Algorhythm (RIME) 10-Q 14 Nov 16 2017 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Sep. 30, 2016	Nov. 14, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	SINGING MACHINE CO INC
Entity Central Index Key	923,601
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		38,223,303
Trading Symbol	SMDM
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Current Assets
Cash	$ 948,506	$ 2,116,490
Accounts receivable, net of allowances of $283,689 and $51,179, respectively	18,141,061	1,381,789
Due from PNC Bank		184,392
Accounts receivable related parties - other	2,974	7,075
Inventories, net	8,626,644	3,690,975
Prepaid expenses and other current assets	77,360	115,601
Deferred financing costs	58,644	74,077
Total Current Assets	28,488,971	7,589,476
Property and equipment, net	419,440	430,602
Other non-current assets	11,523	11,394
Deferred financing costs, net of current portion		21,606
Deferred tax asset	1,738,670	2,408,531
Total Assets	30,658,604	10,461,609
Current Liabilities
Accounts payable	10,143,702	722,213
Accrued expenses	1,966,217	650,115
Revolving line of credit	8,103,991
Current portion of capital lease		1,078
Obligations to customers for returns and allowances	19,893	121,092
Warranty provisions	859,872	292,500
Total Current Liabilities	23,588,219	2,883,610
Total Liabilities	23,588,219	4,808,041
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding
Additional paid-in capital	19,374,536	19,337,939
Subscriptions receivable		(6,400)
Accumulated deficit	(12,686,384)	(14,059,787)
Total Shareholders' Equity	7,070,385	5,653,568
Total Liabilities and Shareholders' Equity	30,658,604	10,461,609
Common Class A [Member]
Shareholders' Equity
Common stock, value
Common Class B [Member]
Shareholders' Equity
Common stock, value	382,233	381,816
Cosmo Communications Canada, Inc [Member]
Current Assets
Accounts receivable related party	375,874	19,077
Winglight Pacific Ltd [Member]
Current Assets
Accounts receivable related party	257,908
Ram Light Management, Ltd [Member]
Current Liabilities
Note payable related party	467,449	696,612
Due to related party		400,000
Starlight Electronics Co Ltd [Member]
Current Liabilities
Due to related party	87,066
Starlight Consumer Electronics Co., Ltd [Member]
Current Liabilities
Due to related party	15,598
Subordinated Debt [Member] | Starlight Marketing Development, Ltd [Member]
Current Liabilities
Due to related party	1,924,431
Subordinated related party debt		$ 1,924,431

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Allowance for doubtful accounts	$ 283,689	$ 51,179
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common Class A [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000	100,000
Common stock, shares issued
Common stock, shares outstanding
Common Class B [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	38,223,303	38,161,635
Common stock, shares outstanding	38,223,303	38,161,635

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net Sales	$ 28,129,051	$ 21,060,584	$ 32,988,443	$ 24,527,458
Cost of Goods Sold	21,626,419	16,109,943	25,342,128	18,718,396
Gross Profit	6,502,632	4,950,641	7,646,315	5,809,062
Operating Expenses
Selling expenses	2,227,223	1,831,235	2,652,101	2,288,962
General and administrative expenses	1,467,131	1,202,256	2,713,982	2,304,237
Depreciation	43,795	37,332	87,590	74,665
Total Operating Expenses	3,738,149	3,070,823	5,453,673	4,667,864
Income from Operations	2,764,483	1,879,818	2,192,642	1,141,198
Other Expenses
Interest expense	(67,038)	(102,806)	(83,065)	(152,918)
Financing costs	(18,520)	(18,520)	(37,039)	(37,039)
Total Other Expenses	(85,558)	(121,326)	(120,104)	(189,957)
Income Before Income Tax Provision	2,678,925	1,758,492	2,072,538	951,241
Income Tax Provision	(868,449)	(687,019)	(699,135)	(374,694)
Net Income	$ 1,810,476	$ 1,071,473	$ 1,373,403	$ 576,547
Income per Common Share
Basic	$ 0.05	$ 0.03	$ 0.04	$ 0
Diluted	$ 0.05	$ 0.03	$ 0.04	$ 0
Weighted Average Common and Common Equivalent Shares
Basic	38,205,186	38,141,974	38,193,247	38,129,812
Diluted	38,980,571	38,629,328	38,968,632	38,613,732

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net Income	$ 1,373,403	$ 576,547
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	87,590	74,665
Amortization of deferred financing costs	37,039	37,039
Change in inventory reserve	90,000	112,440
Change in allowance for bad debts	232,510	(48,741)
Stock based compensation	37,014	12,193
Change in net deferred tax asset	669,861	374,694
(Increase) decrease in:
Accounts receivable	(16,991,782)	(15,457,793)
Accounts receivable-related parties	(610,604)	(1,591,257)
Inventories	(5,025,669)	(2,213,520)
Prepaid expenses and other current assets	38,241	(95,715)
Other non-current assets	(129)
Increase (decrease) in:
Accounts payable	9,421,489	6,495,546
Due to related parties	(297,336)	2,336,171
Accrued expenses	1,316,102	1,179,864
Customer deposits		91,157
Obligations to clients for returns and allowances	(101,199)	(394,009)
Warranty provisions	567,372	429,658
Net cash used in operating activities	(8,971,706)	(8,081,061)
Cash flows from investing activities:
Purchase of property and equipment	(76,428)	(129,517)
Net cash used in investing activities	(76,428)	(129,517)
Cash flows from financing activities:
Net proceeds from revolving line of credit	8,103,991	8,678,304
Net proceeds from subscription receivable	6,400
Payments on capital lease	(1,078)	(6,244)
Net cash (used in) provided by financing activities	7,880,150	8,539,604
Net change in cash	(1,167,984)	329,026
Cash at beginning of period	2,116,490	116,286
Cash at end of period	948,506	445,312
Supplemental disclosures of cash flow information:
Cash paid for interest	53,107	58,808
PNC Bank [Member]
(Increase) decrease in:
Due from PNC Bank	184,392
Ram Light Management, Ltd [Member]
Cash flows from financing activities:
Payment on note payable related party - Ram Light Management, Ltd.	$ (229,163)	$ (132,456)

Basis of Presentation

Basis of Presentation	6 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	NOTE 1 – BASIS OF PRESENTATION OVERVIEW The Singing Machine Company, Inc., a Delaware corporation (the “Company”, “SMC”, “The Singing Machine”) and its three wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (“Macau Subsidiary”), SMC Logistics, Inc. (“SMC-L”) and SMC-Music, Inc.(“SMC-M”) are primarily engaged in the development, marketing, and sale of consumer karaoke audio systems, accessories, musical instruments and musical recordings. The products are sold by SMC to retailers and distributors for resale to consumers.

