Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2021 | Jul. 13, 2021 | Sep. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | SINGING MACHINE CO INC | ||
Entity Central Index Key | 0000923601 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2021 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Public Float | $ 3,766,000 | ||
Entity Common Stock, Shares Outstanding | 39,060,748 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Current Assets | ||
Cash | $ 396,579 | $ 345,200 |
Accounts receivable, net of allowances of $138,580 and $337,461, respectively | 2,298,922 | 1,860,500 |
Due from banks | 4,557,120 | 2,388,438 |
Insurance claim receivable | 1,268,463 | |
Inventories, net | 5,490,255 | 7,601,277 |
Prepaid expenses and other current assets | 221,071 | 252,473 |
Deferred financing costs | 15,359 | 3,333 |
Total Current Assets | 12,979,306 | 13,819,684 |
Property and equipment, net | 674,153 | 771,349 |
Deferred tax assets | 887,164 | 1,285,721 |
Operating Leases - right of use assets | 2,074,115 | 573,874 |
Other non-current assets | 147,173 | 150,509 |
Total Assets | 16,761,911 | 16,601,137 |
Current Liabilities | ||
Accounts payable | 2,461,103 | 5,041,610 |
Accrued expenses | 1,659,499 | 1,529,168 |
Revolving line of credit - Iron Horse Credit | 64,915 | |
Customer deposits | 139,064 | |
Refunds due to customers | 145,408 | 806,475 |
Reserve for sales returns | 960,000 | 1,224,000 |
Current portion of finance leases | 2,546 | 14,953 |
Current portion of installment notes | 68,332 | 63,098 |
Current portion of note payable - Paycheck Protection Program | 172,685 | |
Current portion of operating lease liabilities | 794,938 | 321,389 |
Current portion of related party subordinated note payable - Starlight Marketing Development, Ltd. | 502,659 | |
Total Current Liabilities | 7,034,199 | 9,502,409 |
Finance leases, net of current portion | 2,550 | |
Installment notes, net of current portion | 212,949 | 283,193 |
Note payable - Payroll Protection Program, net of current portion | 271,215 | |
Operating lease liabilities, net of current portion | 1,334,010 | 322,263 |
Subordinated related party debt - Starlight Marketing Development, Ltd., net of current portion | 802,659 | |
Total Liabilities | 8,852,373 | 10,913,074 |
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 | 19,773,322 | 19,729,043 |
Accumulated deficit | (12,254,191) | (14,426,556) |
Total Shareholders' Equity | 7,909,538 | 5,688,063 |
Total Liabilities and Shareholders' Equity | 16,761,911 | 16,601,137 |
Common Class A [Member] | ||
Shareholders' Equity | ||
Common stock value | ||
Common Class B [Member] | ||
Shareholders' Equity | ||
Common stock value | 390,407 | 385,576 |
Starlight Consumer Electronics Co.Ltd. [Member] | ||
Current Liabilities | ||
Due to related party | 14,400 | 14,400 |
Starlight Electronics Co., Ltd [Member] | ||
Current Liabilities | ||
Due to related party | 372,300 | |
Winglight Pacific, Ltd [Member] | ||
Current Assets | ||
Accounts receivable related party | 100,000 | |
Current Liabilities | ||
Due to related party | ||
Starlight R&D, Ltd. [Member] | ||
Current Liabilities | ||
Due to related party | $ 48,650 | $ 115,016 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Allowance for doubtful accounts receivable, net | $ 138,580 | $ 337,461 |
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 | 39,040,748 | 38,557,643 |
Common stock, shares outstanding | 39,040,748 | 38,557,643 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net Sales | $ 45,802,574 | $ 38,500,570 |
Cost of Goods Sold | 33,505,356 | 30,323,223 |
Gross Profit | 12,297,218 | 8,177,347 |
Operating Expenses | ||
Selling expenses | 3,976,523 | 4,286,257 |
General and administrative expenses | 6,531,932 | 6,564,422 |
Bad debt expense | 65,055 | 302,333 |
Depreciation | 298,357 | 269,107 |
Total Operating Expenses | 10,871,867 | 11,422,119 |
Income (Loss) from Operations | 1,425,351 | (3,244,772) |
Other Income (Expenses) | ||
Gain from damaged goods insurance claim | 1,067,829 | |
Gain from settlement of accounts payable | 390,000 | |
Gain - related party | 220,023 | |
Interest expense | (412,270) | (240,709) |
Finance costs | (61,699) | (13,333) |
Total Other Income (Expenses), net | 1,203,883 | (254,042) |
Income (Loss) Before Income Tax (Provision) Benefit | 2,629,234 | (3,498,814) |
Income Tax (Provision) Benefit | (456,869) | 641,814 |
Net Income (Loss) | $ 2,172,365 | $ (2,857,000) |
Net Income (Loss) per Common Share | ||
Basic | $ 0.06 | $ (0.07) |
Diluted | $ 0.06 | $ (0.07) |
Weighted Average Common and Common Equivalent Shares: | ||
Basic | 38,760,092 | 38,532,889 |
Diluted | 39,128,650 | 38,532,889 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net Income (Loss) | $ 2,172,365 | $ (2,857,000) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 298,357 | 269,107 |
Amortization of deferred financing costs | 61,699 | 13,333 |
Change in inventory reserve | 202,339 | 180,000 |
Change in allowance for bad debts | (198,881) | 286,365 |
Stock based compensation | 22,710 | 32,508 |
Change in net deferred tax assets | 398,557 | (527,355) |
Gain - related party | 220,023 | |
Gain from settlement of accounts payable | 390,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (239,541) | (377,461) |
Due from banks | (2,168,682) | (151,659) |
Accounts receivable - related parties | 100,000 | 188,941 |
Insurance receivable | 1,268,463 | (1,268,463) |
Inventories | 1,908,683 | (1,756,966) |
Prepaid expenses and other current assets | 31,402 | 21,805 |
Other non-current assets | 3,336 | (60,427) |
Accounts payable | (3,190,530) | 4,198,902 |
Income Taxes Payable | ||
Accrued expenses | 130,331 | 704,433 |
Due to related parties | (438,666) | 501,716 |
Customer deposits | 139,064 | |
Refunds due to customers | (661,067) | 775,400 |
Reserve for sales returns | (264,000) | 327,846 |
Operating lease liabilities, net of operating leases - right of use assets | (14,945) | (56,260) |
Net cash provided by operating activities | 171,017 | 444,765 |
Cash flows from investing activities | ||
Purchase of property and equipment | (201,161) | (517,546) |
Net cash used in investing activities | (201,161) | (517,546) |
Cash flows from financing activities | ||
Net Proceeds from revolving lines of credit | 64,915 | |
Proceeds from note payable - Payroll Protection Program | 443,900 | |
Payment of bank term note | (125,000) | |
Payment of deferred financing charges | (73,725) | |
Proceeds from installment notes | 365,340 | |
Payments on installment notes | (65,010) | (19,049) |
Proceeds from subscription receivable | 2,200 | |
Proceeds from exercise of stock options | 26,400 | 10,200 |
Payment on subordinated note payable - related party | (300,000) | (12,708) |
Payments on finance leases | (14,957) | (14,410) |
Net cash provided by financing activities | 81,523 | 206,573 |
Net change in cash | 51,379 | 133,792 |
Cash at beginning of year | 345,200 | 211,408 |
Cash at end of year | 396,579 | 345,200 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 461,080 | 179,811 |
Operating leases - right of use assets initial adoption | 1,108,330 | |
Operating lease liabilities - initial adoption | 1,234,368 | |
Operating leases - right of use assets and lease liabilities at inception of lease | $ 2,184,105 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid in Capital [Member] | Subscriptions Receivable [Member] | Accumulated Deficit [Member] | Total |
Balance at Mar. 31, 2019 | $ 384,648 | $ 19,687,263 | $ (2,200) | $ (11,569,556) | $ 8,500,155 | |
Balance, shares at Mar. 31, 2019 | 38,464,753 | |||||
Net income (loss) | (2,857,000) | (2,857,000) | ||||
Employee compensation-stock option | 20,008 | 20,008 | ||||
Collection of subscription receivable | 2,200 | 2,200 | ||||
Issuance of common stock - directors | $ 328 | 12,172 | 12,500 | |||
Issuance of common stock - directors, shares | 32,890 | |||||
Exercise of stock options | $ 600 | 9,600 | 10,200 | |||
Exercise of stock options, shares | 60,000 | |||||
Balance at Mar. 31, 2020 | $ 385,576 | 19,729,043 | (14,426,556) | 5,688,063 | ||
Balance, shares at Mar. 31, 2020 | 38,557,643 | |||||
Net income (loss) | 2,172,365 | 2,172,365 | ||||
Employee compensation-stock option | 10,210 | 10,210 | ||||
Issuance of common stock - directors | $ 431 | 12,069 | 12,500 | |||
Issuance of common stock - directors, shares | 43,105 | |||||
Exercise of stock options | $ 4,400 | 22,000 | 26,400 | |||
Exercise of stock options, shares | 440,000 | |||||
Balance at Mar. 31, 2021 | $ 390,407 | $ 19,773,322 | $ (12,254,191) | $ 7,909,538 | ||
Balance, shares at Mar. 31, 2021 | 39,040,748 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Mar. 31, 2021 | |
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 wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (“Macau Subsidiary”), SMC Logistics, Inc. (“SMCL”) and SMC-Music, Inc. (“SMCM”), are primarily engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories and musical recordings. The products are sold directly to distributors and retail customers. The Company is partially held by koncepts International Limited (“koncepts”) who is major shareholder of the Company, owning approximately 49% of our shares of common stock outstanding on a fully diluted basis as of March 31, 2021. The Company is also partly held by Treasure Green Holdings Ltd. (“Treasure Green) who owns approximately 2% of our common stock. In total approximately 51% of the Company’s shares of common stock on a fully diluted basis as of March 31, 2021 are owned by koncepts and Treasure Green. koncepts and Treasure Green are owned by Fairy King Prawn Holdings Limited (“Fairy King”), an investment holding company incorporated in the British Virgin Islands, principally owned by the Company’s Chairman, Philip Lau. We do business with a number of entities that are principally owned by the Company’s Chairman, Philip Lau, including Starlight R&D Ltd (“SLRD”), Starlight Consumer Electronics USA, Inc., (“SCE”), Cosmo Communications Corporation of Canada, Inc. (“Cosmo”), Winglight Pacific, Ltd (“Winglight”) and Starlight Electronics Company Ltd (“SLE”), among others. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMCL, and SMCM. All inter-company accounts and transactions have been eliminated in consolidation for all periods presented. 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 statements. However, circumstances could change which may alter future expectations. 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 in an amount sufficient to respond to normal business conditions. Management sets 100% reserves for customers in bankruptcy and other allowances based upon historical collection experience. The Company is subject to chargebacks from customers for co-op program incentives, defective returns, return freight and handling charges that are deducted from open invoices and reduce collectability of open invoices. 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. 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 are recorded in the statement of operations and translations would be recorded in a separate component of shareholders’ equity. Any such amounts 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 March 31, 2021 and 2020 were approximately $0.2 million. Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable. INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected future inventory returns due to warranty and allowance programs. As of March 31, 2021 and March 31, 2020 the estimated amounts for these future inventory returns were approximately $1.0 million and $1.4 million, respectively. The Company 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 in inventories for such declines in value. As of March 31, 2021 and 2020 the Company had inventory reserves of approximately and $0.6 million and $0.4 million, respectively for estimated excess and obsolete inventory. 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, customer deposits, refunds due to customers, and due to related parties approximates fair value due to the relatively short period to maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment notes approximate fair value either due to the relatively short period to maturity or the related interest is 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. REVENUE RECOGNITION AND RESERVE FOR SALES RETURNS The Company recognizes revenue in accordance with FASB ASC 606, “Revenue from Contracts with Customers”. All revenue is generated from contracts with customers. The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation. The Company selectively participates in a retailer’s co-op promotion incentives to maximize sales of the Company’s products on the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. Co-op promotion incentives were approximately $2.0 million during fiscal 2021 and $2.9 million during fiscal 2020. The Company’s contracts with customers consist of one performance obligation (the sale of the Company’s products). The Company’s contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive for the sale of these goods. Costs incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions are included in selling expenses in the accompanying consolidated statements of operations as our underlying customer agreements are less than one year. The Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments (See NOTE 10 – SEGMENT INFORMATION). While the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates variable consideration under our return allowance programs for goods returned from the customer for various reasons, whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns were approximately $1.0 million and $1.2 million as of March 31, 2021 and 2020, respectively. During fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product lines consisted of the following: Revenue by Product Line Fiscal Years Ended Product Line March 31, 2021 March 31, 2020 Karaoke Machines $ 34,700,000 $ 32,600,000 Licensed Products 4,700,000 2,000,000 Microphones and Accessories 4,700,000 2,600,000 SMC Kids Toys 1,300,000 900,000 Music Subscriptions 400,000 400,000 Total Net Sales $ 45,800,000 $ 38,500,000 SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For both Fiscal 2021 and 2020 shipping and handling expenses were approximately $1.2 million. These expenses are classified as a component of selling expenses in the accompanying consolidated statements of operations. 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 consolidated statement of operations 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 in fiscal years 2021 and 2020 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 years ended March 31, 2021 and 2020, the stock option expense was approximately $10,000 and $20,000, respectively. The fair value of each 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. ● For the year ended March 31, 2021: expected dividend yield of 0%, risk-free interest rate of .18%, volatility of 146.7% and expected term of three years. ● For the year ended March 31, 2020: expected dividend yield of 0%, risk-free interest rate of 2.08%, volatility of 194.5% and expected term of three years. The Company’s directors were issued shares of stock as compensation for their service. For the years ended March 31, 2021and 2020, the stock compensation expense to directors was $12,500. RESEARCH AND DEVELOPMENT COSTS All research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the consolidated statements of operations. For both years ended March 31, 2021 and 2020, these amounts totaled approximately $0.1 million. 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 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 March 31, 2021 and 2020 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. COMPUTATION OF EARNINGS (LOSS) PER SHARE Computation of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows: Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Basic weighted average common shares outstanding 38,760,092 38,532,889 Effect of dilutive stock options 368,558 - Diluted weighted average of common shares outstanding 39,128,650 38,532,889 Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options and the proceeds thereof were used to purchase shares of Company common stock at the average market price during the period using the treasury stock method. ADOPTION OF NEW ACCOUNTING STANDARDS In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740). RECENT ACCOUNTING PRONOUNCEMENTS: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326) |
Inventories, Net
Inventories, Net | 12 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | NOTE 3 – INVENTORIES, NET Inventories are comprised of the following components: March 31, March 31, 2021 2020 Finished Goods $ 5,400,000 $ 6,600,000 Inventory in Transit 200,000 100,000 Estimated Amount of Future Returns 500,000 1,300,000 Subtotal 6,100,000 8,000,000 Less: Inventory Reserve 600,000 400,000 Total Inventories $ 5,500,000 $ 7,600,000 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 4 - PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: USEFUL MARCH 31, MARCH 31, LIFE 2021 2020 Computer and office equipment 5-7 years $ 400,000 $ 400,000 Furniture and fixtures 7 years 100,000 100,000 Warehouse equipment 7 years 200,000 200,000 Molds and tooling 3-5 years 1,900,000 1,700,000 2,600,000 2,400,000 Less: Accumulated depreciation 1,900,000 1,600,000 $ 700,000 $ 800,000 Depreciation expense for fiscal years ended 2021 and 2020 was approximately $0.3 million. |
Financing
Financing | 12 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Financing | NOTE 5 – FINANCING Intercreditor Revolving Credit Facility Crestmark Bank and Iron Horse Credit On June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility on eligible accounts receivable and inventory which replaced the Company’s previous revolving credit facility with PNC Bank which was terminated on June 16, 2020. The Company signed a two-year Loan and Security Agreement for a $10.0 million financing facility (decreasing to $5.0 million in off-peak season) with Crestmark Bank (“Crestmark Facility”) on eligible accounts receivable. The outstanding loan balance cannot exceed $10.0 million during peak selling season between July 1 and December 31and is reduced to a maximum of $5.0 million between January 1 and July 31. Costs associated with closing of the Intercreditor Revolving Credit Facility of approximately $74,000 were deferred and are being amortized over one year. During fiscal years ended March 31, 2021 and 2020 the Company incurred amortization expense of approximately $62,000 and $0, respectively associated with the amortization of deferred financing costs from the Intercreditor Revolving Credit Facility. Under the Crestmark Facility: ● Advance rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date. ● Crestmark shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%. ● Crestmark will implement an availability block of 20% of amounts due on Iron Horse Credit (“IHC”) Intercreditor Revolving Credit Facility. See below ● Mandatory pay-down of the loan to zero in January and February each year. The Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable and Inventory. Notwithstanding the foregoing, Crestmark shall subordinate its first security interest in inventory to IHC as agreed between all parties. The Crestmark Facility bears interest at the Wall Street Journal Prime Rate plus 5.50% with a floor of 8.75%. Interest and Maintenance Fees shall be calculated on the higher of the actual average monthly loan balance from the prior month or a minimum average loan balance of $2.0 million. For the fiscal years ended March 31, 2021 and 2020 the Company recorded interest expense under the Crestmark Facility of approximately $0.2 million and $0.0 million, respectively. The Crestmark Facility expires on June 15, 2022. As of March 31, 2021 and 2020 the Company had no outstanding balance on the Crestmark Facility. In addition, the Company executed a two-year Loan