $47.5 million for the same period in the prior year. The 17.3% decrease was largely due to a comparatively slower holiday retail season in North America as inflation, higher interest rates and overall economic conditions led to slower retail sales;
  • Gross margins improved to 23.4% for fiscal 2023, as compared to 22.8% for the prior fiscal year. The improvement was largely the result of cost rationalizations and lower logistics costs post COVID. These improvements were partially offset by higher labor costs and fuel costs;
  • Operating expenses were $12.9 million for the 12 months ended March 31, 2023, as compared to $10.7 million for the same period in the prior year, an increase of 20.6%. Half of the $2.2 million increase represented expenses due to non-recurring transactions during the fiscal year, resulting in higher overall general and administrative expenses. The Company completed two capital raises and a successful uplisting to Nasdaq during fiscal 2023, resulting in approximately $1.1 million in one-time expenses. Excluding these items, operating expenses were $11.8 million, a 10.3% increase, as the Company added additional staffing resources to support new marketing and growth initiatives; and
  • The overall balance sheet improved significantly during the fiscal year 2023. Cash on hand improved to $2.8 million at March 31, 2023. The Company reduced its overall working capital investments by approximately $5.2 million during the year as the management team focused heavily on inventory management and building a more liquid short-term capital position.
  • The Company also heavily reduced its short-term liabilities. Current liabilities at March 31, 2023 decreased 49%, from $12.0 million at March 31, 2022 to $6.1 million at fiscal 2023 year-end. As a result, the Company had no short-term debt and 67% less trade payables at fiscal year-end.

“Fiscal 2023 includes a number of major milestones for our team and the Company,” commented Gary Atkinson, CEO of the Singing Machine. “Our public offering and uplisting onto the Nasdaq in May 2022 was a major accomplishment, and it has enabled us to significantly upgrade our access to growth capital since. This flexibility has already proved very useful as we executed a cost-effective at-the-market offering that was concluded in May of 2023. This has enabled our team to begin investing in several promising growth initiatives for fiscal 2024 and beyond, which we look forward to sharing with stockholders over the coming months.”

“While we executed very well on virtually all fronts that were within our control, we were confronted by a backlog of inventory at the retail level during calendar 2022 caused by the supply chain bottleneck,” stated Atkinson. “This over-supply of inventory, together with lower overall economic demand during the holiday season, caused many of our retail customers to take a more conservative approach to stocking inventory last year. As these developments unfolded, we aggressively sought to control costs, invest carefully, and leverage our growth initiatives during the second half of the fiscal year as we began to turn our attention to the 2024 fiscal period.”

“As the premier in-home karaoke device manufacturer in North America, we are fortunate to hold a majority market share. However, there are additional areas of growth internationally, as well as new segments of the domestic karaoke industry that we are eager to penetrate. Please join us on our earnings call to hear more on what we feel are some exciting new opportunities for our Company,” concluded Mr. Atkinson.

About The Singing Machine

Singing Machine 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. Singing Machine is also developing the world’s first 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 www.singingmachine.com .

Investor Relations Contact:
investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors

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. and Subsidiaries
CONSOLIDATED BALANCE SHEETS