Summary of Accounting Policies

Summary of Accounting Policies	6 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Summary of Significant Policies	NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial statements for the three and six months ended September 30, 2016 and 2015 have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet information as of March 31, 2016 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K. The interim condensed consolidated financial statements should be read in conjunction with that report. USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial condition. However, circumstances could change which may alter future expectations. FOREIGN CURRENCY TRANSLATION The functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions and translations were not material during the periods presented. Concentration of Credit Risk At times, the Company maintains cash in United States bank accounts that are in excess of the Federal Deposit Insurance Corporation insured amounts. The Company maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at September 30, 2016 and March 31, 2016 are $829,698 and $21,256, respectively. ACCOUNTS RECEIVABLE The Singing Machine’s accounts receivable consist of amounts due from customers in the ordinary course of business. Accounts receivable are carried at cost, net of allowances for uncollectible amounts. Provisions for losses are charged to operations in amounts sufficient to maintain an allowance for losses at a level considered adequate to cover probable losses inherent in the Company’s accounts receivable. COLLECTIBILITY OF ACCOUNTS RECEIVABLE The Singing Machine’s allowance for doubtful accounts is based on management’s estimates of the creditworthiness of its customers, current economic conditions and historical information, and, in the opinion of management, is believed to be an amount sufficient to respond to normal business conditions. Management sets 100% reserves for customers in bankruptcy and other reserves based upon historical collection experience. Should business conditions deteriorate or any major customer default on its obligations to the Company, this allowance may need to be significantly increased, which would have a negative impact on operations. INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or market, as determined using the first in, first out method. The Singing Machine reduces inventory on hand to its net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below cost. Management regularly reviews the Company’s investment ininventories for such declines in value. LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated and straight-line methods. FAIR VALUE OF FINANCIAL INSTRUMENTS We follow FASB ASC 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses, obligations to clients for returns and allowances, subordinated debt to Starlight Marketing Development, Ltd. (related party) and net due to related parties approximates fair value due to the relatively short period to maturity for these instruments. The carrying amounts on the note payable to Ram Light Management, Ltd. (related party) approximates fair value due the relatively short period to maturity and related interest accrued at a rate similar to market rates. The carrying amounts on the revolving line of credit approximates fair value due the relatively short period to maturity and related interest accrued at market rates. RECLASSIFICATIONS Certain balances presented relating to accounts receivable related parties - other have been reclassified to conform to the financial statement presentation adopted for this period. REVENUE RECOGNITION Revenue from the sale of equipment, accessories, musical recordings and subscriptions and third –party logistics services are recognized upon the later of: (a) the time of shipment or (b) when title passes to the customers and all significant contractual obligations and services have been satisfied and collection of the resulting receivable is reasonably assured. Net sales are comprised of gross sales net of actual and estimated future returns, discounts and volume rebates. SHIPPING AND HANDLING COSTS Shipping and handling costs are classified as a component of selling expenses and those billed to customers are recorded as a reduction of expense in the condensed consolidated statements of income. STOCK BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense for the three and six months ended September 30, 2016 and 2015 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the three months ended September 30, 2016 and 2015, the stock option expense was $17,685 and $2,692, respectively. For the six months ended September 30, 2016 and 2015, the stock option expense was $27,014 and $4,693, respectively. ADVERTISING Costs incurred for producing and publishing advertising of the Company are charged to operations the first time the advertising takes place. The Company has entered into cooperative advertising agreements with its major customers that specifically indicated that the customer has to spend the cooperative advertising fund upon the occurrence of mutually agreed events. The percentage of the cooperative advertising allowance ranges from 2% to 10% of the purchase. The customers have to advertise the Company’s products in the customer’s catalog, local newspaper and other advertising media. The customer must submit the proof of the performance (such as a copy of the advertising showing the Company’s products) to the Company to request for the allowance. The customer does not have the ability to spend the allowance at their discretion. The Company believes that the identifiable benefit from the cooperative advertising program and the fair value of the advertising benefit is equal or greater than the cooperative advertising expense. Advertising expense for the three months ended September 30, 2016 and 2015 was $1,561,790 and $1,237,478, respectively. Advertising expense for the six months ended September 30, 2016 and 2015 was $1,766,840 and $1,516,834, respectively. As of September 30, 2016 and March 31, 2016 there was an accrual for cooperative advertising allowances of $1,000,825 and $93,222, respectively. These amounts were a component of accrued expenses in the condensed consolidated balance sheets. RESEARCH AND DEVELOPMENT COSTS Research and development costs are charged to results of operations as incurred. These expenses are shown as a component of selling, general and administrative expenses in the condensed consolidated statements of income. For the three months ended September 30, 2016 and 2015, these amounts totaled $23,757 and $69,169, respectively. For the six months ended September 30, 2016 and 2015, these amounts totaled $69,393 and $101,289, respectively. INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management’s best estimate of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. The Company’s effective tax rate for the fiscal year ending March 31, 2017 is estimated to be approximately 32%. The effective tax rate for the full year ended March 31, 2016 was approximately 35%. As of September 30, 2016 and March 31, 2016, The Singing Machine had gross deferred tax assets of approximately $1.7 million and $2.4 million respectively. The Company recorded an income tax provision of approximately $868,000 and $687,000 for the three months ended September 30, 2016 and 2015, respectively. The Company recorded an income tax provision of approximately $699,000 and $375,000 for the six months ended September 30, 2016 and 2015, respectively. The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. As of September 30, 2016, there were no uncertain tax positions that resulted in any adjustment to the Company’s provision for income taxes. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities recorded for accrued interest or penalties related to uncertain tax provisions. As of September 30, 2016, the Company is subject to U.S. Federal income tax examinations for the tax years ended March 31, 2014 through March 31, 2016. COMPUTATION OF EARNINGS PER SHARE Income per common share is computed by dividing net income by the weighted average of common shares outstanding during the period. Diluted net income per share is presented as the conversion of stock options would have a dilutive effect. As of September 30, 2016 and 2015 total potential dilutive shares amounted to approximately 775,000 and 484,000 shares, respectively. These shares were included in the computation of diluted earnings per share for the three and six months ended September 30, 2016 and 2015. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB ASC 2014-09 which outlines a single comprehensive model for companies to use when accounting for revenue arising from contracts with customers. The core principle of the revenue recognition model is that an entity recognizes revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In order to achieve this core principle a company must apply the following steps in determining revenue recognition: ● Identify the contract(s) with a customer ● Identify the performance obligations in the contract. ● Determine the transaction price. ● Allocate the transaction price to the performance obligations in the contract. ● Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this ASU are now effective for annual reporting periods beginning April 1, 2018 including interim periods within that reporting period with early application allowed beginning with reporting periods beginning April 1, 2017. Management is currently assessing whether the implementation of ASU 2014-09 will have any material effect on the company’s consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The guidance in ASU 2015-11 is effective for fiscal years and interim periods within those fiscal years beginning after April 1, 2017. The new guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. In February 2016, the FASB issued ASU 2016-02, Leases.

Due From PNC Bank

Due From PNC Bank	6 Months Ended
	Sep. 30, 2016
Related Party Transactions [Abstract]
Due From PNC Bank	NOTE 3 – DUE FROM PNC BANK In connection with the Company’s revolving credit facility with PNC Bank, cash collected by PNC Bank on trade accounts receivable may exceed amounts borrowed on the revolving credit facility from time to time (See Note 7 – LINE OF CREDIT). As of September 30, 2016 and March 31, 2016, PNC Bank owed the Company $0 and $184,392, respectively, which represented cash received by PNC Bank on accounts receivable in excess of amounts borrowed against the revolving credit facility.

