-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kb5gTHFG2xGykpTULNl0QyyrsTGKzdtchQy6cgn2tPJFmOor3TrzpQi+u0ZrOWW9 hHk+cLTj0D/D4loFSNQCOQ== 0001116502-04-001685.txt : 20040630 0001116502-04-001685.hdr.sgml : 20040630 20040630110859 ACCESSION NUMBER: 0001116502-04-001685 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040630 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINGING MACHINE CO INC CENTRAL INDEX KEY: 0000923601 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 953795478 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24968 FILM NUMBER: 04890362 BUSINESS ADDRESS: STREET 1: 6601 LYONS ROAD STREET 2: BLDG A-7 CITY: COCONUT CREEK STATE: FL ZIP: 33073 BUSINESS PHONE: 9545961000 MAIL ADDRESS: STREET 1: 6601 LYONS ROAD BLDG CITY: COCONUT CREEK STATE: FL ZIP: 33073 8-K 1 singing8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 30, 2004 THE SINGING MACHINE COMPANY, INC. ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-24968 95-3795478 - ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 6601 Lyons Road, Bldg. A-7 Coconut Creek, FL 33073 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (954) 596-1000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- (Former Name or Former Address, if Change Since Last Report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits. 99.1 The Singing Machine Company, Inc. Press Release dated June 30, 2004 ITEM 12. RESULTS OF OPERATION AND FINANCIAL CONDITION On June 30, 2004, The Singing Machine Company, Inc. (the "Company") issued a press release commenting on its preliminary and unaudited financial results for the twelve months ended March 31, 2004. A copy of the press release issued on June 30, 2004 is attached hereto as Exhibit 99.1. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. THE SINGING MACHINE COMPANY, INC. Date: June 30, 2004 By: /s/ Jeff Barocas ------------------------------ Jeff Barocas Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press Release of The Singing Machine Company, Inc. dated June 30, 2004 EX-99.1 2 pressrelease.txt PRESS RELEASE THE SINGING [LOGO] INVESTOR CONTACT: COMPANY CONTACT: MACHINE(R) Neil Berkman Jeff Barocas Berkman Associates CFO (310) 277 - 5162 (954) 596 - 1000 info@BerkmanAssociates.com www.SingingMachine.com FOR IMMEDIATE RELEASE THE SINGING MACHINE COMPANY ANNOUNCES PRELIMINARY AND UNAUDITED FISCAL 2004 FINANCIAL RESULTS COCONUT CREEK, FL, June 30, 2004 THE SINGING MACHINE COMPANY (AMEX: SMD) today announced preliminary and unaudited financial results for the fiscal year ended March 31, 2004. For fiscal 2004, The Singing Machine reported a net loss of $22.7 million, or $2.65 per share, on revenue of $70.5 million. Results for fiscal 2004 included inventory write-offs of approximately $7.6 million, as well as litigation, severance, license guarantee, lease termination and other unusual or non-recurring expenses totaling approximately $4.6 million. For fiscal 2003, net income was $1.2 million, or $0.14 per diluted share, on revenue of $95.6 million. The Singing Machine reported total current assets at March 31, 2004 of $13.2 million, including cash and restricted cash of $1.2 million, accounts receivable of $3.8 million, and inventories of $5.2 million. Total current liabilities at March 31, 2004 were $13.1 million. Shareholder's equity was $217,000 versus $17.7 million at March 31, 2003. As was the case in fiscal 2003, the Company again expects its auditors to state that there exists substantial doubt about the Company's ability to continue as a going concern. Interim CEO Y.P. Chan noted that the Company's cash on hand is limited. He said that management plans to finance working capital needs from the collection of accounts receivable and continued sales of existing inventory. If these sources do not provide adequate financing, he said that the Company may try to obtain financing under its factoring agreement or from a third party. Although the Company currently has no outstanding borrowings under its factoring agreement, it is in technical default because it has violated tangible net worth and working capital requirements. The Company intends to negotiate to amend or waive these requirements. Chan added, "Following a difficult year in fiscal 2004, we are making progress in areas that are critical to The Singing Machine's future. On the cost side, we recently sub-leased one of our warehouses and partially sub-leased a second warehouse. We estimate that this will save the Company approximately $750,000 annually. We plan to sub-lease the rest of the space by the end of the year when we complete the sale of our remaining inventory, which should generate additional savings. We also have reduced our payroll expense in the U.S. by approximately 50% compared to last year's peak payroll. While this has been a painful process, we believe that we have the right people in place to achieve a cost structure that's appropriate for our business. "On the sales side, the new season is off to an encouraging start. The backlog of FOB orders for our karaoke products was $32.8 million at June 15, 2004 compared to backlog of $33.4 million a year earlier, with substantially higher gross margin on this year's orders than last year's. We expect volume shipments by our vendors in China to begin this summer." Chan noted that these orders are subject to cancellation or modification at any time prior to delivery. (more) THE SINGING MACHINE COMPANY, INC. 6601 Lyons Road o Building A-7 o Coconut Creek, Florida 33073 (954) 596-1000 o Fax (954) 596-2000 THE SINGING MACHINE COMPANY ANNOUNCES FISCAL 2004 FINANCIAL RESULTS June 