EX-99.1 2 v079558_ex99-1.htm
 
 
Investor Contact:
Neil Berkman
Berkman Associates
(310) 826 - 5051
 info@BerkmanAssociates.com
 
Company Contact:
Danny Zheng
CFO
(954) 596 - 1000
 www.SingingMachine.com
 
 
 
The Singing Machine Company Reports Fiscal 2007 Results

Net Income Was $0.03 Per Share Versus A Loss of $0.19 Per Share
Working Capital Increased to $2.4 Million Versus A Deficit of $4.3 Million
Shareholders' Equity Increased to $2.9 Million Versus A Deficit of $3.7 Million


Coconut Creek, FL, June 27, 2007 -- The Singing Machine Company (AMEX: SMD) today announced financial results for the fiscal year ended March 31, 2007, highlighted by net income of $0.03 per diluted share versus a loss of $0.19 per diluted share for the fiscal year ended March 31, 2006.
The Company also reported substantial improvements in its balance sheet, including an increase in working capital to $2.4 million at March 31, 2007 compared to a working capital deficit of $4.3 million at March 31, 2006, and an increase in shareholders' equity to $2.9 million at March 31, 2007 compared to a deficit of $3.7 million at March 31, 2006.
"We achieved our primary goals for fiscal 2007, most importantly a return to profitability after three years of losses and a dramatic improvement in our financial condition, but we are far from satisfied. What remains is to drive top line growth going forward, and we believe that we have positioned the Company to make this happen in fiscal 2008," said CFO Danny Zheng.
"We also developed and introduced a new line of electronic products based on MGA's BRATZTM franchise, one of the world's leading toy lines and girls' lifestyle brands. These new products, which include DVD players, combination TV/DVDs, boom boxes, mini radios and sunglass radios jointly developed by The Singing Machine and MGA, have been well-received by our customers. Our BRATZ line is now being carried in Toys R Us stores nationwide, for example, and we currently expect these products to make a significant contribution to revenue in fiscal 2008. As a result, we are optimistic that we will increase our revenues in the new year compared to fiscal 2007." Zheng added.
Zheng noted that total operating expenses decreased 15% for fiscal 2007 compared to fiscal 2006, reflecting the Company's continued focus on effective cost control.

Fiscal 2007 Results
Revenue for the twelve months ended March 31, 2007 decreased to $26,732,000 compared to $32,306,000 for fiscal 2006.
Gross margin improved to 23% of revenue compared to 22% for the prior year, reflecting the increased contribution of new models.


(more)
THE SINGING MACHINE COMPANY, INC.
6601 Lyons Road ● Building A-7 ● Coconut Creek, Florida 33073 ● (954) 596-1000 ● Fax (954) 596-2000

 

 

 
The Singing Machine Company Reports Fiscal 2007 Results
June 27, 2007
Page Two
 
Loss from operations decreased to $1,702,000 compared to a loss from operations of $2,159,000 for fiscal 2006. The decrease was primarily due to the reduction of operating expenses.
Net income for fiscal 2007 was $739,000, or $0.03 per diluted share, which included $2,454,000 from the reversal of a provision for Hong Kong income taxes. This compares to a net loss for fiscal 2006 of $1,905,000, or $0.19 per diluted share.

Conference Call Postponed
Singing Machine has postponed the conference call previously scheduled for today at 11:00 a.m. EST, and will soon announce a new date and time for the call soon.

About The Singing Machine
Incorporated in 1982, The Singing Machine Company develops and distributes a full line of consumer-oriented karaoke machines and music as well as other electronic products under The Singing MachineTM, MotownTM, MTVTM, NickelodeonTM, Hi-5TM, BratzTM and other brand names. The first to provide karaoke systems for home entertainment in the United States, The 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, 2007. 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 our vendors in China may not ship our products on the scheduled basis and that we will have sufficient cash flow to finance our working capital needs in the second and third quarter of this fiscal year. 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)
#4371
 
 
 
The Singing Machine Company, Inc. and Subsidiaries
 
CONSOLIDATED STATEMENTS OF OPERATIONS 
  
 
     
For Years Ended
March 31, 
  
     
2007 
    
2006 
    
2005 
  
 
Net Sales
  
$
26,732,144
  
$
32,305,560
  
$
38,209,825
  
                     
 
Cost of Goods Sold
    
20,616,541
   
25,223,056
   
28,945,283
 
                     
 
