Singing Machine Reports Third Quarter Earnings Report
February 21 2023 - 8:00AM
The Singing Machine Compa
ny, Inc. (“Singing
Machine” or the “Company”) (NASDAQ:
MICS) – the
worldwide leader in consumer karaoke products – today announced its
third quarter financial results for the three months ended December
31, 2022.
Third Quarter
Highlights:
-
Net sales for the quarter of $7.1 million; fiscal year-to-date
revenue of $35.9 million.
-
Gross profit for the quarter of $1.3 million.
-
Income from Operations of approximately ($2.3) million.
-
Total assets of $24.1 million as of December 31, 2022.
-
Cash on hand of $2.8 million as of December 31, 2022.
-
Net loss for the quarter of $(1.9) million; fiscal year-to-date net
loss of approximately ($1.6) million.
Management Commentary:
Gary Atkinson, Singing Machine CEO, commented,
“Despite our wholesale sell-in numbers for this quarter, consumer
demand for consumer karaoke remained very strong. The real
challenge to this quarter was timing and getting our products into
retail. Last calendar year, our traditional sales cycle was
disrupted by the lingering effects of supply chain disruptions.
There was a build-up of retail inventory on the shelves at the end
of the first quarter of calendar 2021, which slowly started to make
the major retailers gradually more cautious about inventory
throughout the rest of the year.”
Atkinson continued, “As a result, we did not get
the opportunity to sell-in to many of our retail customers with our
typical holiday bulk replenishment. Simply put, our retail
customers were backfilling the demand with the lingering inventory
from last year, or in many cases, opting to lose sales with empty
shelves. Despite our customers decisions to lower exposure to
inventory due to elevated risk factors associated with the overall
economy in the back of the year, we saw steady demand for our
products, and we believe that reflects well on our brand and our
technology. Moving forward, we expect more of a return to normal
for this coming season.”
Earnings Call Information:
The Company will host a conference call today,
Tuesday, February 21, 2023, 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 (800) 225-9448 and use
conference ID: MICS.
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
Singing Machine® is the leading provider of
karaoke products to consumers across the world. The Company offers
the industry's widest line of at-home and in-car karaoke
entertainment products, which allow consumers to find a machine
that suits their needs and skill level. The Company’s products are
sold in over 25,000 locations worldwide, including at well-known
retailers such as Amazon, Costco, Sam’s Club, Target, and Walmart.
As the most recognized brand in karaoke, Singing Machine products
incorporate the latest technology and provide access to over 70,000
songs for streaming through its mobile app and select WiFi-capable
products. To learn more, go to www.singingmachine.com.
Investor Relations Contact:Brendan Hopkins(407)
645-5295investors@singingmachine.comwww.singingmachine.comwww.singingmachine.com/investors
Forward-Looking StatementsThis
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
SubsidiariesCONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
December 31, 2022 |
|
|
March 31, 2022 |
|
|
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
2,795,171 |
|
|
$ |
2,290,483 |
|
Accounts receivable, net of allowances of $139,182 and $122,550,
respectively |
|
|
7,023,603 |
|
|
|
2,785,038 |
|
Due from Crestmark Bank |
|
|
- |
|
|
|
100,822 |
|
Accounts receivable related party - Stingray Group, Inc. |
|
|
282,317 |
|
|
|
152,212 |
|
Inventories, net |
|
|
10,984,742 |
|
|
|
14,161,636 |
|
Prepaid expenses and other current assets |
|
|
154,329 |
|
|
|
344,409 |
|
Deferred financing costs |
|
|
84,668 |
|
|
|
7,813 |
|
Total Current Assets |
|
|
21,324,830 |
|
|
|
19,842,413 |
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net |
|
|
540,867 |
|
|
|