and Security Agreement with Iron Horse Credit (“IHC Facility”) for up to $2.5 million in inventory financing. Under the IHC Facility: ● Advance rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined by an independent third-party appraiser engaged by IHC. ● The Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before interest, taxes, depreciation and amortization (“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. This financial covenant was waived for the first six months of the IHC Facility. As of March 31, 2021, the Company was in compliance with this covenant. The IHC Facility is secured by a perfected security interest in the Company’s inventory. The IHC Facility bears interest at 1.292% per month or 15.51% annually. Interest shall be calculated on the higher of the actual average monthly loan balance from the prior month or a minimum average loan balance of $1,000,000. Interest expense under the IHC Facility for the fiscal years ended March 31, 2021 and 2020 was approximately $0.1 million and $0.0 million, respectively. The IHC Facility expires on June 15, 2022. As of March 31, 2021 and 2020, there was an outstanding balance of approximately $65,000 and $0, respectively. As both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a revision or extension of these debt facilities upon their maturity however, there can be no assurance that such revision or extension will occur or at what terms. Revolving Credit Facility PNC Bank On June 22, 2017, the Company renewed the existing revolving credit facility (the “PNC Revolving Credit Facility”) with PNC Bank, National Association (“PNC”) for an additional three years which was terminated on June 16, 2020 and replaced by the Intercreditor Revolving Credit Facility with Crestmark and IHC. In September 2019, the Company defaulted on the PNC Revolving Credit Facility due to non-compliance with the fixed charge coverage ratio requirement. In November 2019, the Company entered into a Forbearance Agreement with PNC whereby PNC delayed taking action they would have been entitled to under a default through March 31, 2020. The Company remained in default of the Forbearance Agreement up until termination of the Revolving Credit Facility on June 16, 2020 at which time the Company executed the Intercreditor Revolving Credit Facility with Crestmark and IHC. As of March 31, 2021, and 2020 there were no amounts due on the PNC Revolving Credit Facility. During the fiscal years ended March 31, 2021 and 2020 the Company incurred interest expense of approximately $0.0 million and $0.1 million, respectively on amounts borrowed against the PNC Revolving Credit Facility. Note Payable Payroll Protection Plan On May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $0.4 million under the Paycheck Protection Program (“PPP”). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced if the borrower terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments until a forgiveness application has been accepted and reviewed by the Small Business Administration (“SBA”), and the SBA has provided Crestmark with the loan forgiveness amount. For the fiscal years ended March 31, 2021 and 2020 the Company incurred interest expense of approximately $4,000 and $0, respectively. As of March 31, 2021 and 2020 there was an outstanding balance on the PPP note payable of approximately $0.4 million and $0.0 million, respectively. In June 2021 the Company received notification from the SBA that the loan had been forgiven in its entirety. Installment Notes Payable On June 18, 2019, the Company entered into a financing arrangement with Dimension Funding, LLC (“Dimension”) to finance an entire ERP System project over a term of 60 months at a cost of approximately $365,000. As of March 31, 2021, the Company executed three installment notes totaling approximately $0.4 million for payments issued to the project vendor. The installment notes have 60-month terms with interest rates of 7.58%, 8.55% and 9.25%, respectively. The installment notes are payable in monthly installments of $7,459 which include principal and interest. For both fiscal years ended March 31, 2021 and 2020 there was an outstanding balance on the installment notes of approximately $0.3 million. For the fiscal years ended March 31 2021 and 2020 the Company incurred interest expense of approximately $26,000 and $23,000, respectively. Subordinated Debt/Note Payable to Related Party In conjunction with the Crestmark Facility and IHC Facility there is a subordination agreement on related party debt due to Starlight Marketing Development, Ltd. of approximately $803,000. On June 1, 2020 the remaining amount due on the subordinated debt of approximately $803,000 was converted to a note payable (“subordinated note payable”) which bears interest at 6%. As part of the agreement to convert the subordinated debt to a note payable it was agreed that interest expense would be accrued at the same 6% interest rate on the unpaid principal retroactively from the date that previously scheduled payments had been missed. During the fiscal years ended March 31, 2021 and 2020 interest expense was approximately $47,000 and $74,000, respectively on the subordinated note payable and the related party subordinated debt. In connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the subordinated note payable. Both the Crestmark Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any amounts borrowed against these credit facilities are paid in full, the Company maintains a 1 : 1 debt coverage ratio and exhibits sufficient cash liquidity to support on-going operations. As of March 31, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility to make principal payments totaling $0.3 million. During the next twelve months the Company intends on making additional payments and pay off the remaining balance outstanding provided the Company meets all repayment requirements of the Crestmark Facility and IHC Facility agreements. As of March 31, 2021 and 2020 the remaining amount due on the note payable was approximately $0.5 million and $0.8 million, respectively. The remaining amount due on the subordinated note payable was classified as a current liability as of March 31, 2021 on the consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6 - COMMITMENTS AND CONTINGENCIES LEGAL MATTERS On September 11, 2020 a Complaint was filed against the Company’s SMCL subsidiary and various staffing agencies used by SMCL in a Superior Court of San Bernadino County. The complaint alleges an employee of SMCL committed employment practice violations against a former temporary employee not employed by SMC Logistics. Management has investigated the allegation and has engaged with an employment attorney to defend the lawsuit. Management does not believe the claims have merit and does not believe the lawsuit will have a material adverse effect on our financial results. As of this filing management is not aware of any other legal proceedings other than matters that arise in the ordinary course of business. LEASES The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date. The liability is equal to the present value of the remaining minimum lease payments. The asset is based on the liability, subject to certain adjustments. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). As the interest rate implicit in the Company’s operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease payments. The Company utilizes the implicit rate for its finance leases. Operating Leases We have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through 2024. We entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida where we lease approximately 6,500 square feet of office space. The lease expires on March 31, 2024. The base rent payment is approximately $9,400 per month, subject to annual adjustments. We entered into an operating lease agreement, effective June 1, 2013, for 86,000 square feet of warehouse space in Ontario, California for our logistics operations. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. The renewal base rent payment is $65,300 per month with a 3% increase every 12 months for the remaining term of the extension. We entered into an operating lease agreement, effective May 1, 2018, for 424 square feet of office space in Macau. The rent is fixed at approximately $1,600 per month for the duration of the lease which expired on April 30, 2021. In May 2021 we executed a one-year lease extension which will expire on April 30, 2022. The lease provides for a renewal option to extend the lease. Rent expense on the new lease is fixed at approximately $1,700 per month for the duration of the lease term. Lease expense for our operating leases is recognized on a straight-line basis over the lease terms. Finance Leases On May 25, 2018 and June 4, 2018, we entered into two long-term capital leasing arrangements with Wells Fargo Equipment Finance (“Wells Fargo”) to finance the leasing of two used forklift vehicles in the amount of approximately $44,000. The leases require monthly payments in the amount of $1,279 per month over a total lease term of 36 months which commenced on June 1, 2018. The agreement has an effective interest rate of 4.5% and the Company has the option to purchase the equipment at the end of the lease term for one dollar. As of March 31, 2021 and March 31, 2020, the remaining amounts due on these capital leasing arrangements was approximately $3,000 and $18,000, respectively. Supplemental balance sheet information related to leases as of March 31, 2021 is as follows: Assets: Operating lease - right-of-use assets $ 2,074,115 Finance leases as a component of property and equipment, net of accumulated depreciation of $18,136 25,390 Liabilities Current Current portion of operating leases $ 794,938 Current portion of finance leases 2,546 Noncurrent Operating lease liabilities, net of current portion $ 1,334,010 Finance leases, net of current portion - Supplemental statement of operations information related to leases for