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Singing Machine Reports $17.1 Million in Second Quarter Revenue; 23% Increase in Year-to-Date Sales

Fort Lauderdale, FL, Nov. 14, 2022 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. (“Singing Machine” or the “Company”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products – today announced its second quarter financial results for the three months ended September 30, 2022.

Second Quarter Highlights:

  • Net sales for the quarter of $17.1 million; fiscal year-to-date revenue of $28.8 million (an increase of 23% over the same period in the prior year).
  • Gross profit increased by approximately $0.6 million to $3.9 million (representing a 23% gross margin) compared to $3.3 million (or 19% gross margin) in the prior year (an overall increase of 4% compared to the prior year same period). The improvement was in part due to lower inbound logistics and transportation expenses.
  • Income from Operations of approximately $0.6 million for the quarter; the Company continues to demonstrate ability to produce profitable quarters.
  • Strengthened balance sheet with a successful $15 million senior secured line of credit refinancing with Fifth Third Bank on October 14, 2022.
  • Fully diluted EPS of $0.08 for the quarter and $0.11 for the year-to-date period.

Management Commentary:

Gary Atkinson, Singing Machine CEO, commented, “This was a very strong quarter for our Company. We are very pleased to share our results of operations, particularly in a challenging overall economic environment.”

“We have aggressively sought to sell product into our best retail partners throughout the year, and that was a key factor for our $17 million in top line sales for the quarter which helped contribute to the 23% growth in year-to-date net sales and almost $29 million in net sales for the fiscal-year-to-date period. We’re proud of these results and our ability to continue to perform and deliver despite some of the overall headwinds facing the retail industry today.”

“More importantly, we were able to accomplish our goal at the beginning of the year which was to improve gross margins by over 400-basis point compared to the same quarter last year. To overcome last year’s supply chain challenges, our team worked hard this year to shift a majority of our business to FOB-China thereby improving the timing and efficiency of shipments to avoid any potential supply-chain disruptions and to ensure our retail customers remained in-stock on key karaoke products.”

“As we enter our holiday quarter, the market remains volatile and challenging with generally elevated levels of inventory present throughout the entire consumer products market. However, through our long-standing partnerships at retail and our commitment to innovation, we firmly believe we are well-positioned to remain the market leader today and well into the future.”

“We continue to look for and invest into new serviceable markets and business verticals within the karaoke category that are currently untapped in the U.S. market. We believe there are a number of significant growth opportunities where we can be very competitive while driving new sales growth at compelling margins,” concluded Mr. Atkinson.

Earnings Call Information:

The Company will host a conference call today, Monday, November 14, 2021, beginning at 5:00 PM Eastern time to discuss these results and answer questions. If you would like to participate on the call, please dial (800) 343-4849 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:

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

Investor Relations Contact:
Brendan Hopkins
(407) 645-5295

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

  September 30, 2022  March 31, 2022 
Current Assets        
Cash $2,978,683  $2,290,483 
Accounts receivable, net of allowances of $277,953 and $122,550, respectively  10,640,685   2,785,038 
Due from Crestmark Bank  1,076,988   100,822 
Accounts receivable related party - Stingray Group, Inc.  81,665   152,212 
Inventories, net  16,022,436   14,161,636 
Prepaid expenses and other current assets  158,238   344,409 
Deferred financing costs  -   7,813 
Total Current Assets  30,958,695   19,842,413 
Property and equipment, net  532,505   565,094 
Deferred tax assets  812,478   892,559 
Operating Leases - right of use assets  862,279   1,279,347 
Other non-current assets  193,841   86,441 
Total Assets $33,359,798  $22,665,854 
Liabilities and Shareholders’ Equity        
Current Liabilities        
Accounts payable $10,133,744  $5,391,265 
Accrued expenses  2,544,287   1,732,355 
Revolving line of credit - Iron Horse Credit  2,500,000   2,500,000 
Refunds due to customers  93,925   97,968 
Reserve for sales returns  1,690,606   990,000 
Current portion of finance leases  7,988   7,605 
Current portion of installment notes  77,479   74,300 
Current portion of operating lease liabilities  848,723   876,259 
Subordinated note payable - Starlight Marketing Development, Ltd.  352,659   352,659 
Total Current Liabilities  18,249,411   12,022,411 
Finance leases, net of current portion  6,528   10,620 
Installment notes, net of current portion  99,098   138,649 
Operating lease liabilities, net of current portion  60,374   457,750 
Total Liabilities  18,415,411   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; 3,108,814 and 1,221,209 shares issued and outstanding, respectively  31,088   12,212 
Additional paid-in capital  29,511,317   24,902,694 
Accumulated deficit  (14,598,018)  (14,878,482)
Total Shareholders’ Equity  14,944,387   10,036,424 
Total Liabilities and Shareholders’ Equity $33,359,798  $22,665,854 