March 31, 2023
March 31, 2022
Assets
Current Assets
Cash
$
2,894,574
$
2,290,483
Accounts receivable, net of allowances of $165,986 and $122,550, respectively
2,075,086
2,785,038
Due from Crestmark Bank
-
100,822
Accounts receivable related party - Stingray Group, Inc.
218,328
152,212
Accounts receivable related party - Ault Alliance, Inc.
20,750
-
Inventories, net
9,639,992
14,161,636
Prepaid expenses and other current assets
266,068
344,409
Deferred financing costs
84,667
7,813
Total Current Assets
15,199,465
19,842,413
Property and equipment, net
633,207
565,094
Deferred financing costs, net of current portion
130,528
-
Deferred tax assets
-
892,559
Operating Leases - right of use assets
561,185
1,279,347
Other non-current assets
124,212
86,441
Total Assets
$
16,648,597
$
22,665,854
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable
$
1,769,348
$
5,328,215
Accrued expenses
2,265,424
1,732,355
Due to related party - Starlight Consumer Electronics Co., Ltd.
-
14,400
Due to related party - Starlight R&D, Ltd.
-
48,650
Revolving lines of credit
-
2,500,000
Refunds due to customers
583,323
97,968
Reserve for sales returns
900,000
990,000
Current portion of finance leases
18,162
7,605
Current portion of installment notes
80,795
74,300
Current portion of operating lease liabilities
508,515
876,259
Subordinated note payable - Starlight Marketing Development, Ltd.
-
352,659
Total Current Liabilities
6,125,567
12,022,411
Finance leases, net of current portion
46,142
10,620
Installment notes, net of current portion
57,855
138,649
Operating lease liabilities, net of current portion
87,988
457,750
Total Liabilities
6,317,552
12,629,430
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; 3,184,439 shares issued, 3,167,489 shares outstanding and 1,221,209 shares issued and outstanding, respectively
31,675
12,212
Additional paid-in capital
29,822,205
24,902,694
Subscriptions receivable
(5,891
)
-
Accumulated deficit
(19,516,944
)
(14,878,482
)
Total Shareholders’ Equity
10,331,045
10,036,424
Total Liabilities and Shareholders’ Equity
$
16,648,597
$
22,665,854


See notes to the consolidated financial statements

The Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Twelve Months Ended
March 31, 2023
March 31, 2022
Net Sales
$
39,299,280
$
47,512,161
Cost of Goods Sold
30,090,686
36,697,383
Gross Profit
9,208,594
10,814,778
Operating Expenses
Selling expenses
3,441,975
3,588,276
General and administrative expenses
9,236,899
6,911,377
Depreciation
228,004
245,890
Total Operating Expenses
12,906,878
10,745,543
(Loss) Income from Operations
(3,698,284
)
69,235
Other Income (Expense), net
Gain from Paycheck Protection Plan loan forgiveness
-
448,242
Gain - related party
-
11,236
Gain from Employee Retension Credit Program refund
704,297
-
Gain from settlement of accounts payable
48,650
339,311
Loss from extinguishment of debt
(183,333
)
-
Interest expense
(432,700
)
(535,202
)
Finance costs
(46,618
)
(45,047
)
Total Other Income (Expense), net
90,296
218,540
(Loss) Income Before Income Tax (Provision)
(3,607,988
)
287,775
Income Tax (Provision)
(1,030,474
)
(57,304
)
Net (Loss) Income
$
(4,638,462
)
$
230,471
Net (Loss) Income per Common Share
Basic
$
(1.65
)
$
0.14
Diluted
$
(1.65
)
$
0.14
Weighted Average Common and Common Equivalent Shares:
Basic
2,811,872
1,614,506
Diluted
2,811,872
1,623,397


