- Revenues for the three months ended
June 30, 2023 were$2.6 million , as compared to$11.7 million for the same period in the prior year. The$9.1 million decrease was largely due to the distortive effects of$6.7 million in purchase orders from Walmart and Sam’s Club in the first quarter of the prior year. - These orders were in part due to the launch of
Singing Machine products in theWalmart Consumer Electronics department in mid-2022, and a direct import shipment that accelerated revenues normally booked in the second quarter into the tail end of our first quarter of fiscal 2022. Overall, first quarter of fiscal 2024 sales were consistent with the Company’s historical record for customer purchases. - Gross margins improved to 32.3% for the first quarter of fiscal 2024, as compared to 27.2% for the same period in the prior year. The improvement was largely the result of more sales of higher margin products and efficiencies in shipping that resulted in slightly lower overall shipping expenses.
- Operating expenses were
$3.3 million for the three months endedJune 30, 2023 , as compared to$3.0 million for the same period in the prior year. The increase was almost entirely due to a$0.3 million one-time expense relating to the closure of the Company’s logistics facility inOntario, CA. The Company has migrated to an outsourced third-party logistics warehouse that is expected to covert fixed annual overhead expenses to variable expenses and help insulate the Company from rising occupancy and labor costs in the southernCalifornia market. - The Company maintained a strong balance sheet with
$8.6 million in working capital as ofJune 30, 2023 . Cash on hand was$1.9 million , and additional$2.0 million was available under a revolving credit agreement as ofJune 30, 2023 .
Management Commentary:
“In contrast, during the same period last year, supply chain interruptions resulted in extended lead-times, forcing retailers to accelerate their order timing to ship earlier during our first quarter. Additionally, during the same quarter last year, we celebrated opening a new major department within Walmart stores which resulted in a heavy front loading of inventory to set all of the stores.”
Atkinson continued, “Despite the timing of shipments returning to the traditional second fiscal quarter, our view on the upcoming holiday retail season remains optimistic. All of our existing retail customers have committed to karaoke programs for this holiday season and we will be launching at least five new, innovative karaoke products this fall. We are generally pleased with the purchase orders received and the timing and schedule of delivery for product shipments.”
Earnings Call Information:
The Company will host a conference call today,
About
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
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 1,890,014 | $ | 2,894,574 | ||||
Accounts receivable, net of allowances of | 713,152 | 2,075,086 | ||||||
Accounts receivable related party - Stingray Group, Inc. | 174,853 | 218,328 | ||||||
Accounts receivable related party - | 20,750 | 20,750 | ||||||
Inventories, net | 10,607,610 | 9,639,992 | ||||||
Prepaid expenses and other current assets | 473,277 | 266,068 | ||||||
Deferred financing costs | 84,667 | 84,667 | ||||||
Total Current Assets | 13,964,323 | 15,199,465 | ||||||
Property and equipment, net | 492,253 | 633,207 | ||||||
Deferred financing costs, net of current portion | 109,361 | 130,528 | ||||||
Operating leases - right of use assets | 331,878 | 561,185 | ||||||
Other non-current assets | 124,201 | 124,212 | ||||||
Total Assets | $ | 15,022,016 | $ | 16,648,597 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 2,644,691 | $ | 1,769,348 | ||||
Accrued expenses | 1,294,794 | 2,265,424 | ||||||
Refunds due to customers | 670,699 | 583,323 | ||||||
Reserve for sales returns | 331,754 | 900,000 | ||||||
Current portion of finance leases | 18,531 | 18,162 | ||||||
Current portion of installment notes | 82,506 | 80,795 | ||||||
Current portion of operating lease liabilities | 277,733 | 508,515 | ||||||