Gross Profit
    
6,115,603
   
7,082,504
   
9,264,542
 
     
   
   
 
 
Operating Expenses
                    
 
Selling expenses
    
2,308,959
   
2,169,168
   
3,546,185
 
 
General and administrative expenses
    
4,952,254
   
6,140,542
   
6,629,263
 
 
Depreciation and amortization
    
556,051
   
932,216
   
709,329
 
                     
 
Total Operating Expenses
    
7,817,264
   
9,241,926
   
10,884,777
 
                     
 
Loss from Operations
    
(1,701,661
)
  
(2,159,422
)
  
(1,620,235
)
                     
 
Other Income (Expenses)
                    
 
Other income
    
--
   
103,396
   
204,267
 
 
Gain on sale of subsidiary and other assets
    
29,028
   
--
   
--
 
 
Net gain on retirement of convertible debentures
    
--
   
2,253,725
   
--
 
 
Interest expense
    
(42,355
)
  
(487,307
)
  
(549,506
)
 
Interest expense - Amortization of
                    
 
   discount on convertible debentures
    
--
   
(1,615,642
)
  
(1,626,501
)
                     
 
Net Other Income (Expenses)
    
(13,327
)
  
254,172
   
(1,971,740
)
                     
 
Loss before reversal of provision for income taxes 
    
(1,714,988
)
  
(1,905,250
)
  
(3,591,975
)
                     
 
Reversal of Provision for income taxes
    
2,453,576
   
--
   
--
 
                     
 
Net Income (Loss)
  
$
738,588
 
$
(1,905,250
)
$
(3,591,975
)
                     
 
Income (Loss) per Common Share
                    
 
Basic 
  
$
0.03
 
$
(0.19
)
$
(0.39
)
 
Diluted
  
$
0.03
 
$
(0.19
)
$
(0.39
)
                     
 
Weighted Average Common and
                    
 
Common Equivalent Shares:
                    
 
Basic 
    
21,473,193
   
10,029,085
   
9,112,278
 
 
Diluted
    
25,082,054
   
10,029,085
   
9,112,278
 
 


 
The Singing Machine Company, Inc. and Subsidiaries
 
CONSOLIDATED BALANCE SHEETS 
 
  
     
March 31,
  
     
2007
    
2006 
  
 
Assets
          
 
Current Assets
          
 
Cash and cash equivalents
  
$
1,188,900
 
$
423,548
 
 
Restricted cash
    
--
   
268,405
 
 
Accounts receivable, net 
    
1,054,371
   
1,169,271
 
 
Due from factor
    
109,991
   
134,281
 
 
Inventories
    
2,280,083
   
1,688,058
 
 
Prepaid expenses and other current assets
    
521,891
   
228,402
 
               
 
Total Current Assets
    
5,155,236
   
3,911,965
 
               
 
Property and Equipment, net
    
446,510
   
513,615
 
 
Other Non-Current Assets
    
56,054
   
98,687
 
               
 
Total Assets
  
$
5,657,800
 
$
4,524,267
 
               
               
 
Liabilities and Shareholders' Equity (Deficit)
              
               
 
Current Liabilities
              
 
Accounts payable
  
$
903,245
 
$
1,563,810
 
 
Accounts payable - related party
    
199,316
   
--
 
 
Accrued expenses
    
624,994
   
648,182
 
 
Customer credits on account
    
594,169
   
1,034,215
 
 
Deferred gross profit on estimated returns
    
213,718
   
186,282
 
 
Loan payable
    
--
   
2,000,000
 
 
Subordinated debt-related parties
    
225,000
   
300,000
 
 
Income tax payable
    
--
   
2,453,576
 
               
 
Total Current Liabilities
    
2,760,441
   
8,186,065
 
               
 
Shareholders' Equity (Deficit)
              
 
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; 100,000,000 shares authorized; 
              
 
27,286,199 and 10,060,282 shares issued and outstanding
    
272,862
   
100,603
 
 
Additional paid-in capital
    
17,306,341
   
11,658,031
 
 
Accumulated deficit
    
(14,681,844
)
  
(15,420,432
)
               
 
Total Shareholders' Equity (Deficit)
    
2,897,359
   
(3,661,798
)
               
 
Total Liabilities and Shareholders' Equity (Deficit)
  
$
5,657,800
 
$
4,524,267