the fiscal year ended March 31, 2021 is as follows: Fiscal Year Ended March 31, 2021 Operating lease expense as a component of general and administrative expenses $ 790,715 Finance lease cost Depreciation of leased assets as a component of depreciation $ 6,218 Interest on lease liabilities as a component of interest expense $ 370 Supplemental cash flow information related to leases for the nine months ended March 31, 2021 is as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases $ 805,662 Financing cash flow paid for finance leases $ 14,957 Lease term and Discount Rate Weighted average remaining lease term (months) 30.0 Operating leases 2.0 Finance leases Weighted average discount rate Operating leases 6.25 % Finance leases 3.68 % Scheduled maturities of operating and finance lease liabilities outstanding as of March 31, 2021 are as follows: Fiscal Year Operating Leases Finance Leases 2022 $ 682,373 $ 2,558 2023 931,948 - 2024 674,488 - 2025 30,739 - Total Minimum Future Payments 2,319,548 2,558 Less: Imputed Interest 190,600 12 Present Value of Lease Liabilities $ 2,128,948 $ 2,546 |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | NOTE 7 – SHAREHOLDERS’ EQUITY COMMON STOCK ISSUANCES During the years ended March 31, 2021 and 2020 the Company issued the following common stock shares: Fiscal 2021: On October 30, 2020 the Company issued 440,000 shares of its common stock to three executive officers who exercised stock options at an average exercise price of $.06 per share. On November 6, 2020, the Company issued 43,105 shares of its common stock to our Board of Directors at $0.29 per share, pursuant to our annual director compensation plan for the fiscal year ending March 31, 2021. Fiscal 2020: On August 30, 2019 the Company issued 60,000 shares of its common stock to a former director who exercised stock options at an average exercise price of $0.17 per share. On June 12, 2019, the Company issued 32,890 shares of its common stock to our Board of Directors at $0.38 per share, pursuant to our annual director compensation plan for the fiscal year ending March 31, 2020. STOCK OPTIONS On June 1, 2001, the Board of Directors approved the 2001 Stock Option Plan (“Plan”), as amended. The Plan was developed to provide a means whereby directors and selected employees, officers, consultants, and advisors of the Company may be granted incentive or non-qualified stock options to purchase common stock of the Company. As of March 31, 2021, the Plan had expired and no shares were available to be issued nor were any additional shares issued from the plan in Fiscal 2021 or 2020. A summary of stock option activity for each of the years presented is summarized below. Fiscal 2021 Fiscal 2020 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of year 2,230,000 $ 0.26 2,210,000 $ 0.25 Granted 100,000 $ 0.29 100,000 $ 0.38 Exercised (440,000 ) $ 0.06 (60,000 ) $ 0.17 Forfeited (210,000 ) $ 0.17 (20,000 ) $ 0.03 Balance at end of year * 1,680,000 $ 0.32 2,230,000 $ 0.26 Options exercisable at end of year 1,580,000 $ 0.33 2,130,000 $ 0.25 The following table summarizes information about employee stock options outstanding at March 31, 2021: Range of Exercise Price Number Outstanding at March 31, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at March 31, 2021 Weighted Average Exercise Price $0.12 - $0.38 1,130,000 4.0 $ 0.24 1,030,000 $ 0.23 $0.47 - $0.55 550,000 6.4 $ 0.50 550,000 $ 0.50 * 1,680,000 1,580,000 * Total number of options outstanding as of March 31, 2021 includes 600,000 options issued to five current and two former directors as compensation and 1,040,000 options issued to key employees that were not issued from the Plan. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8 - INCOME TAXES The Company files separate tax returns in the United States and in Macau. The Macau Subsidiary has received approval from the Macau government to operate its business as a Macau Offshore Company (MOC), and is exempt from the Macau income tax. For the fiscal years ended March 31, 2021 and 2020, the Macau Subsidiary recorded no tax provision. The U.S. Federal net operating loss carryforward is subject to an IRS Section 382 limitation. As of March 31, 2021 and 2020, the Company had net deferred tax assets of approximately $0.9 million and $1.3 million, respectively. For the fiscal year ended March 31, 2021 we determined our effective tax rate to be approximately 17.4% and we recorded a tax provision of approximately $0.5 million which was net of a valuation reserve of approximately $23,000 for deferred tax assets that will most likely expire prior to being realized. For the fiscal year ended March 31, 2020 we determined our effective tax rate to be approximately 18.1% and we recorded a tax benefit of approximately $0.6 million which was net of a valuation reserve of approximately $88,000 for deferred tax assets that will most likely expire prior to being realized. The Company also recorded an income tax receivable of approximately $0.1 million due to the availability of net operating loss carrybacks and alternative minimum tax credits that were realized for the year ended March 31, 2021. The income tax receivable was included as a component of prepaid expenses and other current assets on the accompanying consolidated balance sheet as of March 31, 2021. The income tax provision (benefit) for federal, foreign, and state income taxes in the consolidated statements of operations consisted of the following components for 2021 and 2020: 2021 2020 Income tax provision (benefit): Current: Federal $ 54,487 $ (104,437 ) State 3,825 - Total current Federal and State tax benefit $ 58,312 $ (104,437 ) Deferred: Federal $ 417,477 $ (521,776 ) State (18,920 ) (15,601 ) Total Deferred Federal and State 398,557 (537,377 ) Total income tax (benefit) provision $ 456,869 $ (641,814 ) The United States and foreign components of income (loss) before income taxes are as follows: 2021 2020 United States $ 1,922,947 $ (3,765,272 ) Foreign 706,287 266,458 $ 2,629,234 $ (3,498,814 ) The actual tax provision differs from the “expected” tax for the years ended March 31, 2021 and 2020 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows: 2021 2020 Expected tax provision (benefit) $ 551,982 $ (734,751 ) State income taxes, net of Federal income tax provision (benefit) 128,699 (175,245 ) Permanent differences (6,578 ) 9,977 Tax rate differential on foreign earnings (108,690 ) - Change in valuation allowance (65,193 ) 87,842 Effect of IRC §382 on NOL - 100,966 Tax rate differential on NOL carryback - 16,263 Correction of state rate - 83,803 Other (43,351 ) (30,669 ) Actual tax provision (benefit) $ 456,869 $ (641,814 ) The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows: 2021 2020 NOL Federal Carryforward $ 246,769 $ 312,430 State NOL Carryforward 194,388 157,967 General business credit - 14,196 Inventory differences 348,921 303,529 Stock option compensation expense 115,730 128,220 Allowance for doubtful accounts 35,877 143,748 Insurance contingency - 220,425 Reserve for estimated returns 111,887 112,537 Accrued vacation 13,186 42,928 Business interest deduction - 55,978 1,066,758 1,491,958 Less: valuation allowance 22,649 87,842 1,044,109 1,404,116 Depreciable and amortizable assets (119,242 ) (82,512 ) Prepaid expenses (37,703 ) (35,883 ) Net deferred tax liabilities (156,945 ) (118,395 ) Net deferred tax asset $ 887,164 $ 1,285,721 The Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences and the length of carryback and carryforward periods available under the applicable federal and state laws; and the amount and timing of future taxable income. At March 31, 2021, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP and concluded that a $22,649 valuation allowance against deferred tax assets was necessary. The recognition of the remaining net deferred tax asset and corresponding tax benefit is based upon the Company’s conclusions regarding, among other considerations, the Company’s history of earnings and projected earnings for fiscal year 2022 and in the future. At March 31, 2021, the Company has federal tax net operating loss carryforwards in the amount of approximately $1.2 million that begin to expire in the year 2025. The net operating loss carryforward is subject to an IRS Section 382 limitation that limited the amount available to use beginning in Fiscal 2020 to approximately $.15 million per year. In addition, the Company has state tax net operating loss carryforwards of approximately $3.6 million that will begin to expire beginning in 2024. |
Segment Information
Segment Information | 12 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 9 - SEGMENT INFORMATION The Company operates in one segment. Sales by geographic region for the period presented are as follows: FOR THE FISCAL YEARS ENDED March 31, March 31, 2021 2020 North America $ 44,200,000 $ 36,000,000 Europe 1,200,000 1,700,000 Asia - 300,000 Australia 400,000 500,000 $ 45,800,000 $ 38,500,000 The geographic area of sales is based primarily on where the product was delivered. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | NOTE 10 - 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 fiscal years ended March 31, 2021 and 2020 totaled approximately $74,000 and $63,000, respectively. The amounts are included as a component of general and administrative expense in the accompanying Consolidated Statements of Operations. The Company does not provide any post-employment benefits to retirees. |
Concentrations of Credit Risk,
Concentrations of Credit Risk, Customers, and Suppliers | 12 Months Ended |