Total Current Liabilities | 5,320,708 | 6,125,567 | ||||||
Finance leases, net of current portion | 41,369 | 46,142 | ||||||
Installment notes, net of current portion | 36,575 | 57,855 | ||||||
Operating lease liabilities, net of current portion | 78,809 | 87,988 | ||||||
Total Liabilities | 5,477,461 | 6,317,552 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock | 42,203 | 31,675 | ||||||
Additional paid-in capital | 31,478,977 | 29,822,205 | ||||||
Subscriptions receivable | - | (5,891 | ) | |||||
Accumulated deficit | (21,976,625 | ) | (19,516,944 | ) | ||||
Total Shareholders’ Equity | 9,544,555 | 10,331,045 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 15,022,016 | $ | 16,648,597 |
See notes to the condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended | ||||||||
$ | 2,625,003 | $ | 11,692,054 | |||||
Cost of Goods Sold | 1,776,153 | 8,511,524 | ||||||
Gross Profit | 848,850 | 3,180,530 | ||||||
Operating Expenses | ||||||||
Selling expenses | 445,274 | 605,197 | ||||||
General and administrative expenses | 2,650,858 | 2,370,424 | ||||||
Depreciation | 183,454 | 58,067 | ||||||
Total Operating Expenses | 3,279,586 | 3,033,688 | ||||||
(Loss) Income from Operations | (2,430,736 | ) | 146,842 | |||||
Other Expenses | ||||||||
Interest expense | (7,778 | ) | (160,113 | ) | ||||
Finance costs | (21,167 | ) | (7,813 | ) | ||||
Total Other Expenses | (28,945 | ) | (167,926 | ) | ||||
Loss Before Income Tax Benefit | (2,459,681 | ) | (21,084 | ) | ||||
Income Tax Benefit | - | 5,081 | ||||||
Net Loss | $ | (2,459,681 | ) | $ | (16,003 | ) | ||
Net Loss per Common Share | ||||||||
Basic and Diluted | $ | (0.64 | ) | $ | (0.01 | ) | ||
Weighted Average Common and Common Equivalent Shares: | ||||||||
Basic and Diluted | 3,872,447 | 1,911,485 | ||||||
See notes to the condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended | ||||||||
Cash flows from operating activities | ||||||||
Net Loss | $ | (2,459,681 | ) | $ | (16,003 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 183,454 | 58,067 | ||||||
Amortization of deferred financing costs | 21,167 | 7,813 | ||||||
Change in inventory reserve | 132,386 | - | ||||||
Change in allowance for bad debts | (19,671 | ) | 138,237 | |||||
Stock based compensation | 63,406 | 35,565 | ||||||
Change in net deferred tax assets | - | (5,081 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,381,605 | (7,001,987 | ) | |||||
Due from banks | - | (340,810 | ) | |||||
Accounts receivable - related parties | 43,475 | (90,043 | ) | |||||
Inventories | (1,100,004 | ) | 1,205,145 | |||||
Prepaid expenses and other current assets | (207,209 | ) | 113,473 | |||||
Other non-current assets | 11 | 3,032 | ||||||
Accounts payable | 875,343 | 1,390,942 | ||||||
Accrued expenses | (970,630 | ) | 447,566 | |||||
Refunds due to customers | 87,376 | 16,034 | ||||||
Reserve for sales returns | (568,246 | ) | (108,341 | ) | ||||
Operating lease liabilities, net of operating leases - right of use assets | (10,654 | ) | (2,913 | ) | ||||
Net cash used in operating activities | (2,547,872 | ) | (4,149,304 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (42,500 | ) | (21,801 | ) | ||||
Net cash used in investing activities | (42,500 | ) | (21,801 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of stock - net of transaction expenses | 1,603,894 | 3,362,750 | ||||||
Collection of subscriptions receivable | 5,891 | - | ||||||
Payments on installment notes | (19,569 | ) | (17,995 | ) | ||||
Proceeds from exercise of common stock warrants | - | 647,422 | ||||||
Proceeds from exercise of pre-funded warrants | - | 168,334 | ||||||
Payments on finance leases | (4,404 | ) | (1,832 | ) | ||||
Net cash provided by financing activities | 1,585,812 | 4,158,679 | ||||||
Net change in cash | (1,004,560 | ) | (12,426 | ) | ||||
Cash at beginning of period | 2,894,574 | 2,290,483 | ||||||
Cash at end of period | $ | 1,890,014 | $ | 2,278,057 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 6,280 | $ | 158,490 |
See notes to the condensed consolidated financial statements
Source:
2023 GlobeNewswire, Inc., source