REVENUE

6 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUE

NOTE 5 - REVENUE

The Company disaggregates revenues by product line as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments.

Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended				Six Months Ended
Product Line	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Classic Karaoke Machines	$	7,259,000	$	9,132,000	$	8,461,000	$	14,343,000
Licensed Products		36,000		4,000		43,000		48,000
SMC Kids Toys		297,000		622,000		327,000		1,557,000
Microphones and Accessories		962,000		2,558,000		1,885,000		5,110,000
Streaming Karaoke Machines *		7,377,000		4,798,000		7,840,000		7,748,000
Total Net Sales	$	15,931,000	$	17,114,000	$	18,556,000	$	28,806,000

* Streaming Karaoke Machines -The Streaming Karaoke Machines product line is defined as a karaoke hardware unit that contains built-in technology that gives the user the ability to stream karaoke content directly via WiFi to the karaoke machine without requiring any third-party devices.

THE SINGING MACHINE COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 and 2022

(Unaudited)

Sales by geographic region for the periods presented are as follows:

	FOR THE THREE MONTHS ENDED				FOR THE SIX MONTHS ENDED
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Australia	$	263,000	$	670,000	$	263,000	$	670,000
Europe		290,000		306,000		290,000		306,000
North America		15,378,000		16,138,000		18,003,000		27,830,000
Total Net Sales	$	15,931,000	$	17,114,000	$	18,556,000	$	28,806,000

The Company selectively participates in a retailer’s co-op promotion incentives by providing marketing fund allowances to its customers. As these co-op promotion initiatives 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 cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. For the three months ended September 30, 2023 and 2022, co-op promotion incentives were approximately $1,637,000 and $724,000, respectively. For the six months ended September 30, 2023 and 2022, co-op promotion incentives were approximately $1,728,000 and $1,020,000, respectively.

The Company estimates variable consideration under its return allowance programs for goods returned from the customer whereby a revenue return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns as of September 30, 2023 and March 31, 2023 was approximately $2,289,000 and $900,000, respectively. In conjunction with the recording of the revenue sales return reserve, the Company estimates the cost of products that are expected to be returned under its return allowance program whereby the estimated cost of product returns is recorded as an asset and is included in inventory on the condensed consolidated balance sheets. The Company’s estimated cost of returns as of September 30, 2023 and March 31, 2023 was approximately $840,000 and $555,000, respectively.

A return program for defective goods is negotiated with each of the Company’s wholesale customers on a year-to-year basis. Customers are allowed to return defective goods within a specified period of time after shipment (between six and nine months). The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates.

The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets.