Fort Lauderdale, FL, Feb. 21, 2023 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. ("Singing Machine" or the "Company") (NASDAQ: MICS) – the worldwide leader in consumer karaoke products – today announced its third quarter financial results for the three months ended December 31, 2022.

Third Quarter Highlights:

Net sales for the quarter of $7.1 million; fiscal year-to-date revenue of $35.9 million.
Gross profit for the quarter of $1.3 million.
Income from Operations of approximately ($2.3) million.
Total assets of $24.1 million as of December 31, 2022.
Cash on hand of $2.8 million as of December 31, 2022.
Net loss for the quarter of $(1.9) million; fiscal year-to-date net loss of approximately ($1.6) million.

Management Commentary:

Gary Atkinson, Singing Machine CEO, commented, "Despite our wholesale sell-in numbers for this quarter, consumer demand for consumer karaoke remained very strong. The real challenge to this quarter was timing and getting our products into retail. Last calendar year, our traditional sales cycle was disrupted by the lingering effects of supply chain disruptions. There was a build-up of retail inventory on the shelves at the end of the first quarter of calendar 2021, which slowly started to make the major retailers gradually more cautious about inventory throughout the rest of the year."

Atkinson continued, "As a result, we did not get the opportunity to sell-in to many of our retail customers with our typical holiday bulk replenishment. Simply put, our retail customers were backfilling the demand with the lingering inventory from last year, or in many cases, opting to lose sales with empty shelves. Despite our customers decisions to lower exposure to inventory due to elevated risk factors associated with the overall economy in the back of the year, we saw steady demand for our products, and we believe that reflects well on our brand and our technology. Moving forward, we expect more of a return to normal for this coming season."

Earnings Call Information:

The Company will host a conference call today, Tuesday, February 21, 2023, beginning at 10:00 AM Eastern time to discuss these results and answer questions. If you would like to participate on the call, please dial (800) 225-9448 and use conference ID: MICS.

An audio rebroadcast of the call will be available later in the day after the earnings call and can be heard at: www.singingmachine.com/investors.

About The Singing Machine

Singing Machine^® is the leading provider of karaoke products to consumers across the world. The Company offers the industry's widest line of at-home and in-car karaoke entertainment products, which allow consumers to find a machine that suits their needs and skill level. The Company's products are sold in over 25,000 locations worldwide, including at well-known retailers such as Amazon, Costco, Sam's Club, Target, and Walmart. As the most recognized brand in karaoke, Singing Machine products incorporate the latest technology and provide access to over 70,000 songs for streaming through its mobile app and select WiFi-capable products. To learn more, go to www.singingmachine.com.

Investor Relations Contact:

Brendan Hopkins

(407) 645-5295

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 Securities and Exchange Commission. The forward-looking statements are applicable only as of the date on which they are made, and the Company does not assume any obligation to update any forward-looking statements.

The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2022			March 31, 2022
	(unaudited)
Assets
Current Assets
Cash	$	2,795,171		$	2,290,483
Accounts receivable, net of allowances of $139,182 and $122,550, respectively		7,023,603			2,785,038
Due from Crestmark Bank		-			100,822
Accounts receivable related party - Stingray Group, Inc.		282,317			152,212
Inventories, net		10,984,742			14,161,636
Prepaid expenses and other current assets		154,329			344,409
Deferred financing costs		84,668			7,813
Total Current Assets		21,324,830			19,842,413

Property and equipment, net		540,867			565,094
Deferred financing costs, net of current portion		151,694			-
Deferred tax assets		1,399,016			892,559
Operating Leases - right of use assets		648,323			1,279,347
Other non-current assets		98,724			86,441
Total Assets	$	24,163,454		$	22,665,854

Liabilities and Shareholders' Equity

Current Liabilities
Accounts payable	$	2,084,756		$	5,391,265
Accrued expenses		3,234,714			1,732,355
Revolving lines of credit		1,761,495			2,500,000
Refunds due to customers		93,520			97,968
Reserve for sales returns		2,935,465			990,000
Current portion of finance leases		8,187			7,605
Current portion of installment notes		79,119			74,300
Current portion of operating lease liabilities		654,883			876,259
Subordinated note payable - Starlight Marketing Development, Ltd.		-			352,659
Total Current Liabilities		10,852,139			12,022,411

Finance leases, net of current portion		4,405			10,620
Installment notes, net of current portion		78,693			138,649
Operating lease liabilities, net of current portion		30,422			457,750
Total Liabilities		10,965,659			12,629,430

Commitments and Contingencies

Shareholders' Equity
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock $0.01 par value; 100,000,000 shares authorized; 3,148,219 and 1,221,209 shares issued and outstanding, respectively		31,482			12,212
Additional paid-in capital		29,697,697			24,902,694
Accumulated deficit		(16,531,384	)		(14,878,482	)
Total Shareholders' Equity		13,197,795			10,036,424
Total Liabilities and Shareholders' Equity	$	24,163,454		$	22,665,854