Inventories, Net

Inventories, Net	6 Months Ended
	Sep. 30, 2016
Inventory Disclosure [Abstract]
Inventories, Net	NOTE 4- INVENTORIES, NET Inventories are comprised of the following components: September 30,2016 March 31,2016 Finished Goods $ 8,231,997 $ 4,450,975 Inventory in Transit 1,244,647 - Inventory Reserve (850,000 ) (760,000 ) Inventories, net $ 8,626,644 $ 3,690,975

Property and Equipment

Property and Equipment	6 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment [Abstract]
Property and Equipment	NOTE 5 - PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: USEFUL September 30, March 31, LIFE 2016 2016 (unaudited) Computer and office equipment 5 years $ 285,650 $ 285,650 Furniture and fixtures 7 years 4,312 4,312 Warehouse equipment 7 years 238,470 224,106 Molds and tooling 3-5 years 2,555,014 2,492,950 3,083,446 3,007,018 Accumulated depreciation 2,664,006 2,576,416 Property and equipment, net $ 419,440 $ 430,602 Depreciation expense for the three months ended September 30, 2016 and September 30, 2015 was $43,795 and $37,332, respectively. Depreciation expense for the six months ended September 30, 2016 and September 30, 2015 was $87,590 and $74,665, respectively.

Obligations to Customers for Re

Obligations to Customers for Returns and Allowances	6 Months Ended
	Sep. 30, 2016
Payables and Accruals [Abstract]
Obligations to Clients for Returns and Allowances	NOTE 6 - OBLIGATIONS TO CUSTOMERS FOR RETURNS AND ALLOWANCES Due to the seasonality of the business and length of time customers are given to return defective product, it is not uncommon for customers to accumulate credits from the Company’s sales and allowance programs that are in excess of unpaid invoices in accounts receivable. All credit balances in customers’ accounts receivable are reclassified to “obligations to customers for returns and allowances” in current liabilities on the condensed consolidated balance sheets. Client requests for payment of a credit balance are reclassified from obligations to customers for returns and allowances to accounts payable on the condensed consolidated balance sheets. When new invoices are processed prior to settlement of the credit balance and the client accepts settlement of open credits with new invoices, then the excess of new invoices over credits are netted in accounts receivable. As of September 30, 2016 and March 31, 2016 obligations to customers for returns and allowances reclassified from accounts receivable were $19,893 and $121,092, respectively.

Line of Credit

Line of Credit	6 Months Ended
	Sep. 30, 2016
Line of Credit Facility [Abstract]
Line of Credit	NOTE 7 – LINE OF CREDIT On July 14, 2014, the Company executed a three-year revolving credit facility (the “Revolving Credit Facility”) with PNC Bank, National Association (“PNC”) that replaced an existing line of credit agreement. The Revolving Credit Facility has a three year term expiring on July 14, 2017. The outstanding loan balance cannot exceed $15,000,000 during peak selling season between August 1 and December 31 and is reduced to a maximum of $7,500,000 between January 1 and July 31. Usage under the Revolving Credit Facility shall not exceed the sum of the following (the “Borrowing Base”): ● Up to 85% of the company’s eligible domestic and Canadian accounts receivable aged less than 60 days past due (not to exceed 90 days from invoice date, cross aged on the basis of 50% or more past due with certain specific accounts qualifying for up to 120 days from invoice date not to exceed 30 days from the due date; plus ● Up to the lesser of (a) 50% of the cost of eligible inventory or (b) 75% of net orderly liquidation value percentage of eligible inventory (annual inventory appraisals required); minus ● An all-time $500,000 block; minus ● Applicable reserves including a dilution reserve equal to 125% of the Company’s advertising and return accrual reserves. Dilution reserve not to exceed availability generated from eligible accounts receivable. The Revolving Line of Credit includes the following sub-limits: ● Letters of Credit to be issued limited to $3,000,000. ● Inventory availability limited to $4,000,000. ● Mandatory pay-down to $1,000,000 (excluding letters of credit) for any 30 consecutive days between February 1 and April 30. The Revolving Line of Credit must comply with the following quarterly financial covenants to avoid default: ● Fixed charge coverage ratio test of 1.1:1 times measured on a rolling four quarter basis, defined as EBITDA less non-financed capital expenditures, cash dividends and distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. ● Capital expenditures limited to $150,000 per year. Interest on the Revolving Credit Facility is accrued at 2% per annum over PNC’s announced prime rate with an option for the Company to elect the 1, 2 or 3 month fully absorbed PNC LIBOR Rate plus 3.5% per annum with a default rate of 2% over the applicable rate. There is an unused facility fee equal to .375% per annum on the unused portion of the Revolving Credit Facility which will be calculated on the basis of a 360 day year for the actual number of days elapsed and will be payable quarterly in arrears. During the three month periods ended September 30, 2016 and 2015, the Company incurred interest expense of $52,076 and $42,748, respectively on amounts borrowed against the Revolving Credit Facility. During the six month periods ended September 30, 2016 and 2015, the Company incurred interest expense of $52,076 and $52,143, respectively on amounts borrowed against the Revolving Credit Facility. During the three month periods ended September 30, 2016 and 2015, the Company incurred an unused facility fee of $8,233 and $8,132, respectively on the unused portion of the Revolving Credit Facility. During the six month periods ended September 30, 2016 and 2015, the Company incurred an unused facility fee of $15,264 and $14,274, respectively on the unused portion of the Revolving Credit Facility. The Revolving Credit Facility is secured by first priority security interests in all of the named borrowers’ tangible and intangible assets as well as first priority security interests of 100% of member or ownership interests of any of its domestic existing or newly formed subsidiaries and first priority lien on up to 65% of the borrowers’ domestic subsidiary’s existing or subsequently formed or acquired foreign subsidiaries. The Revolving Credit Facility is also secured by a related-party debt subordination agreement with Starlight Marketing Development, Ltd. in the amount of $2,500,000. Costs associated with securing the Revolving Credit Facility of approximately $222,000 were deferred and amortized over the term of the agreement. During the three month periods ended September 30, 2016 and 2015, the Company incurred amortization expense of $18,520. During the six month periods ended September 30, 2016 and 2015, the Company incurred amortization expense of $37,039. As a condition of the Revolving Credit Facility, a portion of the Company’s related-party debt with Ram Light Management, Ltd. in the amount of $1,100,000 was converted to a note payable with Ram Light Management, Ltd. (“Ram Light Note”). The Ram Light Note bears interest at 6% per annum with quarterly payments of $150,000 (including principal and interest) payable which commenced on December 31, 2014. The scheduled principal and interest payments of $150,000 were only permitted upon receipt of the Company’s quarterly compliance certificate; the Company having met the mandatory pay-down of the Revolving Credit Facility to $1,000,000 and average excess availability for the prior 30 days (after subtraction of third party trade payables 30 days or more past due) of no less than $1,000,000 after giving effect to the payment. While the Company did meet the mandatory pay-down requirement, the Company did not meet the prior 30 day average excess availability requirement permitting the Company to make all scheduled payments on the note, and as a result, the first three scheduled payments due December 31, 2014, March 31, 2015 and June 30, 2015 were not made. As part of the Conditions to Installment Payment in the note, payments not made under this note that cannot be made as a result of the foregoing prohibition shall not be deemed an Event of Default and will not cumulate with the next payment that can be made, but rather will be payable on the maturity date together with any additional interest that has accrued thereon. The Company has made all payments as scheduled since June 30, 2015. In September 2016 the Revolving Credit Facility was modified which allowed the modification of the Ram Light Note such that the remaining amount due on the note is to be paid off in increments of $100,000 (inclusive of principal and interest) due at the end of each month which extended the maturity of the note to March 31, 2017. For the three months ended September 30, 2016 and 2015 the Company recognized interest expense on the Ram Light Note in the amount of $9,375 and $17,544, respectively. For the six months ended September 30, 2016 and 2015 the Company recognized interest expense on the Ram Light Note in the amount of $20,838 and $34,828, respectively. As of September 30, 2016 and March 31, 2016 the company accrued interest expense on the Ram Light Note in the amount of $63,778. These amounts were a component of accrued expenses in the condensed consolidated balance sheets.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 8 - COMMITMENTS AND CONTINGENCIES LEGAL MATTERS Management is currently not aware of any legal proceedings. OPERATING LEASES The Company is committed to various operating lease agreements for office and warehouse facilities in Fort Lauderdale, Florida; Ontario, California; and Macau, PRC; expiring at varying dates. Rent expense for the three months ended September 30, 2016 and 2015 was $155,906 and $154,964, respectively. Rent expense for the six months ended September 30, 2016 and 2015 was $320,437 and $310,185, respectively. In addition, the Company maintains various warehouse equipment and computer equipment operating leases. Future minimum lease payments under property and equipment leases with terms exceeding one year as of September 30, 2016 are as follows: Operating Leases For period ending September 30, 2017 $ 519,748 2018 509,295 2019 524,272 2020 480,582 $ 2,033,897