565,094 |
|
Deferred financing
costs, net of current portion |
|
|
151,694 |
|
|
|
- |
|
Deferred tax
assets |
|
|
1,399,016 |
|
|
|
892,559 |
|
Operating Leases -
right of use assets |
|
|
648,323 |
|
|
|
1,279,347 |
|
Other non-current
assets |
|
|
98,724 |
|
|
|
86,441 |
|
Total Assets |
|
$ |
24,163,454 |
|
|
$ |
22,665,854 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,084,756 |
|
|
$ |
5,391,265 |
|
Accrued expenses |
|
|
3,234,714 |
|
|
|
1,732,355 |
|
Revolving lines of credit |
|
|
1,761,495 |
|
|
|
2,500,000 |
|
Refunds due to customers |
|
|
93,520 |
|
|
|
97,968 |
|
Reserve for sales returns |
|
|
2,935,465 |
|
|
|
990,000 |
|
Current portion of finance leases |
|
|
8,187 |
|
|
|
7,605 |
|
Current portion of installment notes |
|
|
79,119 |
|
|
|
74,300 |
|
Current portion of operating lease liabilities |
|
|
654,883 |
|
|
|
876,259 |
|
Subordinated note payable - Starlight Marketing Development,
Ltd. |
|
|
- |
|
|
|
352,659 |
|
Total Current Liabilities |
|
|
10,852,139 |
|
|
|
12,022,411 |
|
|
|
|
|
|
|
|
|
|
Finance leases, net of
current portion |
|
|
4,405 |
|
|
|
10,620 |
|
Installment notes, net
of current portion |
|
|
78,693 |
|
|
|
138,649 |
|
Operating lease
liabilities, net of current portion |
|
|
30,422 |
|
|
|
457,750 |
|
Total Liabilities |
|
|
10,965,659 |
|
|
|
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;
3,148,219 and 1,221,209 shares issued and outstanding,
respectively |
|
|
31,482 |
|
|
|
12,212 |
|
Additional paid-in capital |
|
|
29,697,697 |
|
|
|
24,902,694 |
|
Accumulated deficit |
|
|
(16,531,384 |
) |
|
|
(14,878,482 |
) |
Total Shareholders’ Equity |
|
|
13,197,795 |
|
|
|
10,036,424 |
|
Total Liabilities and Shareholders’ Equity |
|
$ |
24,163,454 |
|
|
$ |
22,665,854 |
|
The Singing Machine Company,
Inc. and
SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales |
|
$ |
7,110,520 |
|
|
$ |
21,244,306 |
|
|
$ |
35,916,210 |
|
|
$ |
44,678,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold |
|
|
5,819,991 |
|
|
|
15,934,842 |
|
|
|
27,481,182 |
|
|
|
34,464,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
1,290,529 |
|
|
|
5,309,464 |
|
|
|
8,435,028 |
|
|
|
10,214,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
|
1,124,780 |
|
|
|
1,406,175 |
|
|
|
2,629,567 |
|
|
|
2,717,642 |
|
General and administrative expenses |
|
|
2,395,430 |
|
|
|
2,154,553 |
|
|
|
7,183,259 |
|
|
|
5,352,902 |
|
Depreciation |
|
|
52,816 |
|
|
|
55,007 |
|
|
|
173,206 |
|
|
|
190,087 |
|
Total Operating
Expenses |
|
|
3,573,026 |
|
|
|
3,615,735 |
|
|
|
9,986,032 |
|
|
|
8,260,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from
Operations |
|
|
(2,282,497 |
) |
|
|
1,693,729 |
|
|
|
(1,551,004 |
) |
|
|
1,954,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)
Income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain - related party |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,236 |
|
Gain from Payroll Protection Plan loan forgiveness |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
448,242 |
|
Gain from settlement of accounts payable |
|
|
48,650 |
|
|
|
- |
|
|
|
48,650 |
|
|
|
236,472 |
|
Loss from extinguishment of debt |
|
|
(183,333 |
) |
|
|
- |
|
|
|
(183,333 |
) |
|
|
- |
|
Interest expense |
|
|
(67,891 |
) |
|
|
(155,573 |
) |
|
|
(413,831 |
) |
|
|
(365,966 |
) |
Finance costs |
|
|
(17,638 |
) |
|
|
(9,375 |
) |
|
|
(25,451 |
) |
|
|
(35,672 |
) |
Total Other (Expenses)
Income, net |
|
|
(220,212 |
) |
|
|
(164,948 |
) |
|
|
(573,965 |
) |
|
|
294,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income Before
Income Tax Benefit (Provision) |
|
|
(2,502,709 |
) |
|
|
1,528,781 |
|
|
|
(2,124,969 |
) |
|
|
2,248,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Benefit
(Provision) |
|
|
569,343 |
|
|
|
(102,886 |
) |
|
|
472,067 |
|
|
|
(248,664 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
Income |
|
$ |
(1,933,366 |
) |
|
$ |
1,425,895 |
|
|
$ |
(1,652,902 |
) |
|
$ |
1,999,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) Income per
Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.62 |
) |
|
$ |
0.80 |
|
|
$ |
(0.61 |
) |
|
$ |
1.28 |
|
Diluted |
|
$ |
(0.62 |
) |
|
$ |
0.80 |
|
|
$ |
(0.61 |
) |
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common and Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalent
Shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
3,125,979 |
|
|
|
1,780,342 |
|
|
|
2,699,210 |
|
|
|
1,559,585 |
|
Diluted |
|
|
3,125,979 |
|
|
|
1,787,846 |
|
|
|
2,699,210 |
|
|
|
1,570,329 |
|
The Singing Machine Company,
Inc. and
SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited)
|
|
For the Nine Months Ended |
|
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(1,652,902 |
) |
|
$ |
1,999,655 |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
173,206 |
|
|
|
190,087 |
|
Amortization of deferred financing costs |
|
|
25,451 |
|
|
|
35,672 |
|
Change in inventory reserve |
|
|
396,553 |
|
|
|
297,661 |
|
Change in allowance for bad debts |
|
|
16,632 |
|
|
|
168,395 |
|
Loss from disposal of property and equipment |
|
|
- |
|
|
|
4,394 |
|
Stock based compensation |
|
|
307,651 |
|
|
|
38,376 |
|
Change in net deferred tax assets |
|
|
(506,457 |
) |
|
|
248,773 |
|
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 |
) |
|
|
(236,472 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(4,255,197 |
) |
|
|
(10,123,571 |
) |
Due from Crestmark Bank |
|
|
100,822 |
|
|
|
4,557,120 |
|
Accounts receivable - related parties |
|
|
(130,105 |
) |
|
|
(159,125 |
) |
Inventories |
|
|
2,780,341 |
|
|
|
(5,933,704 |
) |
Prepaid expenses and other current assets |
|
|
190,080 |
|
|
|
(63,135 |
) |
Other non-current assets |
|
|
(12,283 |
) |
|
|
10,288 |
|
Accounts payable |
|
|
(3,257,859 |
) |
|
|
3,769,157 |
|
Accrued expenses |
|
|
1,502,359 |
|
|
|
762,252 |
|
Customer deposits |
|
|
- |
|
|
|
(129,544 |
) |
Refunds due to customers |
|
|
(4,448 |
) |
|
|
(55,333 |
) |
Reserve for sales returns |
|
|
1,945,465 |
|
|
|
1,962,457 |
|
Operating lease liabilities, net of operating leases - right of use
assets |
|
|
(17,680 |
) |
|
|
2,741 |
|
Net cash used in operating activities |
|
|
(2,263,688 |
) |
|
|
(3,113,334 |
) |
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(148,979 |
) |
|
|
(77,599 |
) |
Net cash used in investing activities |
|
|
(148,979 |
) |
|
|
(77,599 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Proceeds from Issuance of stock - net of transaction expenses |
|
|
3,362,750 |
|
|
|
9,000,580 |
|
Payment of redemption and retirement of treasury stock |
|
|
- |
|
|
|
(7,162,452 |
) |
Net (payment) proceeds from revolving lines of credit |
|
|
(738,505 |
) |
|
|
8,561,925 |
|
Payment of subordinated note payable - Starlight Marketing
Development, Ltd. |
|
|
(352,659 |
) |
|
|
(150,000 |
) |
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 |
|
|
(55,137 |
) |
|
|
(50,709 |
) |
Proceeds from exercise of stock options |
|
|
- |
|
|
|
14,000 |
|
Proceeds from exercise of pre-funded warrants |
|
|
168,334 |
|
|
|
- |
|
Proceeds from exercise of common warrants |
|
|
975,538 |
|
|
|
- |
|
Payments on finance leases |
|
|
(5,633 |
) |
|
|
(6,184 |
) |
Net cash provided by financing activities |
|
|
2,917,355 |
|
|
|
10,169,659 |
|
Net change in
cash |
|
|
504,688 |
|
|
|
6,978,726 |
|
|
|
|
|
|
|
|
|
|
Cash at beginning of
year |
|
|
2,290,483 |
|
|
|
396,579 |
|
Cash at end of
period |
|
$ |
2,795,171 |
|
|
$ |
7,375,305 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
456,978 |
|
|
$ |
378,076 |
|
Equipment purchased under capital lease |
|
$ |
- |
|
|
$ |
23,651 |
|
Issuance of common stock and warrants for stock issuance
expenses |
|
$ |
- |
|
|
$ |
547,838 |
|
Operating leases - right of use assets and lease liabilities at
inception of lease |
|
$ |
- |
|
|
$ |
16,364 |
|
Singing Machine (NASDAQ:MICS)
Historical Stock Chart
From May 2024 to Jun 2024
Singing Machine (NASDAQ:MICS)
Historical Stock Chart
From Jun 2023 to Jun 2024