Mar. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk, Customers, and Suppliers | NOTE 11 - CONCENTRATIONS OF CREDIT RISK, CUSTOMERS, AND SUPPLIERS The Company derives a majority of its revenues from retailers in the United States. The Company’s allowance for doubtful accounts is based upon management’s estimates and historical experience and reflects the fact that accounts receivable are concentrated with several large customers. At March 31, 2021, 70% of accounts receivable were due from four customers in North America that individually owed over 10% of total accounts receivable. At March 31, 2020, 82% of accounts receivable were due from four customers in North America that individually owed over 10% of total accounts receivable. Revenues derived from three customers in 2021 and 2020 were 69% and 64% of total revenue, respectively. Revenues from customers representing greater than 10% of total net sales were derived from top four customers in Fiscal 2021 and top three customers in Fiscal 2020 as percentage of the net sales were 36%, 20%, 13% and 12%, and 41%, 13% and 10%, respectively. The loss of any of these customers could have an adverse impact on the Company. The Macau Subsidiary recorded net sales of approximately $4.1 million and $5.1 million in fiscal 2021 and 2020, respectively. The Company is dependent upon foreign companies for the manufacture of all its electronic products. The Company’s arrangements with manufacturers are subject to the risk of doing business abroad, such as import duties, trade restrictions, work stoppages, foreign currency fluctuations, political instability, and other factors, which could have an adverse impact on its business. The Company believes that the loss of any one or more of their suppliers would not have a long-term material adverse effect because other manufacturers with whom the Company does business would be able to increase production to fulfill their requirements. However, the loss of certain suppliers in the short-term could adversely affect business until alternative supply arrangements are secured. During fiscal years 2021 and 2020, manufacturers in the People’s Republic of China accounted for 100% of the Company’s total product purchases, including all of the Company’s hardware purchases. In 2018 the U.S. government-imposed tariffs of up to 25% on certain goods imported from China. All of our products are manufactured and imported from China however, only our microphones are currently subject to a 7.5% tariff currently in place. Should the government decide to expand its list of products to include our karaoke products that would subject our products to tariffs in the future, there could be a significant increase in the landed cost of our products. If we are unable to mitigate these increased costs through price increases, we could experience reductions in revenues, gross profit margin and results from operations. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 – RELATED PARTY TRANSACTIONS DUE TO/FROM RELATED PARTIES On March 31, 2021 the Company had approximately $0.1 million due to related parties SLRD, SCE and SLE for services provided by these companies and licensing fees for use of pedestal model molds and tools owned by them. On March 31, 2020, the Company had approximately $0.5 million due from related parties SLRD, SCE and SLE for goods and services sold to these companies. TRADE During both Fiscal 2021 and 2020 the Company paid approximately $0.4 million to SLE as reimbursement for engineering, quality control and other administrative services performed on our behalf in China. These expense reimbursements were included in general and administrative expenses on our consolidated statements of operations. During Fiscal 2021 and 2020 the Company sold approximately $0.0 million and $0.9 million, respectively of product to Winglight for direct shipment to Cosmo at discounted pricing granted to major direct import customers shipped internationally with freight prepaid. These amounts were included as a component of net sales in the accompanying consolidated statements of operations. On July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company’s Canadian distributor and the Company became the sole and exclusive distributor of the Company’s products in Canada. As part of the agreement, the companies executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo’s karaoke inventory for approximately $0.7 million. During Fiscal 2021 there was a gain of approximately $0.2 million from Cosmo related to payments received in Fiscal 2021 on prior year sales and the related receivable previously reversed and written off as initially deemed uncollectible. |
Reserve for Sales Returns
Reserve for Sales Returns | 12 Months Ended |
Mar. 31, 2021 | |
First Priority Lien Percentage | |
Reserve for Sales Returns | NOTE 13 – RESERVE FOR SALES RETURNS 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 invoice price in lieu of returning defective products. The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates. The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the consolidated balance sheets. Changes in the Company’s reserve for sales returns are presented in the following table: Fiscal Year Ended March 31, March 31, 2021 2020 Reserve for sales returns at beginning of the fiscal year $ 1,224,000 $ 896,000 Provision for estimated sales returns 3,881,000 5,771,000 Sales returns received (4,145,000 ) (5,443,000 ) Reserve for sales returns at end of the year $ 960,000 $ 1,224,000 |
Damaged Goods Incident
Damaged Goods Incident | 12 Months Ended |
Mar. 31, 2021 | |
Environmental Remediation Obligations [Abstract] | |
Damaged Goods Incident | NOTE 14 – DAMAGED GOODS INCIDENT In August 2019, we received notification from a major customer that several containers of goods from multiple vessels purchased direct import by the customer had arrived severely water damaged. Upon inspection of the damaged goods by insurance surveyors it was their opinion that the source of the damage was due to moisture in the pallets provided by the factory which caused significant condensation and consequently water damage to the merchandise. Actual damage to the goods occurred while the goods were in transit. We filed insurance claims on our cargo insurance policy which provided for recovery of the sales value plus additional expenses associated with the damaged goods. For the fiscal year ended March 31, 2020, the customer charged us back a total of approximately $1.7 million for damaged goods consisting of sales value of approximately $1.6 million which was recorded as a reduction in net sales and approximately $0.1 million in freight charges which were expensed as a component of sales and marketing expense on the accompanying consolidated statements of operations. For the fiscal year ended March 31, 2020, we incurred additional related expenses of approximately $0.3 million that were included as a component of general and administrative expenses on the accompanying consolidated statements of operations. We recorded a refund due to the customer of approximately $0.5 million which reflected approximately $1.7 million of chargebacks by the customer less approximately $1.2 million the customer had deducted on payment remittances to the Company as of March 31, 2020. We recognized an insurance claim receivable of approximately $1.3 million (the approximate cost of the damaged goods destroyed) on the accompanying consolidated balance sheets for March 31, 2020. During Fiscal 2021, we recovered approximately $2.3 million in proceeds from the damaged goods insurance claim which consisted of $1.6 million of lost sales, approximately $0.1 million in freight costs and approximately $0.6 million in out-of-pocket expenses associated with the incident. We recognized a one-time gain from the damaged goods claim settlement of approximately $1.1 million (net of the insurance claim receivable) as other income for the fiscal year ended March 31, 2021 on the accompanying statements of operations. In addition, we recognized an additional one-time gain of approximately $0.4 million as other income for the fiscal year ended March 31, 2021 on the accompanying consolidated statements of operations due settlement of accounts payable by the factory that caused the damage. |
Refunds Due to Customers
Refunds Due to Customers | 12 Months Ended |
Mar. 31, 2021 | |
Refunds Due To Customers Abstract | |
Refunds Due to Customers | NOTE 15 – REFUNDS DUE TO CUSTOMERS As of March 31, 2021 and 2020 the amount of refunds due to customers was approximately $0.1 million and $0.8 million, respectively. All refunds related to the damaged goods incident were settled with the customer from proceeds from the damaged goods insurance settlement claim. Refunds due to customers at March 31, 2021 were primarily due to amounts due to two major customers for seasonal returns. Refunds due to customers at March 31, 2020 were primarily due to one major customer which reflects approximately $1.7 million of chargebacks primarily due to damaged goods received less approximately $1.2 million that the customer had deducted on payment remittances to the Company as of March 31, 2020. The remaining $0.3 million was primarily due to amounts due to two major customers for overstock returns. |
Reserves
Reserves | 12 Months Ended |
Mar. 31, 2021 | |
Reserves | |
Reserves | NOTE 16 – RESERVES Asset reserves and allowances for years ended March 31, 2021 and 2020 are presented in the following table: Balance at Charged to Reduction to Credited to Balance at Beginning of Costs and Allowance for Costs and End of Description Year Expenses Write off Expenses Year Year ended March 31, 2021 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 337,461 $ 16,086 $ (227,184 ) $ 12,217 $ 138,580 Inventory reserve $ 434,000 $ 688,200 $ (485,861 ) $ - $ 636,339 Year ended March 31, 2020 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 51,096 $ 303,843 $ (15,303 ) $ (2,175 ) $ 337,461 Inventory reserve $ 254,000 $ 398,730 $ (218,730 ) $ - $ 434,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMCL, and SMCM. All inter-company accounts and transactions have been eliminated in consolidation for all periods presented. |
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 statements. However, circumstances could change which may alter future expectations. |