Geographical Information

Geographical Information	6 Months Ended
	Sep. 30, 2016
Segment Reporting [Abstract]
Geographical Information	NOTE 9 - GEOGRAPHICAL INFORMATION Sales to customers outside of the United States for the three and six months ended September 30, 2016 and 2015 were made by the Macau Subsidiary. Sales by geographic region for the periods presented are as follows: FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED September 30, September 30, 2016 2015 2016 2015 North America $ 25,937,100 $ 19,352,542 $ 30,478,245 $ 22,426,119 Europe 2,171,380 1,499,913 2,489,627 1,737,420 Australia - 145,140 - 145,140 South Africa 20,571 62,989 20,571 218,779 $ 28,129,051 $ 21,060,584 $ 32,988,443 $ 24,527,458 The geographic area of sales is based primarily on the location where the product is delivered.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Sep. 30, 2016
Related Party Transactions [Abstract]
Related Party Transactions	NOTE 10 – RELATED PARTY TRANSACTIONS DUE TO/FROM RELATED PARTIES On September 30, 2016 and March 31, 2016, in the aggregate the Company had $636,756 and $26,152, respectively, due from related parties for goods and services sold to these companies. On September 30, 2016 and March 31, 2016 the Company had $0 and $400,000 due to Ram Light Management, Ltd. for prior years purchases of karaoke hardware. Effective October 1, 2015 the amount due to Ram Light began bearing interest at 6% per annum. The Company paid $500 and $0 in interest expense to Ram Light for the three months ended September 30, 2016 and 2015, respectively. The Company paid $4,000 and $0 in interest expense to Ram Light for the six months ended September 30, 2016 and 2015, respectively. On September 30, 2016 and March 31, 2016 the Company had amounts due to other related party companies in the amounts of $102,664 and $0 for goods, repair services, engineering fees, storage and administrative services provided to the Company by these related parties. NOTE PAYABLE In connection with the Revolving Credit Facility agreement there was a conversion of past due trade payables to a note payable of $1,100,000 to Ram Light Management, Ltd. on July 15, 2014. As of September 30, 2016 and March 31, 2016 the principal amount due on the note was $467,449 and $696,612, respectively. The note bears interest at 6% per annum and the Company recognized interest expense in the amount of $9,375 and $17,544 for the three months ended September 30, 2016 and 2015, respectively. The Company recognized interest expense in the amount of $20,838 and $34,828 for the six months ended September 30, 2016 and 2015, respectively. SUBORDINATED DEBT In connection with the Revolving Credit Facility the Company was required to subordinate related party debt to Starlight Marketing Development, Ltd. in the amount of $1,924,431. The debt cannot be repaid until after the expiration of the Revolving Credit Facility, therefore the subordinated related party debt is classified as a current liability on the accompanying condensed consolidated balance sheets as of September 30, 2016 and a long-term liability as of March 31, 2016. TRADE During the three months ended September 30, 2016 and September 30, 2015 the Company sold approximately $0 and $51,000, respectively to Starlight Electronics Company, Ltd (“SLE”), a related party, at a discounted price, similar to prices granted to major direct import customers shipped internationally with freight prepaid. The average gross profit margin on sales to SLE for the three months ended September 30, 2016 and September 30, 2015 was NA and 17.7%, respectively. During the six months ended September 30, 2016 and September 30, 2015 the Company sold approximately $0 and $116,000, respectively to SLE, at a discounted price, similar to prices granted to major direct import customers shipped internationally with freight prepaid. The average gross profit margin on sales to SLE for the six months ended September 30, 2016 and September 30, 2015 was NA and 16.0%, respectively. The product was drop shipped to Cosmo Communications of Canada (“Cosmo”), the Company’s primary distributor of its products to Canada. These amounts were included as a component of net sales in the accompanying condensed consolidated statements of income. During the three months ended September 30, 2016 and September 30, 2015 the Company sold $1,001,001 and $1,171,000, respectively to Winglight Pacific, Ltd. (“Winglight”), a related party, at a discounted price, similar to prices granted to major direct import customers shipped internationally with freight prepaid. The average gross profit margin on sales to Winglight for the three months ended September 30, 2016 and September 30, 2015 was 22.9% and 21.4%, respectively. During the six months ended September 30, 2016 and September 30, 2015 the Company sold $1,194,001 and $1,171,000, respectively to Winglight at a discounted price, similar to prices granted to major direct import customers shipped internationally with freight prepaid. The average gross profit margin on sales to Winglight for the six months ended September 30, 2016 and September 30, 2015 was 21.7% and 21.4%, respectively. The product was drop shipped to Cosmo Communications of Canada (“Cosmo”), the Company’s primary distributor of its products to Canada. These amounts were included as a component of net sales in the accompanying condensed consolidated statements of income. During the three months ended September 30, 2016 and September 30, 2015 the Company sold approximately $195,000 and $331,000, respectively of product to Cosmo from its California warehouse facility. During the six months ended September 30, 2016 and September 30, 2015 the Company sold approximately $318,000 and $445,000, respectively of product to Cosmo from its California warehouse facility. These amounts were included as a component of net sales in the accompanying condensed consolidated statements of income. The Company purchased services from Starlight R&D, Ltd, (“SLRD”) a related party. The purchases from SLRD for the three months ended September 30, 2016 and 2015 were approximately $9,600 and $587,000, respectively. The purchases from SLRD for the six months ended September 30, 2016 and 2015 were approximately $23,400 and $620,000, respectively. These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income. The Company purchased products from SLE. The purchases from SLE for the three month periods ended September 30, 2016 and 2015 were $287,000 and $2,810,000, respectively. The purchases from SLE for the six month periods ended September 30, 2016 and 2015 were $998,000 and $2,810,000, respectively. These amounts were included as a component of cost of goods sold in the accompanying condensed consolidated statements of income. The Company purchased services from Starlight Consumer Electronics USA, Inc., (“SCE”) a related party. The purchases from SCE for the three month periods ended September 30, 2016 and 2015 were approximately $46,000 and $73,000, respectively. The purchases from SCE for the six month periods ended September 30, 2016 and 2015 were approximately $98,000 and $155,000, respectively. These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income. Effective April 1, 2016, SMC-L renewed the service and logistics agreement with Starlight R&D, Cosmo and SLE, to provide logistics, fulfillment, and warehousing services for Starlight R&D, Cosmo and SLE’s domestic sales from April 1, 2016 and expiring on March 31, 2017. For these services, Starlight R&D, Cosmo and SLE have agreed to reimburse the Company for actual warehouse space occupied by these companies at $0.096 per cubic foot and for logistics services performed based on an agreed to fee schedule specified in the agreement. For the three months ended September 30, 2016, the Company received $22,500. For the six months ended September 30, 2016, the Company received $41,100. This amount was included as a component of general and administrative expenses in the accompanying condensed consolidated statement of income. Effective April 1 2015, SMC-L entered into a service and logistics agreement with SCE, Cosmo and SLE, to provide logistics, fulfillment, and warehousing services for Shihua affiliated companies SCE, Cosmo and SLE’s domestic sales. For these services, Starlight USA, Cosmo and SLE agreed to reimburse the Company for actual warehouse space occupied by these companies at $0.096 per cubic foot and for logistics services performed based on an agreed to fee schedule specified in the agreement. For the three and six months ended September 30, 2015, the Company received approximately $27,000 and $47,000, respectively. This agreement expired on March 31, 2016. This amount was included as a component of general and administrative expenses in the accompanying condensed consolidated statement of income.

