Restatement of Previously Issued Consolidated Financial Statements

12 Months Ended

Mar. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Restatement of Previously Issued Consolidated Financial Statements

NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

The Company has determined that in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, the Company incorrectly accounted for the cost of its co-op promotion allowances (previously referred to as “cooperative advertising”) with its customers as selling expenses instead of a reduction in net sales for each of the years ended March 31, 2020 and 2019, as these co-op promotion allowances are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements.

The effects of this accounting error do not impact the consolidated balance sheets, statements of cash flows and statements of shareholders’ equity for any current or past reporting period. The effects are confined to the consolidated statements of operations, and these notes to consolidated financial statements. The tables below set forth the consolidated statements of operations, including the balances as originally reported, adjustments and the as restated balances for each of the years affected:

The Singing Machine Company, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	Originally Reported						As Restated
	For the Year Ended						For the Year Ended
	March 31, 2020			Adjustment			March 31, 2020
Net Sales	$	41,418,304		$	(2,917,734	)	$	38,500,570
Cost of Goods Sold		30,323,223			-			30,323,223
Gross Profit		11,095,081			(2,917,734	)		8,177,347
Operating Expenses
Selling expenses		7,203,991			(2,917,734	)		4,286,257
General and administrative expenses		6,564,422			-			6,564,422
Bad debt expense (recovery)		302,333			-			302,333
Depreciation		269,107			-			269,107
Total Operating Expenses		14,339,853			(2,917,734	)		11,422,119
Loss from Operations		(3,244,772	)		-			(3,244,772	)
Other Expenses
Interest expense		(240,709	)		-			(240,709	)
Finance costs		(13,333	)		-			(13,333	)
Total Other Expenses		(254,042	)		-			(254,042	)
Loss Before Income Tax Benefit		(3,498,814	)		-			(3,498,814	)
Income Tax Benefit		641,814			-			641,814
Net Loss	$	(2,857,000	)	$	-		$	(2,857,000	)

	Originally Reported						As Restated
	For the Year Ended						For the Year Ended
	March 31, 2019			Adjustment			March 31, 2019
Net Sales	$	46,482,998		$	(2,284,830	)	$	44,198,168
Cost of Goods Sold		34,709,799			-			34,709,799
Gross Profit		11,773,199			(2,284,830	)		9,488,369
Operating Expenses
Selling expenses		5,117,235			(2,284,830	)		2,832,405
General and administrative expenses		5,790,019			-			5,790,019
Bad debt expense (recovery)		(442,671	)		-			(442,671	)
Depreciation		259,662			-			259,662
Total Operating Expenses		10,724,245			(2,284,830	)		8,439,415
Income from Operations		1,048,954			-			1,048,954
Other Expenses
Interest expense		(244,593	)		-			(244,593	)
Finance costs		(13,334	)		-			(13,334	)
Total Other Expenses		(257,927	)		-			(257,927	)
Income Before Income Tax Provision		791,027			-			791,027
Income Tax Provision		(159,480	)		-			(159,480	)
Net Income	$	631,547		$	-		$	631,547