Collectibility 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 in an amount sufficient to respond to normal business conditions. Management sets 100% reserves for customers in bankruptcy and other allowances based upon historical collection experience. The Company is subject to chargebacks from customers for co-op program incentives, defective returns, return freight and handling charges that are deducted from open invoices and reduce collectability of open invoices. 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. |
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 are recorded in the statement of operations and translations would be recorded in a separate component of shareholders’ equity. Any such amounts 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 March 31, 2021 and 2020 were approximately $0.2 million. Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable. |
Inventory | INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected future inventory returns due to warranty and allowance programs. As of March 31, 2021 and March 31, 2020 the estimated amounts for these future inventory returns were approximately $1.0 million and $1.4 million, respectively. The Company 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 in inventories for such declines in value. As of March 31, 2021 and 2020 the Company had inventory reserves of approximately and $0.6 million and $0.4 million, respectively for estimated excess and obsolete inventory. |
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, customer deposits, refunds due to customers, and due to related parties approximates fair value due to the relatively short period to maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment notes approximate fair value either due to the relatively short period to maturity or the related interest is 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. |
Revenue Recognition and Reserve for Sales Returns | REVENUE RECOGNITION AND RESERVE FOR SALES RETURNS The Company recognizes revenue in accordance with FASB ASC 606, “Revenue from Contracts with Customers”. All revenue is generated from contracts with customers. The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation. The Company selectively participates in a retailer’s co-op promotion incentives to maximize sales of the Company’s products on the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. Co-op promotion incentives were approximately $2.0 million during fiscal 2021 and $2.9 million during fiscal 2020. The Company’s contracts with customers consist of one performance obligation (the sale of the Company’s products). The Company’s contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive for the sale of these goods. Costs incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions are included in selling expenses in the accompanying consolidated statements of operations as our underlying customer agreements are less than one year. The Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments (See NOTE 10 – SEGMENT INFORMATION). While the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates variable consideration under our return allowance programs for goods returned from the customer for various reasons, whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns were approximately $1.0 million and $1.2 million as of March 31, 2021 and 2020, respectively. During fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product lines consisted of the following: Revenue by Product Line Fiscal Years Ended Product Line March 31, 2021 March 31, 2020 Karaoke Machines $ 34,700,000 $ 32,600,000 Licensed Products 4,700,000 2,000,000 Microphones and Accessories 4,700,000 2,600,000 SMC Kids Toys 1,300,000 900,000 Music Subscriptions 400,000 400,000 Total Net Sales $ 45,800,000 $ 38,500,000 |
Shipping and Handling Costs | SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For both Fiscal 2021 and 2020 shipping and handling expenses were approximately $1.2 million. These expenses are classified as a component of selling expenses in the accompanying consolidated statements of operations. |
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 consolidated statement of operations 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 in fiscal years 2021 and 2020 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 years ended March 31, 2021 and 2020, the stock option expense was approximately $10,000 and $20,000, respectively. The fair value of each 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. ● For the year ended March 31, 2021: expected dividend yield of 0%, risk-free interest rate of .18%, volatility of 146.7% and expected term of three years. ● For the year ended March 31, 2020: expected dividend yield of 0%, risk-free interest rate of 2.08%, volatility of 194.5% and expected term of three years. The Company’s directors were issued shares of stock as compensation for their service. For the years ended March 31, 2021and 2020, the stock compensation expense to directors was $12,500. |
Research and Development Costs | RESEARCH AND DEVELOPMENT COSTS All research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the consolidated statements of operations. For both years ended March 31, 2021 and 2020, these amounts totaled approximately $0.1 million. |
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 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 March 31, 2021 and 2020 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. |
Computation of Earnings (Loss) Per Share | COMPUTATION OF EARNINGS (LOSS) PER SHARE Computation of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows: Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Basic weighted average common shares outstanding 38,760,092 38,532,889 Effect of dilutive stock options 368,558 - Diluted weighted average of common shares outstanding 39,128,650 38,532,889 Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options and the proceeds thereof were used to purchase shares of Company common stock at the average market price during the period using the treasury stock method. |
Adoption of New Accounting Standards | ADOPTION OF NEW ACCOUNTING STANDARDS In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740). |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | During fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product lines consisted of the following: Revenue by Product Line Fiscal Years Ended Product Line March 31, 2021 March 31, 2020 Karaoke Machines $ 34,700,000 $ 32,600,000 Licensed Products 4,700,000 2,000,000 Microphones and Accessories 4,700,000 2,600,000 SMC Kids Toys 1,300,000 900,000 Music Subscriptions 400,000 400,000 Total Net Sales $ 45,800,000 $ 38,500,000 |
Schedule of Computation of Earnings (Loss) Per Share | Computation of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows: Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Basic weighted average common shares outstanding 38,760,092 38,532,889 Effect of dilutive stock options 368,558 - Diluted weighted average of common shares outstanding 39,128,650 38,532,889 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories are comprised of the following components: March 31, March 31, 2021 2020 Finished Goods $ 5,400,000 $ 6,600,000 Inventory in Transit 200,000 100,000 Estimated Amount of Future Returns 500,000 1,300,000 Subtotal 6,100,000 8,000,000 Less: Inventory Reserve 600,000 400,000 Total Inventories $ 5,500,000 $ 7,600,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | A summary of property and equipment is as follows: USEFUL MARCH 31, MARCH 31, LIFE 2021 2020 Computer and office equipment 5-7 years $ 400,000 $ 400,000 Furniture and fixtures 7 years 100,000 100,000 Warehouse equipment 7 years 200,000 200,000 Molds and tooling 3-5 years 1,900,000 1,700,000 2,600,000 2,400,000 Less: Accumulated depreciation 1,900,000 1,600,000 $ 700,000 $ 800,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Supplemental Information Related to Leases | Supplemental balance sheet information related to leases as of March 31, 2021 is as follows: Assets: Operating lease - right-of-use assets $ 2,074,115 Finance leases as a component of property and equipment, net of accumulated depreciation of $18,136 25,390 Liabilities Current Current portion of operating leases $ 794,938 Current portion of finance leases 2,546 Noncurrent Operating lease liabilities, net of current portion $ 1,334,010 Finance leases, net of current portion - Supplemental statement of operations information related to leases for the fiscal year ended March 31, 2021 is as follows: Fiscal Year Ended March 31, 2021 Operating lease expense as a component of general and administrative expenses $ 790,715 Finance lease cost Depreciation of leased assets as a component of depreciation $ 6,218 Interest on lease liabilities as a component of interest expense $ 370 Supplemental cash flow information related to leases for the nine months ended March 31, 2021 is as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases $ 805,662 Financing cash flow paid for finance leases $ 14,957 |
Schedule of Lease term and Discount Rate | Lease term and Discount Rate Weighted average remaining lease term (months) 30.0 Operating leases 2.0 Finance leases Weighted average discount rate Operating leases 6.25 % Finance leases 3.68 % |
Schedule of Future Minimum Rental Payments for Operating and Finance Leases | Scheduled maturities of operating and finance lease liabilities outstanding as of March 31, 2021 are as follows: Fiscal Year Operating Leases Finance Leases 2022 $ 682,373 $ 2,558 2023 931,948 - 2024 674,488 - 2025 30,739 - Total Minimum Future Payments 2,319,548 2,558 Less: Imputed Interest 190,600 12 Present Value of Lease Liabilities $ 2,128,948 $ 2,546 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Summary of Stock Option Activity | A summary of stock option activity for each of the years presented is summarized below. Fiscal 2021 Fiscal 2020 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of year 2,230,000 $ 0.26 2,210,000 $ 0.25 Granted 100,000 $ 0.29 100,000 $ 0.38 Exercised (440,000 ) $ 0.06 (60,000 ) $ 0.17 Forfeited (210,000 ) $ 0.17 (20,000 ) $ 0.03 Balance at end of year * 1,680,000 $ 0.32 2,230,000 $ 0.26 Options exercisable at end of year 1,580,000 $ 0.33 2,130,000 $ 0.25 |