Warranty Provisions

Warranty Provisions	6 Months Ended
	Sep. 30, 2016
Product Warranties Disclosures [Abstract]
Warranty Provisions	NOTE 11 – WARRANTY PROVISIONS A return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are either allowed to return defective goods within a specified period of time after shipment (between 6 and 9 months) or granted a “defective allowance” consisting of a fixed percentage (between 1% and 5%) off of the invoice price in lieu of returning defective products. The Company records liabilities for its return goods programs and defective goods allowance program at the time of sale for the estimated costs that may be incurred. The liability for defective goods is included in warranty provisions on the condensed consolidated balance sheets. Changes in the Company’s warranty provision are presented in the following table: Three Months Ended Six Months Ended September 30,2016 September 30,2015 September 30,2016 September 30, 2015 Estimated warranty provision at beginning of period $ 193,263 $ 153,074 $ 292,500 $ 197,873 Costs accrued for future estimated returns 765,157 550,673 874,402 637,907 Returns received (98,548 ) (76,216 ) (307,030 ) (208,249 ) Estimated warranty provision at end of period $ 859,872 $ 627,531 $ 859,872 $ 627,531

Shareholders' Equity

Shareholders' Equity	6 Months Ended
	Sep. 30, 2016
Equity [Abstract]
Shareholders' Equity	NOTE 12- SHAREHOLDERS’ EQUITY COMMON STOCK ISSUANCES On August 10, 2016, the Company issued 41,668 shares of its common stock to our Board of Directors at $0.24 per share, pursuant to our annual director compensation plan for the fiscal year ending March 31, 2016. STOCK OPTIONS On August 10, 2016, the Company granted 100,000 stock options to the Vice President of Sales and Marketing with an exercise price of $0.32 per share with a one year vesting period pursuant to a sales incentive program for the fiscal year ended March 31, 2016. The fair value of the option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees and other contributing factors. ● For the three and six months ended September 30, 2016: expected dividend yield 0%, risk-free interest rate of 0.55%, volatility 145.0% and expected term of three years.

Employee Benefit Plans

Employee Benefit Plans	6 Months Ended
	Sep. 30, 2016
Compensation and Retirement Disclosure [Abstract]
Employee Benefit Plans	NOTE 13 - EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee’s contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged to operations for contributions to this plan and administrative costs during the three month periods ended September 30, 2016 and 2015 totaled $12,362 and $11,634, respectively. The amounts charged to operations for contributions to this plan and administrative costs during the six month periods ended September 30, 2016 and 2015 totaled $22,229 and $20,893, respectively. The amounts are included as a component of general and administrative expense in the accompanying condensed consolidated statements of income. The Company does not provide any post-employment benefits to retirees.

Concentration of Sales Risk

Concentration of Sales Risk	6 Months Ended
	Sep. 30, 2016
Risks and Uncertainties [Abstract]
Concentration of Sales Risk	NOTE 14 – CONCENTRATION OF SALES RISK The Company generates most of its revenue from retailers of products in the United States with a significant amount of sales concentrated with several large customers the loss of which could have an adverse impact on the financial position of the Company. Revenues derived from the Company’s five largest customers for the three months ended September 30, 2016 and 2015 were approximately 88% and 84% respectively, of total net revenues. Revenues derived from the Company’s top five customers for the six months ended September 30, 2016 and 2015 were approximately 86% and 69% of total net revenues, respectively.