The Singing Machine Company, Inc. and Subsidiaries

  For the Three Months Ended  For the Six Months Ended 
  September 30,
  September 30,
  September 30,
  September 30,
Net Sales $17,113,636  $17,368,973  $28,805,690  $23,434,623 
Cost of Goods Sold  13,149,667   14,041,669   21,661,191   18,529,449 
Gross Profit  3,963,969   3,327,304   7,144,499   4,905,174 
Operating Expenses                
Selling expenses  899,590   733,485   1,504,787   1,311,467 
General and administrative expenses  2,417,405   1,776,997   4,787,829   3,198,349 
Depreciation  62,323   66,809   120,390   135,080 
Total Operating Expenses  3,379,318   2,577,291   6,413,006   4,644,896 
Income from Operations  584,651   750,013   731,493   260,278 
Other (Expenses) Income                
Gain - related party  -   -   -   11,236 
Gain from Payroll Protection Plan loan forgiveness  -   -   -   448,242 
Gain from settlement of accounts payable  -   236,472   -   236,472 
Interest expense  (185,827)  (110,864)  (345,940)  (210,393)
Finance costs  -   (9,375)  (7,813)  (26,297)
Total Other (Expenses) Income, net  (185,827)  116,233   (353,753)  459,260 
Income Before Income Tax Provision  398,824   866,246   377,740   719,538 
Income Tax Provision  (102,357)  (173,873)  (97,276)  (145,778)
Net Income $296,467  $692,373  $280,464  $573,760 
Net Income per Common Share                
Basic $0.10  $0.43  $0.11  $0.40 
Diluted $0.08  $0.43  $0.09  $0.39 
Weighted Average Common and Common                
Equivalent Shares:                
Basic  3,071,131   1,593,929   2,484,660   1,448,603 
Diluted  3,610,188   1,605,134   2,961,631   1,460,967 

The Singing Machine Company, Inc. and Subsidiaries

  For the Six Months Ended 
  September 30, 2022  September 30, 2021 
Cash flows from operating activities        
Net Income $280,464  $573,760 
Adjustments to reconcile net income to net cash used in operating activities:        
Depreciation  120,390   135,080 
Amortization of deferred financing costs  7,813   26,297 
Change in inventory reserve  (93,447)  53,890 
Change in allowance for bad debts  155,403   118,321 
Loss from disposal of property and equipment  -   4,394 
Stock based compensation  231,213   34,727 
Change in net deferred tax assets  80,081   145,778 
Paycheck Protection Plan loan forgiveness  -   (448,242)
Gain - related party  -   (11,236)
Gain from extinguishment of accounts payable  -   (236,472)
Changes in operating assets and liabilities:        
Accounts receivable  (8,011,050)  (9,409,973)
Due from Crestmark Bank  (976,166)  4,557,120 
Accounts receivable - related parties  70,547   (70,880)
Inventories  (1,767,353)  (13,721,821)
Prepaid expenses and other current assets  186,171   23,155 
Other non-current assets  (107,400)  50,262 
Accounts payable  4,742,479   16,409,171 
Accrued expenses  811,932   381,213 
Customer deposits  -   (53,249)
Refunds due to customers  (4,043)  (46,686)
Reserve for sales returns  700,606   903,731 
Operating lease liabilities, net of operating leases - right of use assets  (7,844)  5,655 
Net cash used in operating activities  (3,580,204)  (576,005)
Cash flows from investing activities        
Purchase of property and equipment  (87,801)  (77,599)
Net cash used in investing activities  (87,801)  (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 proceeds from revolving lines of credit  -   1,977,006 
Payment of deferred financing charges  -   (37,501)
Payments on installment notes  (36,372)  (33,451)
Proceeds from exercise of stock options  -   4,800 
Proceeds from exercise of pre-funded warrants  168,334   - 
Proceeds from exercise of common warrants  865,202   - 
Payment on subordinated note payable      (150,000)
Payments on finance leases  (3,709)  (4,440)
Net cash provided by financing activities  4,356,205   3,594,542 
Net change in cash  688,200   2,940,938 
Cash at beginning of year  2,290,483   396,579 
Cash at end of period $2,978,683  $3,337,517 
Supplemental disclosures of cash flow information:        
Cash paid for interest $331,225  $249,734 
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 


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