See notes to the consolidated financial statements

The Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Twelve Months Ended
March 31, 2023
March 31, 2022
Cash flows from operating activities
Net (Loss) Income
$
(4,638,462
)
$
230,471
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation
228,004
245,890
Amortization of deferred financing costs
46,618
45,047
Change in inventory reserve
535,553
(271,892
)
Change in allowance for bad debts
43,436
(16,030
)
Loss from disposal of property and equipment
2,565
4,394
Stock based compensation
381,826
44,287
Change in net deferred tax assets
892,559
(5,395
)
Loss on debt extinguishment
183,333
-
Paycheck Protection Plan loan forgiveness
-
(448,242
)
Gain - related party
-
(11,236
)
Gain from extinguishment of accounts payable
(48,650
)
(339,311
)
Changes in operating assets and liabilities:
Accounts receivable
666,516
(558,127
)
Due from banks
100,822
4,456,298
Accounts receivable - related parties
(86,866
)
(64,171
)
Inventories
3,986,091
(8,399,489
)
Prepaid expenses and other current assets
78,341
(123,338
)
Other non-current assets
(37,771
)
60,732
Accounts payable
(3,510,217
)
3,217,659
Accrued expenses
533,069
77,198
Due to related parties
(63,050
)
-
Customer deposits
-
(139,064
)
Refunds due to customers
485,355
(47,440
)
Reserve for sales returns
(90,000
)
30,000
Operating lease liabilities, net of operating leases - right of use assets
(19,344
)
(171
)
Net cash used in operating activities
(330,272
)
(2,011,930
)
Cash flows from investing activities
Purchase of property and equipment
(243,729
)
(117,573
)
Net cash used in investing activities
(243,729
)
(117,573
)
Cash flows from financing activities
Proceeds from Issuance of stock - net of transaction expenses
3,362,750
9,000,579
Proceeds from Issuance of stock - at the market offering
30,522
-
Payment of redemption and retirement of treasury stock
-
(7,162,451
)
Net (payment) proceeds from revolving lines of credit
(2,500,000
)
2,435,085
Payment of deferred financing charges
(254,000
)
(37,501
)
Payment of early termination fees on revolving lines of credit
(183,333
)
-
Payments on installment notes
(74,299
)
(68,332
)
Proceeds from exercise of stock options
-
14,000
Proceeds from exercise of pre-funded warrants
168,334
-
Proceeds from exercise of common warrants
989,651
-
Payment on subordinated note payable
(352,659
)
(150,000
)
Payments on finance leases
(8,874
)
(7,973
)
Net cash provided by financing activities
1,178,092
4,023,407
Net change in cash
604,091
1,893,904
Cash at beginning of year
2,290,483
396,579
Cash at end of period
$
2,894,574
$
2,290,483
Supplemental disclosures of cash flow information:
Cash paid for interest
$
481,425
$
546,545
Cash paid for income taxes - SMC (Comercial Offshore de Macau) Limitada
$
34,390
$
-
Equipment purchased under capital lease
$
54,953
$
23,651
Issuance of common stock and warrants for stock issuance expenses
$
243,901
$
547,838
Operating leases - right of use assets and lease liabilities at inception of lease
$
191,951
$
16,364


See notes to the consolidated financial statements

The Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the twelve months ended March 31, 2023 and 2022

Common Stock
Additional Paid in
Subscriptions
Accumulated
Shares
Amount
Capital
Receivable
Deficit
Total
Balance at March 31, 2021
1,301,358
$
13,014
$
20,150,715
$
-
$
(12,254,191
)
$
7,909,538
Net Income
-
-
-
-
230,471
230,471
Issuance of stock
550,000
5,500
4,944,500
-
-
4,950,000
Issuance of pre-funded warrants
-
-
4,881,667
-
-
4,881,667
Payment of stock issuance expenses
-
-
(831,088
)
-
-
(831,088
)
Issuance of stock for stock issuance expenses
19,047
190
(190
)
-
-
Redemption and retirement of treasury shares
(654,105
)
(6,542
)
(4,301,147
)
-
(2,854,762
)
(7,162,451
)
Issuance of common stock - directors
575
6
4,994
-
-
5,000
Issuance of common stock - non-employee
1,667
17
16,983
-
-
17,000
Employee compensation-stock option
-
-
22,287
-
-
22,287
Exercise of stock options
2,667
27
13,973
-
-
14,000
Balance at March 31, 2022
1,221,209
12,212
24,902,694
-
(14,878,482
)
10,036,424
Net Loss
-
-
-
-
(4,638,462
)
(4,638,462
)
Issuance of common stock
1,000,000
10,000
3,990,000
-
-
4,000,000
Payment of stock issuance expenses
-
-
(637,250
)
-
-
(637,250
)
Issuance of common stock - at the market offering
14,230
143
36,270
(5,891
)
-
30,522
Exercise of pre-funded warrants
561,113
5,611
162,723
-
-
168,334
Exercise of common stock warrants
353,445
3,534
986,117
-
-
989,651
Issuance of common stock - directors
2,468
25
19,991
-
-
20,016
Issuance of common stock - officers
3,335
33
31,216
-
-
31,249
Issuance of common stock - non-employee
10,000
100
93,600
-
-
93,700
Employee compensation-stock option
-
-
236,861
-
-
236,861
Rounding of common stock issued due to reverse split
1,688
17
(17
)
-
-
-
Balance at March 31, 2023
3,167,488
$
31,675
$
29,822,205
$
(5,891
)
$
(19,516,944
)
$
10,331,045


See notes to the consolidated financial statements.


Stock Information
Company Name: The Singing Machine Company Inc.
Stock Symbol: MICS
Market: NASDAQ
Website: singingmachine.com
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