Summary of Significant Accounti

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Principles of Consolidation and Basis of Presentation	PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial statements for the three and six months ended September 30, 2016 and 2015 have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet information as of March 31, 2016 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K. The interim condensed consolidated financial statements should be read in conjunction with that report.
Use of Estimates	USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial condition. However, circumstances could change which may alter future expectations.
Foreign Currency Translation	FOREIGN CURRENCY TRANSLATION The functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions and translations were not material during the periods presented.
Concentration of Credit Risk	Concentration of Credit Risk At times, the Company maintains cash in United States bank accounts that are in excess of the Federal Deposit Insurance Corporation insured amounts. The Company maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at September 30, 2016 and March 31, 2016 are $829,698 and $21,256, respectively.
Accounts Receivable	ACCOUNTS RECEIVABLE The Singing Machine’s accounts receivable consist of amounts due from customers in the ordinary course of business. Accounts receivable are carried at cost, net of allowances for uncollectible amounts. Provisions for losses are charged to operations in amounts sufficient to maintain an allowance for losses at a level considered adequate to cover probable losses inherent in the Company’s accounts receivable.
Collectability of Accounts Receivable	COLLECTIBILITY OF ACCOUNTS RECEIVABLE The Singing Machine’s allowance for doubtful accounts is based on management’s estimates of the creditworthiness of its customers, current economic conditions and historical information, and, in the opinion of management, is believed to be an amount sufficient to respond to normal business conditions. Management sets 100% reserves for customers in bankruptcy and other reserves based upon historical collection experience. Should business conditions deteriorate or any major customer default on its obligations to the Company, this allowance may need to be significantly increased, which would have a negative impact on operations.
Inventory	INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or market, as determined using the first in, first out method. The Singing Machine reduces inventory on hand to its net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below cost. Management regularly reviews the Company’s investment ininventories for such declines in value.
Long-Lived Assets	LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.”
Property and Equipment	PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated and straight-line methods.
Fair Value of Financial Instruments	FAIR VALUE OF FINANCIAL INSTRUMENTS We follow FASB ASC 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses, obligations to clients for returns and allowances, subordinated debt to Starlight Marketing Development, Ltd. (related party) and net due to related parties approximates fair value due to the relatively short period to maturity for these instruments. The carrying amounts on the note payable to Ram Light Management, Ltd. (related party) approximates fair value due the relatively short period to maturity and related interest accrued at a rate similar to market rates. The carrying amounts on the revolving line of credit approximates fair value due the relatively short period to maturity and related interest accrued at market rates.
Reclassifications	RECLASSIFICATIONS Certain balances presented relating to accounts receivable related parties - other have been reclassified to conform to the financial statement presentation adopted for this period.
Revenue Recognition	REVENUE RECOGNITION Revenue from the sale of equipment, accessories, musical recordings and subscriptions and third –party logistics services are recognized upon the later of: (a) the time of shipment or (b) when title passes to the customers and all significant contractual obligations and services have been satisfied and collection of the resulting receivable is reasonably assured. Net sales are comprised of gross sales net of actual and estimated future returns, discounts and volume rebates.
Shipping and Handling Costs	SHIPPING AND HANDLING COSTS Shipping and handling costs are classified as a component of selling expenses and those billed to customers are recorded as a reduction of expense in the condensed consolidated statements of income.
Stock Based Compensation	STOCK BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense for the three and six months ended September 30, 2016 and 2015 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the three months ended September 30, 2016 and 2015, the stock option expense was $17,685 and $2,692, respectively. For the six months ended September 30, 2016 and 2015, the stock option expense was $27,014 and $4,693, respectively.
Advertising	ADVERTISING Costs incurred for producing and publishing advertising of the Company are charged to operations the first time the advertising takes place. The Company has entered into cooperative advertising agreements with its major customers that specifically indicated that the customer has to spend the cooperative advertising fund upon the occurrence of mutually agreed events. The percentage of the cooperative advertising allowance ranges from 2% to 10% of the purchase. The customers have to advertise the Company’s products in the customer’s catalog, local newspaper and other advertising media. The customer must submit the proof of the performance (such as a copy of the advertising showing the Company’s products) to the Company to request for the allowance. The customer does not have the ability to spend the allowance at their discretion. The Company believes that the identifiable benefit from the cooperative advertising program and the fair value of the advertising benefit is equal or greater than the cooperative advertising expense. Advertising expense for the three months ended September 30, 2016 and 2015 was $1,561,790 and $1,237,478, respectively. Advertising expense for the six months ended September 30, 2016 and 2015 was $1,766,840 and $1,516,834, respectively. As of September 30, 2016 and March 31, 2016 there was an accrual for cooperative advertising allowances of $1,000,825 and $93,222, respectively. These amounts were a component of accrued expenses in the condensed consolidated balance sheets.
Research and Development Costs	RESEARCH AND DEVELOPMENT COSTS Research and development costs are charged to results of operations as incurred. These expenses are shown as a component of selling, general and administrative expenses in the condensed consolidated statements of income. For the three months ended September 30, 2016 and 2015, these amounts totaled $23,757 and $69,169, respectively. For the six months ended September 30, 2016 and 2015, these amounts totaled $69,393 and $101,289, respectively.
Income Taxes	INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management’s best estimate of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. The Company’s effective tax rate for the fiscal year ending March 31, 2017 is estimated to be approximately 32%. The effective tax rate for the full year ended March 31, 2016 was approximately 35%. As of September 30, 2016 and March 31, 2016, The Singing Machine had gross deferred tax assets of approximately $1.7 million and $2.4 million respectively. The Company recorded an income tax provision of approximately $868,000 and $687,000 for the three months ended September 30, 2016 and 2015, respectively. The Company recorded an income tax provision of approximately $699,000 and $375,000 for the six months ended September 30, 2016 and 2015, respectively. The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. As of September 30, 2016, there were no uncertain tax positions that resulted in any adjustment to the Company’s provision for income taxes. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities recorded for accrued interest or penalties related to uncertain tax provisions. As of September 30, 2016, the Company is subject to U.S. Federal income tax examinations for the tax years ended March 31, 2014 through March 31, 2016.
Computation of Loss Per Common Share	COMPUTATION OF EARNINGS PER SHARE Income per common share is computed by dividing net income by the weighted average of common shares outstanding during the period. Diluted net income per share is presented as the conversion of stock options would have a dilutive effect. As of September 30, 2016 and 2015 total potential dilutive shares amounted to approximately 775,000 and 484,000 shares, respectively. These shares were included in the computation of diluted earnings per share for the three and six months ended September 30, 2016 and 2015.
Recent Accounting Pronouncements	RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB ASC 2014-09 which outlines a single comprehensive model for companies to use when accounting for revenue arising from contracts with customers. The core principle of the revenue recognition model is that an entity recognizes revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In order to achieve this core principle a company must apply the following steps in determining revenue recognition: ● Identify the contract(s) with a customer ● Identify the performance obligations in the contract. ● Determine the transaction price. ● Allocate the transaction price to the performance obligations in the contract. ● Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this ASU are now effective for annual reporting periods beginning April 1, 2018 including interim periods within that reporting period with early application allowed beginning with reporting periods beginning April 1, 2017. Management is currently assessing whether the implementation of ASU 2014-09 will have any material effect on the company’s consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The guidance in ASU 2015-11 is effective for fiscal years and interim periods within those fiscal years beginning after April 1, 2017. The new guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. In February 2016, the FASB issued ASU 2016-02, Leases.