Schedule of Employee Stock Options Outstanding | The following table summarizes information about employee stock options outstanding at March 31, 2021: Range of Exercise Price Number Outstanding at March 31, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at March 31, 2021 Weighted Average Exercise Price $0.12 - $0.38 1,130,000 4.0 $ 0.24 1,030,000 $ 0.23 $0.47 - $0.55 550,000 6.4 $ 0.50 550,000 $ 0.50 * 1,680,000 1,580,000 * Total number of options outstanding as of March 31, 2021 includes 600,000 options issued to five current and two former directors as compensation and 1,040,000 options issued to key employees that were not issued from the Plan. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (Benefit) | The income tax provision (benefit) for federal, foreign, and state income taxes in the consolidated statements of operations consisted of the following components for 2021 and 2020: 2021 2020 Income tax provision (benefit): Current: Federal $ 54,487 $ (104,437 ) State 3,825 - Total current Federal and State tax benefit $ 58,312 $ (104,437 ) Deferred: Federal $ 417,477 $ (521,776 ) State (18,920 ) (15,601 ) Total Deferred Federal and State 398,557 (537,377 ) Total income tax (benefit) provision $ 456,869 $ (641,814 ) |
Schedule of Income (Loss) Before Income Tax | The United States and foreign components of income (loss) before income taxes are as follows: 2021 2020 United States $ 1,922,947 $ (3,765,272 ) Foreign 706,287 266,458 $ 2,629,234 $ (3,498,814 ) |
Schedule of Difference Between Actual Tax Expenses and Expected Tax Expenses | The actual tax provision differs from the “expected” tax for the years ended March 31, 2021 and 2020 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows: 2021 2020 Expected tax provision (benefit) $ 551,982 $ (734,751 ) State income taxes, net of Federal income tax provision (benefit) 128,699 (175,245 ) Permanent differences (6,578 ) 9,977 Tax rate differential on foreign earnings (108,690 ) - Change in valuation allowance (65,193 ) 87,842 Effect of IRC §382 on NOL - 100,966 Tax rate differential on NOL carryback - 16,263 Correction of state rate - 83,803 Other (43,351 ) (30,669 ) Actual tax provision (benefit) $ 456,869 $ (641,814 ) |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows: 2021 2020 NOL Federal Carryforward $ 246,769 $ 312,430 State NOL Carryforward 194,388 157,967 General business credit - 14,196 Inventory differences 348,921 303,529 Stock option compensation expense 115,730 128,220 Allowance for doubtful accounts 35,877 143,748 Insurance contingency - 220,425 Reserve for estimated returns 111,887 112,537 Accrued vacation 13,186 42,928 Business interest deduction - 55,978 1,066,758 1,491,958 Less: valuation allowance 22,649 87,842 1,044,109 1,404,116 Depreciable and amortizable assets (119,242 ) (82,512 ) Prepaid expenses (37,703 ) (35,883 ) Net deferred tax liabilities (156,945 ) (118,395 ) Net deferred tax asset $ 887,164 $ 1,285,721 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographical Region | The Company operates in one segment. Sales by geographic region for the period presented are as follows: FOR THE FISCAL YEARS ENDED March 31, March 31, 2021 2020 North America $ 44,200,000 $ 36,000,000 Europe 1,200,000 1,700,000 Asia - 300,000 Australia 400,000 500,000 $ 45,800,000 $ 38,500,000 |
Reserve for Sales Returns (Tabl
Reserve for Sales Returns (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
First Priority Lien Percentage | |
Schedule of Reserve for Sales Returns | Changes in the Company’s reserve for sales returns are presented in the following table: Fiscal Year Ended March 31, March 31, 2021 2020 Reserve for sales returns at beginning of the fiscal year $ 1,224,000 $ 896,000 Provision for estimated sales returns 3,881,000 5,771,000 Sales returns received (4,145,000 ) (5,443,000 ) Reserve for sales returns at end of the year $ 960,000 $ 1,224,000 |
Reserves (Tables)
Reserves (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Reserves | |
Schedule of Valuation and Qualifying Accounts | Asset reserves and allowances for years ended March 31, 2021 and 2020 are presented in the following table: Balance at Charged to Reduction to Credited to Balance at Beginning of Costs and Allowance for Costs and End of Description Year Expenses Write off Expenses Year Year ended March 31, 2021 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 337,461 $ 16,086 $ (227,184 ) $ 12,217 $ 138,580 Inventory reserve $ 434,000 $ 688,200 $ (485,861 ) $ - $ 636,339 Year ended March 31, 2020 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 51,096 $ 303,843 $ (15,303 ) $ (2,175 ) $ 337,461 Inventory reserve $ 254,000 $ 398,730 $ (218,730 ) $ - $ 434,000 |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) | Mar. 31, 2021 |
Koncepts International Limited [Member] | |
Equity method investment, ownership percentage | 49.00% |
Treasure Green Holdings Ltd [Member] | |
Equity method investment, ownership percentage | 2.00% |
Koncepts International Limited and Treasure Green [Member] | |
Equity method investment, ownership percentage | 51.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | |||
Percentage of reserves for customers | 100.00% | ||
Foreign financial institutions actual deposits | $ 200,000 | $ 200,000 | |
Future inventory returns | 1,000,000 | 1,400,000 | |
Inventory reserves | 600,000 | 400,000 | |
Co-op promotion incentives | 2,000,000 | 2,900,000 | |
Reserve for sales returns | 960,000 | 1,224,000 | $ 896,000 |
Shipping and handling expenses | 1,200,000 | 1,200,000 | |
Stock option expense | $ 10,000 | $ 20,000 | |
Expected dividend yield | 0.00% | 0.00% | |
Risk free interest rate | 0.18% | 2.08% | |
Volatility rate | 146.70% | 194.50% | |
Expected term | 3 years | 3 years | |
Stock compensation expense | $ 12,500 | $ 12,500 | |
Research and development costs | $ 100,000 | $ 100,000 | |
Percentage of tax benefits recognized likelihood of being realized | Greater than 50% | ||
Potentially dilutive securities | 368,558 | ||
Options to purchase | 750,000 | 2,230,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total Net Sales | $ 45,802,574 | $ 38,500,570 |
Karaoke Machines [Member] | ||
Total Net Sales | 34,700,000 | 32,600,000 |
Licensed Product [Member] | ||
Total Net Sales | 4,700,000 | 2,000,000 |
Microphones and Accessories [Member] | ||
Total Net Sales | 4,700,000 | 2,600,000 |
SMC Kids Toys [Member] | ||
Total Net Sales | 1,300,000 | 900,000 |
Music Subscriptions [Member] | ||
Total Net Sales | $ 400,000 | $ 400,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Computation of Earnings (Loss) Per Share (Details) - shares | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accounting Policies [Abstract] | ||
Basic weighted average common shares outstanding | 38,760,092 | 38,532,889 |
Effect of dilutive stock options | 368,558 | |
Diluted weighted average of common shares outstanding | 39,128,650 | 38,532,889 |
Inventories, Net - Schedule of
Inventories, Net - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 5,400,000 | $ 6,600,000 |
Inventory in Transit | 200,000 | 100,000 |
Estimated Amount of Future Returns | 500,000 | 1,300,000 |
Subtotal | 6,100,000 | 8,000,000 |
Less: Inventory Reserve | 600,000 | 400,000 |
Total Inventories | $ 5,490,255 | $ 7,601,277 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 298,357 | $ 269,107 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,600,000 | $ 2,400,000 |
Less: Accumulated depreciation | 1,900,000 | 1,600,000 |
Property and equipment, net | 674,153 | 771,349 |
Computer and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 400,000 | $ 400,000 |
Computer and Office Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 5 years | 5 years |
Computer and Office Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | 7 years |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | 7 years |
Property and equipment, gross | $ 100,000 | $ 100,000 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | 7 years |
Property and equipment, gross | $ 200,000 | $ 200,000 |
Molds and Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,900,000 | $ 1,700,000 |
Molds and Tooling [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 3 years | 3 years |
Molds and Tooling [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 5 years | 5 years |
Financing (Details Narrative)
Financing (Details Narrative) - USD ($) | Jun. 16, 2020 | May 05, 2020 | Jun. 18, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 02, 2020 |
Line of Credit Facility [Line Items] | ||||||
Amortization of deferred financing costs | $ 61,699 | $ 13,333 | ||||
Intercreditor Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Amortization of deferred financing costs | 62,000 | 0 | ||||
Repayments of related party debt | 300,000 | |||||
Paycheck Protection Program [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest expenses | 4,000 | 0 | ||||
Proceeds from loan | $ 400,000 | |||||
Notes payable | 400,000 | 0 | ||||
Financing Agreement [Member] | Dimension Funding, LLC [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest expenses | 26,000 | 23,000 | ||||
Debt instrument, term | 60 months | |||||
Notes payable | $ 365,000 | 300,000 | 300,000 | |||
Financing Agreement [Member] | Dimension Funding, LLC [Member] | Three Installment Notes [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Notes payable | 400,000 | |||||
Financing Agreement [Member] | Dimension Funding, LLC [Member] | Installment Note One [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate | 7.58% | |||||
Financing Agreement [Member] | Dimension Funding, LLC [Member] | Installment Note Two [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate | 8.55% | |||||