30, 2004 Page Two The Company is in the process of finalizing its financial statements for fiscal 2004 and is filing an extension with the SEC on Form 12B-25. CONFERENCE CALL Singing Machine has scheduled a conference call today at 11:00 a.m. ET. A simultaneous webcast may be accessed at www.fulldisclosure.com/company.asp?client=cb&ticker=smd. A replay will be available at this same Internet address after 1:00 p.m. ET. For a telephone replay, dial (800) 633-8284, reservation #21200011 after 1:00 p.m. ET. ABOUT THE SINGING MACHINE Incorporated in 1982, The Singing Machine Company develops and distributes a full line of consumer-oriented karaoke machines and music under The Singing MachineTM, MTVTM, NickelodeonTM, Hardrock AcademyTM, MotownTM and Care BearsTM brand names. The first to provide karaoke systems for home entertainment in the United States, Singing Machine sells its products in North America, Europe and Asia. 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, 2004. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the risks that (1) our financial results for the year ended March 31, 2004 are preliminary and unaudited and may change from the results stated in this press release as a result of issues that have not yet been identified by us or our auditors after the date of this press release, (2) the purchase orders that we have received in the amount of $32.8 million, which represent our backlog as of June 15, 2004, are subject to cancellation, modification of amendment at any time prior to shipment of the products and therefore should not be considered any guarantee of future sales. In addition, 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. (tables attached) THE SINGING MACHINE COMPANY, INC. AND SUBSIDIARY PRELIMINARY AND UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS March 31, March 31, March 31, 2004 2003 2002 ------------ ------------ ------------- (unaudited) (audited) (as restated) Net sales $ 70,541,128 $ 95,613,766 $ 62,475,753 Cost of sales: Cost of goods sold 68,279,589 72,329,035 40,852,840 Impairment of tooling 442,989 -- -- ------------ ------------ ------------ Gross profit 1,818,550 23,284,731 21,622,913 Operating expenses: Advertising 2,340,439 5,032,367 2,377,638 Commissions 1,024,883 997,529 1,294,543 Compensation 5,048,831 3,637,559 2,486,547 Freight & handling 1,423,082 2,112,435 1,242,910 Royalty expense 2,294,727 2,257,653 1,862,116 Selling, general & administrative expenses 9,881,887 7,632,957 4,123,779 ------------ ------------ ------------ Total operating expenses 22,013,849 21,670,501 13,387,533 ------------ ------------ ------------ (Loss) income from operations (20,195,299) 1,614,230 8,235,380 Other income (expenses): Other income 22,116 196,537 44,368 Interest expense (1,752,952) (406,126) (112,123) Interest income 1,216 11,943 16,934 ------------ ------------ ------------ Net other expenses (1,729,620) (197,646) (50,821) ------------ ------------ ------------ (Loss) income before provision for income taxes (21,924,919) 1,416,584 8,184,559 Provision for income taxes 758,505 198,772 1,895,494 ------------ ------------ ------------ Net (loss) income $(22,683,424) $ 1,217,812 $ 6,289,065 ============ ============ ============ (Loss) earnings per common share: Basic $ (2.65) $ 0.15 $ 0.88 Diluted $ (2.65) $ 0.14 $ 0.79 Weighted average common and common equivalent shares: Basic 8,566,116 8,114,330 7,159,142 Diluted 8,566,116 8,931,385 7,943,473 THE SINGING MACHINE COMPANY, INC. AND SUBSIDIARY PRELIMINARY AND UNAUDITED CONSOLIDATED BALANCE SHEETS March 31, March 31, 2004 2003 ------------ ----------- ASSETS (unaudited) (audited) ------ Current assets: Cash and cash equivalents $ 356,342 $ 268,264 Restricted cash 874,283 838,411 Accounts receivable, less allowances of $98,000 and $406,000, respectively 3,806,166 5,762,944 Due from manufacturers 134,964 1,091,871 Inventories, net 5,228,060 25,194,346 Prepaid expense and other current assets 783,492 1,449,505 Insurance receivable 800,000 -- Refundable tax 1,178,512 -- Deferred tax asset -- 1,925,612 ------------ ----------- Total current assets 13,161,819 36,530,953 Property and equipment, at cost less accumulated depreciation of $2,567,000 and $1,473,000, respectively 983,980 1,096,424 Other non-current assets 615,773 1,307,917 ------------ ----------- Total assets $ 14,761,572 $38,935,294 ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank overdraft $ 62,282 $ 316,646 Accounts payable 3,995,851 7,553,007 Accrued expenses 3,481,905 1,443,406 Customer credits on account 2,111,485 933,002 Subordinated debt-related parties 1,000,000 400,000 Revolving credit facilities -- 6,782,824 Income taxes payable 2,447,746 3,821,045 ------------ ----------- Total current liabilities 13,099,269 21,249,930 Convertible debentures, net of unamortized discount of $2,554,511 1,445,489 -- ------------ ----------- Total liabilities 14,544,758 21,249,930 Shareholders' equity Preferred stock, $1.00 par value; 1,000,000 shares authorized, no shares issued and outstanding -- -- Common stock, Class A, $.01 par value; 100,000 shares authorized; no shares issued and outstanding -- -- Common stock, $0.01 par value; 18,900,000 shares authorized; 8,752,318 and 8,171,678 shares issued and outstanding 87,523 81,717 Additional paid-in capital 10,052,498 4,843,430 Accumulated (deficit) / retained earnings (9,923,207) 12,760,217 ------------ ----------- Total shareholders' equity 216,814 17,685,364 ------------ ----------- Total liabilities and shareholders' equity $ 14,761,572 $38,935,294 ============ =========== -----END PRIVACY-ENHANCED MESSAGE-----