Inventories, Net (Tables)

Inventories, Net (Tables)	6 Months Ended
	Sep. 30, 2016
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventories are comprised of the following components: September 30,2016 March 31,2016 Finished Goods $ 8,231,997 $ 4,450,975 Inventory in Transit 1,244,647 - Inventory Reserve (850,000 ) (760,000 ) Inventories, net $ 8,626,644 $ 3,690,975

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment [Abstract]
Summary of Property and Equipment	A summary of property and equipment is as follows: USEFUL September 30, March 31, LIFE 2016 2016 (unaudited) Computer and office equipment 5 years $ 285,650 $ 285,650 Furniture and fixtures 7 years 4,312 4,312 Warehouse equipment 7 years 238,470 224,106 Molds and tooling 3-5 years 2,555,014 2,492,950 3,083,446 3,007,018 Accumulated depreciation 2,664,006 2,576,416 Property and equipment, net $ 419,440 $ 430,602

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Schedule of Future Minimum Rental Payments for Operating Leases	Future minimum lease payments under property and equipment leases with terms exceeding one year as of September 30, 2016 are as follows: Operating Leases For period ending September 30, 2017 $ 519,748 2018 509,295 2019 524,272 2020 480,582 $ 2,033,897

Geographical Information (Table

Geographical Information (Tables)	6 Months Ended
	Sep. 30, 2016
Segment Reporting [Abstract]
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas	Sales by geographic region for the periods presented are as follows: FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED September 30, September 30, 2016 2015 2016 2015 North America $ 25,937,100 $ 19,352,542 $ 30,478,245 $ 22,426,119 Europe 2,171,380 1,499,913 2,489,627 1,737,420 Australia - 145,140 - 145,140 South Africa 20,571 62,989 20,571 218,779 $ 28,129,051 $ 21,060,584 $ 32,988,443 $ 24,527,458

Warranty Provisions (Tables)

Warranty Provisions (Tables)	6 Months Ended
	Sep. 30, 2016
Product Warranties Disclosures [Abstract]
Schedule of Product Warranty Liability	Changes in the Company’s warranty provision are presented in the following table: Three Months Ended Six Months Ended September 30,2016 September 30,2015 September 30,2016 September 30, 2015 Estimated warranty provision at beginning of period $ 193,263 $ 153,074 $ 292,500 $ 197,873 Costs accrued for future estimated returns 765,157 550,673 874,402 637,907 Returns received (98,548 ) (76,216 ) (307,030 ) (208,249 ) Estimated warranty provision at end of period $ 859,872 $ 627,531 $ 859,872 $ 627,531

Summary of Significant Accoun26

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Accounting Policies [Line Items]
Foreign financial institutions actual deposits	$ 829,698		$ 829,698		$ 21,256
Percentage of reserves for customers			100.00%
Stock based compensation	17,685	$ 2,692	$ 27,014	$ 4,693
Advertising expense	1,561,790	1,237,478	1,766,840	1,516,834
Accrual cooperative advertising allowances	1,000,825		1,000,825		$ 93,222
General and administrative expenses	23,757	69,169	69,393	101,289
Effective tax rate					35.00%
Deferred tax assets gross	1,700,000		1,700,000		$ 2,400,000
Income tax provision	$ 868,449	$ 687,019	$ 699,135	$ 374,694
Percentage of tax benefits recognized likelihood of being realized			greater than 50%
Potential dilutive shares amounted	775,000	484,000	775,000	484,000
March 31, 2017 [Member]
Accounting Policies [Line Items]
Effective tax rate			32.00%
Minimum [Member]
Accounting Policies [Line Items]
Cooperative advertising allowance, percentage			2.00%
Maximum [Member]
Accounting Policies [Line Items]
Cooperative advertising allowance, percentage			10.00%

Due From PNC Bank (Details Narr

Due From PNC Bank (Details Narrative) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Related Party Transactions [Abstract]
Due from PNC Bank		$ 184,392

Inventories - Schedule of Inven

Inventories - Schedule of Inventory (Details) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Inventory Disclosure [Abstract]
Finished Goods	$ 8,231,997	$ 4,450,975
Inventory in Transit	1,244,647
Inventory Reserve	(850,000)	(760,000)
Inventories, net	$ 8,626,644	$ 3,690,975

Property and Equipment (Details

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 43,795	$ 37,332	$ 87,590	$ 74,665

Property and Equipment - Summar

Property and Equipment - Summary of Property and Equipment (Details) - USD ($)	6 Months Ended
	Sep. 30, 2016	Mar. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,083,446	$ 3,007,018
Accumulated depreciation	2,664,006	2,576,416
Property and equipment, net	419,440	430,602
Computer and Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 285,650	285,650
Average useful life (in years)	5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 4,312	4,312
Average useful life (in years)	7 years
Warehouse Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 238,470	224,106
Average useful life (in years)	7 years
Molds and tooling [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,555,014	$ 2,492,950
Molds and tooling [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Average useful life (in years)	3 years
Molds and tooling [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Average useful life (in years)	5 years

Obligations to Clients for Retu

Obligations to Clients for Returns and Allowances (Details Narrative) - USD ($)	Sep. 30, 2016	Mar. 31, 2016
Payables and Accruals [Abstract]
Customer obligations for returns and allowances	$ 19,893	$ 121,092

Line of Credit (Details Narrati

Line of Credit (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Line of Credit Facility [Line Items]
Incurred interest expense	$ 52,076	$ 42,748	$ 52,076	$ 52,143
Unused facility fee	$ 8,233	8,132	$ 15,264	14,274
First priority security ownership interest percentage	100.00%		100.00%
Amortization expense	$ 18,520	18,520	$ 37,039	37,039
Ram Light Management, Ltd [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum amount outstanding during period			$ 1,000,000
Line of credit facility, interest rate during period			6.00%
Conversion of related party debt	1,100,000		$ 1,100,000
Repayments of lines of credit			$ 150,000
Line of credit payment description			While the Company did meet the mandatory pay-down requirement, the Company did not meet the prior 30 day average excess availability requirement permitting the Company to make all scheduled payments on the note, and as a result, the first three scheduled payments due December 31, 2014, March 31, 2015 and June 30, 2015 were not made. As part of the Conditions to Installment Payment in the note, payments not made under this note that cannot be made as a result of the foregoing prohibition shall not be deemed an Event of Default and will not cumulate with the next payment that can be made, but rather will be payable on the maturity date together with any additional interest that has accrued thereon.
Interest expense, related party	9,375	17,544	$ 20,838	34,828
Accrued interest	63,778		$ 63,778		$ 63,778
Ram Light Note [Member]
Line of Credit Facility [Line Items]
Line of credit facility, expiration date			Mar. 31, 2017
Line of credit	100,000		$ 100,000
Interest expense, related party	$ 9,375	$ 17,544	$ 20,838	$ 34,828
Maximum [Member]
Line of Credit Facility [Line Items]
First priority lien percentage	65.00%		65.00%
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Debt instrument, term			3 years
Line of credit facility, expiration date			Jul. 14, 2017
Line of credit facility, description			Usage under the Revolving Credit Facility shall not exceed the sum of the following (the “Borrowing Base”): 1. Up to 85% of the company’s eligible domestic and Canadian accounts receivable aged less than 60 days past due (not to exceed 90 days from invoice date, cross aged on the basis of 50% or more past due with certain specific accounts qualifying for up to 120 days from invoice date not to exceed 30 days from the due date; plus. 2. Up to the lesser of (a) 50% of the cost of eligible inventory or (b) 75% of net orderly liquidation value percentage of eligible inventory (annual inventory appraisals required); minus. 3. An all-time $500,000 block; minus. 4. Applicable reserves including a dilution reserve equal to 125% of the Company’s advertising and return accrual reserves. Dilution reserve not to exceed availability generated from eligible accounts receivable.
Line of credit facility sub limits description			The Revolving Credit Facility includes the following sub-limits: Letters of Credit to be issued limited to $3,000,000. Inventory availability limited to $4,000,000. Mandatory pay-down to $1,000,000 (excluding letters of credit) for any 30 consecutive days between February 1 and April 30.
Line of credit facility, covenant terms			The Revolving Credit Facility must comply with the following quarterly financial covenants to avoid default: Fixed charge coverage ratio test of 1.1:1 times measured on a rolling four quarter basis, defined as EBITDA less non-financed capital expenditures, cash dividends and distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. Capital expenditures limited to $150,000 per year.
Line of credit facility, interest rate during period			2.00%
Line of credit facility, LIBOR Rate plus rate	3.50%		3.50%
Line of credit facility default rate			2.00%
Line of credit facility, unused capacity, commitment fee percentage			0.375%
Line of credit facility, collateral amount	$ 2,500,000		$ 2,500,000
Line of credit facility, collateral fee			222,000
Revolving Credit Facility [Member] | Peak Selling Season Between August 1 And December 31 [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum amount outstanding during period			15,000,000
Revolving Credit Facility [Member] | Peak Selling Season Between January 1 And July 31 [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum amount outstanding during period			$ 7,500,000