The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021

Net Sales	$	7,110,520		$	21,244,306		$	35,916,210		$	44,678,929

Cost of Goods Sold		5,819,991			15,934,842			27,481,182			34,464,291

Gross Profit		1,290,529			5,309,464			8,435,028			10,214,638

Operating Expenses
Selling expenses		1,124,780			1,406,175			2,629,567			2,717,642
General and administrative expenses		2,395,430			2,154,553			7,183,259			5,352,902
Depreciation		52,816			55,007			173,206			190,087
Total Operating Expenses		3,573,026			3,615,735			9,986,032			8,260,631

(Loss) Income from Operations		(2,282,497	)		1,693,729			(1,551,004	)		1,954,007

Other (Expenses) Income, net
Gain - related party		-			-			-			11,236
Gain from Payroll Protection Plan loan forgiveness		-			-			-			448,242
Gain from settlement of accounts payable		48,650			-			48,650			236,472
Loss from extinguishment of debt		(183,333	)		-			(183,333	)		-
Interest expense		(67,891	)		(155,573	)		(413,831	)		(365,966	)
Finance costs		(17,638	)		(9,375	)		(25,451	)		(35,672	)
Total Other (Expenses) Income, net		(220,212	)		(164,948	)		(573,965	)		294,312

(Loss) Income Before Income Tax Benefit (Provision)		(2,502,709	)		1,528,781			(2,124,969	)		2,248,319

Income Tax Benefit (Provision)		569,343			(102,886	)		472,067			(248,664	)

Net (loss) Income	$	(1,933,366	)	$	1,425,895		$	(1,652,902	)	$	1,999,655

Net (loss) Income per Common Share
Basic	$	(0.62	)	$	0.80		$	(0.61	)	$	1.28
Diluted	$	(0.62	)	$	0.80		$	(0.61	)	$	1.27

Weighted Average Common and Common
Equivalent Shares:
Basic		3,125,979			1,780,342			2,699,210			1,559,585
Diluted		3,125,979			1,787,846			2,699,210			1,570,329

The Singing Machine Company, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	December 31, 2022			December 31, 2021

Cash flows from operating activities
Net (Loss) Income	$	(1,652,902	)	$	1,999,655
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation		173,206			190,087
Amortization of deferred financing costs		25,451			35,672
Change in inventory reserve		396,553			297,661
Change in allowance for bad debts		16,632			168,395
Loss from disposal of property and equipment		-			4,394
Stock based compensation		307,651			38,376
Change in net deferred tax assets		(506,457	)		248,773
Loss on debt extinguishment		183,333			-
Paycheck Protection Plan loan forgiveness		-			(448,242	)
Gain - related party		-			(11,236	)
Gain from extinguishment of accounts payable		(48,650	)		(236,472	)
Changes in operating assets and liabilities:
Accounts receivable		(4,255,197	)		(10,123,571	)
Due from Crestmark Bank		100,822			4,557,120
Accounts receivable - related parties		(130,105	)		(159,125	)
Inventories		2,780,341			(5,933,704	)
Prepaid expenses and other current assets		190,080			(63,135	)
Other non-current assets		(12,283	)		10,288
Accounts payable		(3,257,859	)		3,769,157
Accrued expenses		1,502,359			762,252
Customer deposits		-			(129,544	)
Refunds due to customers		(4,448	)		(55,333	)
Reserve for sales returns		1,945,465			1,962,457
Operating lease liabilities, net of operating leases - right of use assets		(17,680	)		2,741
Net cash used in operating activities		(2,263,688	)		(3,113,334	)
Cash flows from investing activities
Purchase of property and equipment		(148,979	)		(77,599	)
Net cash used in investing activities		(148,979	)		(77,599	)

Cash flows from financing activities
Proceeds from Issuance of stock - net of transaction expenses		3,362,750			9,000,580
Payment of redemption and retirement of treasury stock		-			(7,162,452	)
Net (payment) proceeds from revolving lines of credit		(738,505	)		8,561,925
Payment of subordinated note payable - Starlight Marketing Development, Ltd.		(352,659	)		(150,000	)
Payment of deferred financing charges		(254,000	)		(37,501	)
Payment of early termination fees on revolving lines of credit		(183,333	)		-
Payments on installment notes		(55,137	)		(50,709	)
Proceeds from exercise of stock options		-			14,000
Proceeds from exercise of pre-funded warrants		168,334			-
Proceeds from exercise of common warrants		975,538			-
Payments on finance leases		(5,633	)		(6,184	)
Net cash provided by financing activities		2,917,355			10,169,659
Net change in cash		504,688			6,978,726

Cash at beginning of year		2,290,483			396,579
Cash at end of period	$	2,795,171		$	7,375,305

Supplemental disclosures of cash flow information:
Cash paid for interest	$	456,978		$	378,076
Equipment purchased under capital lease	$	-		$	23,651
Issuance of common stock and warrants for stock issuance expenses	$	-		$	547,838
Operating leases - right of use assets and lease liabilities at inception of lease	$	-		$	16,364

Singing Machine Reports Third Quarter Earnings Report