Commitments and Contingencies33

Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 155,906	$ 154,964	$ 320,437	$ 310,185

Commitments and Contingencies -

Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating Leases (Details)	Sep. 30, 2016USD ($)
Commitments and Contingencies Disclosure [Abstract]
2,017	$ 519,748
2,018	509,295
2,019	524,272
2,020	480,582
Total	$ 2,033,897

Geographical Information - Sche

Geographical Information - Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Segment Reporting Information [Line Items]
Net Sales	$ 28,129,051	$ 21,060,584	$ 32,988,443	$ 24,527,458
North America [Member]
Segment Reporting Information [Line Items]
Net Sales	25,937,100	19,352,542	30,478,245	22,426,119
Europe [Member]
Segment Reporting Information [Line Items]
Net Sales	2,171,380	1,499,913	2,489,627	1,737,420
Australia [Member]
Segment Reporting Information [Line Items]
Net Sales		145,140		145,140
South Africa [Member]
Segment Reporting Information [Line Items]
Net Sales	$ 20,571	$ 62,989	$ 20,571	$ 218,779

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Related Party Transaction [Line Items]
Due from related parties, current	$ 636,756		$ 636,756		$ 26,152
Ram Light Management, Ltd [Member]
Related Party Transaction [Line Items]
Due to related parties, current					400,000
Interest rate	6.00%		6.00%
Interest Paid	$ 500	$ 0	$ 4,000	$ 0
Due to other related parties	102,664		102,664		0
Debt conversion, amount			1,100,000
Notes payable, related parties, current	467,449		467,449		696,612
Interest expense, related party	9,375	17,544	20,838	34,828
Starlight Marketing Development, Ltd [Member]
Related Party Transaction [Line Items]
Due to related parties	1,924,431		1,924,431
Starlight Electronics Co Ltd [Member]
Related Party Transaction [Line Items]
Due to related parties, current	87,066		87,066
Revenue from related parties	$ 0	$ 51,000	$ 0	$ 116,000
Related party gross margin percentage		17.70%		16.00%
Related party purchases of services from related party transaction	$ 287,000	$ 2,810,000	$ 998,000	$ 2,810,000
Winglight Pacific Ltd [Member]
Related Party Transaction [Line Items]
Revenue from related parties	$ 1,001,001	$ 1,171,000	$ 1,194,001	$ 1,171,000
Related party gross margin percentage	22.90%	21.40%	21.70%	21.40%
Cosmo Communications Usa, Inc [Member]
Related Party Transaction [Line Items]
Revenue from related parties	$ 195,000	$ 331,000	$ 318,000	$ 445,000
Starlight R&D, Ltd [Member]
Related Party Transaction [Line Items]
Related party purchases of services from related party transaction	9,600	587,000	23,400	620,000
Starlight Consumer Electronics USA, Inc [Member]
Related Party Transaction [Line Items]
Related party purchases of services from related party transaction	46,000	73,000	98,000	155,000
Starlight RD, Cosmo and SLE [Member]
Related Party Transaction [Line Items]
Proceeds from fees received	$ 41,100		$ 22,500
Agreement expiration date			Mar. 31, 2017
Warehouse space per pallet			$ 0.096
SEC, Cosmo USA and Starlight Electronics USA [Member]
Related Party Transaction [Line Items]
Proceeds from fees received		$ 27,000		$ 47,000
Agreement expiration date			Mar. 31, 2016
Warehouse space per pallet			$ 0.096

Warranty Provisions (Details Na

Warranty Provisions (Details Narrative)	6 Months Ended
	Sep. 30, 2016
Product Warranties Disclosures [Abstract]
Standard product warranty description	Customers are either allowed to return defective goods within a specified period of time after shipment (between 6 and 9 months) or granted a “defective allowance” consisting of a fixed percentage (between 1% and 5%) off of the invoice price in lieu of returning defective products.

Warranty Provisions - Schedule

Warranty Provisions - Schedule of Product Warranty Liability (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Product Warranties Disclosures [Abstract]
Estimated warranty provision at beginning of period	$ 193,263	$ 153,074	$ 292,500	$ 197,873
Costs accrued for future estimated returns	765,157	550,673	874,402	637,907
Returns received	(98,548)	(76,216)	(307,030)	(208,249)
Estimated warranty provision at end of period	$ 859,872	$ 627,531	$ 859,872	$ 627,531

Shareholders' Equity (Details N

Shareholders' Equity (Details Narrative) - $ / shares	Aug. 10, 2016	Sep. 30, 2016	Sep. 30, 2016
Expected dividend yield		0.00%	0.00%
Risk-free interest rate		0.55%	0.55%
Volatility		145.00%	145.00%
Expected term		3 years	3 years
Board of Directors [Member]
Number of shares issued	41,668
Shares issued price per shares	$ 0.24
Vice President [Member]
Stock option granted	100,000
Granted exercise price	$ 0.32
Vesting period	1 year

Employee Benefit Plans (Details

Employee Benefit Plans (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Compensation and Retirement Disclosure [Abstract]
Defined contribution plan, administrative expenses	$ 12,362	$ 11,634	$ 22,229	$ 20,893

Concentration of Sales Risk (De

Concentration of Sales Risk (Details Narrative)	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Customer One [Member]
Concentration risk, percentage	88.00%	84.00%	86.00%	69.00%
Customer Two [Member]
Concentration risk, percentage	88.00%	84.00%	86.00%	69.00%
Customer Three [Member]
Concentration risk, percentage	88.00%	84.00%	86.00%	69.00%
Customer Four [Member]
Concentration risk, percentage	88.00%	84.00%	86.00%	69.00%
Customer Five [Member]
Concentration risk, percentage	88.00%	84.00%	86.00%	69.00%