Financing Agreement [Member] | Dimension Funding, LLC [Member] | Installment Note Three [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate | 9.25% | |||||
Subordination Agreement [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Notes payable | 500,000 | 800,000 | ||||
Subordination Agreement [Member] | Starlight Marketing Development Ltd. [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Notes payable | 803,000 | |||||
Interest expense, related party | 47,000 | 74,000 | ||||
Subordination Agreement [Member] | Starlight Marketing Development Ltd. [Member] | Subordinated Notes Payable [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Notes payable | $ 803,000 | |||||
Debt instrument, interest rate | 6.00% | |||||
Monthly Payments of Notes Payable with Principal and Interest [Member] | Financing Agreement [Member] | Dimension Funding, LLC [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Repayments of notes payable | $ 7,459 | |||||
Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum amount outstanding during period | $ 10,000,000 | |||||
Line of credit facility, description | Advance rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date. Crestmark shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%. Crestmark will implement an availability block of 20% of amounts due on Iron Horse Credit ("IHC") Intercreditor Revolving Credit Facility. Mandatory pay-down of the loan to zero in January and February each year. | |||||
Revolving Credit Facility [Member] | Off Peak Season [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum amount outstanding during period | $ 5,000,000 | |||||
Revolving Credit Facility [Member] | Amortized Over One Year [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Cost associated with Revolving credit facility deferred | $ 74,000 | |||||
Crestmark Bank [Member] | Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, interest rate during period | 5.50% | |||||
Interest expenses | $ 200,000 | 0 | ||||
Credit facility expiry date | Jun. 15, 2022 | |||||
Loan balance | $ 2,000,000 | |||||
Crestmark Bank [Member] | Revolving Credit Facility [Member] | Interest Rate Floor [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, interest rate during period | 8.75% | |||||
Crestmark Bank [Member] | Peak Selling Season Between July 1 and December 31 [Member] | Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum amount outstanding during period | $ 10,000,000 | |||||
Crestmark Bank [Member] | Peak Selling Season Between January 1 and July 31 [Member] | Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum amount outstanding during period | $ 5,000,000 | |||||
IHC Facility [Member] | Two-Year Loan and Security Agreement [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum amount outstanding during period | $ 65,000 | 0 | ||||
Line of credit facility, description | Advance rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined by an independent third-party appraiser engaged by IHC. The Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before interest, taxes, depreciation and amortization ("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. This financial covenant has been waived for the first six months of the IHC Facility. As of March 31, 2021, the Company is in compliance with this covenant. | |||||
Interest expenses | $ 100,000 | 0 | ||||
Credit facility expiry date | Jun. 15, 2022 | |||||
Inventory financing | $ 2,500,000 | |||||
Loan balance | $ 1,000,000 | |||||
IHC Facility [Member] | Interest Rate Per Month [Member] | Two-Year Loan and Security Agreement [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, interest rate during period | 1.292% | |||||
IHC Facility [Member] | Interest Rate Per Annually [Member] | Two-Year Loan and Security Agreement [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, interest rate during period | 15.51% | |||||
PNC Bank [Member] | Revolving Credit Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest expenses | $ 0 | $ 100,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Jun. 15, 2020USD ($) | Jun. 04, 2018USD ($) | May 25, 2018USD ($) | May 01, 2018USD ($)ft² | Oct. 01, 2017USD ($)ft² | Jun. 01, 2013ft² | May 30, 2021USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) |
Commitments And Contingencies [Line Items] | |||||||||
Monthly lease payments | $ 14,957 | ||||||||
Subsequent Event [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Rent expense | $ 1,700 | ||||||||
Lease extend term | we executed a one-year lease extension which will expire on April 30, 2022. | ||||||||
Operating Lease Agreement [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Operating lease space for office | ft² | 424 | 6,500 | 86,000 | ||||||
Lease expiration date | Apr. 30, 2021 | Mar. 31, 2024 | |||||||
Rent expense | $ 1,600 | $ 9,400 | |||||||
Lease extend term | we executed a three-year lease extension which will expire on August 31, 2023. The renewal base rent payment is $65,300 per month with a 3% increase every 12 months for the remaining term of the extension. | ||||||||
Three Year Lease Extension Agreement [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Lease expiration date | Aug. 31, 2023 | ||||||||
Rent expense | $ 65,300 | ||||||||
Long-Term Capital Leasing Arrangements [Member] | Wells Fargo Equipment Finance [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Financing lease costs | $ 44,000 | $ 44,000 | |||||||
Monthly lease payments | $ 1,279 | $ 1,279 | |||||||
Financing lease term | 36 months | 36 months | |||||||
Effective interest rate | 4.50% | 4.50% | |||||||
Remaining capital lease arrangements | $ 3,000 | $ 18,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Supplemental Information Related to Leases (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease - right-of-use assets | $ 2,074,115 | $ 2,074,115 | $ 573,874 |
Finance leases as a component of property and equipment, net of accumulated depreciation of $18,136 | 25,390 | 25,390 | |
Current portion of operating leases | 794,938 | 794,938 | 321,389 |
Current portion of finance leases | 2,546 | 2,546 | 14,953 |
Operating lease liabilities, net of current portion | 1,334,010 | 1,334,010 | 322,263 |
Finance leases, net of current portion | $ 2,550 | ||
Operating lease expense as a component of general and administrative expenses | 790,715 | ||
Finance lease cost: Depreciation of leased assets as a component of depreciation | 6,218 | ||
Finance lease cost: Interest on lease liabilities as a component of interest expense | $ 370 | ||
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases | 805,662 | ||
Cash paid for amounts included in the measurement of lease liabilities: Financing cash flow paid for finance leases | $ 14,957 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Supplemental Information Related to Leases (Details) (Parenthetical) | 12 Months Ended |
Mar. 31, 2021USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Finance leases Property and equipment accumulated depreciation | $ 18,136 |
Commitments and Contingencies_4
Commitments and Contingencies - Schedule of Lease term and Discount Rate (Details) | Mar. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted average remaining lease term (months), Operating leases | 30 months |
Weighted average remaining lease term (months), Finance leases | 2 months |
Weighted average discount rate, Operating leases | 6.25% |
Weighted average discount rate, Finance leases | 3.68% |
Commitments and Contingencies_5
Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating and Finance Leases (Details) | Mar. 31, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases, 2022 | $ 682,373 |
Operating Leases, 2023 | 931,948 |
Operating Leases, 2024 | 674,488 |
Operating Leases, 2025 | 30,739 |
Operating Leases, Total Minimum Future Payments | 2,319,548 |
Operating Leases, Less: Imputed Interest | 190,600 |
Operating Leases, Present Value of Lease Liabilities | 2,128,948 |
Finance Leases, 2022 | 2,558 |
Finance Leases, 2023 | |
Finance Leases, 2024 | |
Finance Leases, 2025 | |
Finance Leases, Total Minimum Future Payments | 2,558 |
Finance Leases, Less: Imputed Interest | 12 |
Finance Leases, Present Value of Lease Liabilities | $ 2,546 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - $ / shares | Nov. 06, 2020 | Oct. 30, 2020 | Aug. 30, 2019 | Jun. 12, 2019 |
Three Executive Officers [Member] | ||||
Number of shares of common stock | 440,000 | |||
Shares exercise price per share | $ 0.06 | |||
Board of Directors [Member] | ||||
Number of shares of common stock | 43,105 | 32,890 | ||
Shares exercise price per share | $ 0.29 | $ 0.38 | ||
Former Director [Member] | ||||
Number of shares of common stock | 60,000 | |||
Shares exercise price per share | $ 0.17 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Stock Option Activity (Details) - Stock Option [Member] - $ / shares | 12 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | |||
Number of Options, Balance at Beginning of Year | 2,230,000 | [1] | 2,210,000 | |
Number of Options, Granted | 100,000 | 100,000 | ||
Number of Options, Exercised | (440,000) | (60,000) | ||
Number of Options, Forfeited | (210,000) | (20,000) | ||
Number of Options, Balance at End of Year | [1] | 1,680,000 | 2,230,000 | |
Number of Options, Exercisable at End of Year | 1,580,000 | 2,130,000 | ||
Weighted Average Exercise Price, Balance at Beginning of Year | $ 0.26 | [1] | $ 0.25 | |
Weighted Average Exercise Price, Granted | 0.29 | 0.38 | ||
Weighted Average Exercise Price, Exercised | 0.06 | 0.17 | ||
Weighted Average Exercise Price, Forfeited | 0.17 | 0.03 | ||
Weighted Average Exercise Price, Balance at End of Year | [1] | 0.32 | 0.26 | |
Weighted Average Exercise Price, Options Exercisable at End of Year | $ 0.33 | $ 0.25 | ||
[1] | Total number of options outstanding as of March 31, 2021 includes 600,000 options issued to five current and two former directors as compensation and 1,040,000 options issued to key employees that were not issued from the Plan. |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Employee Stock Options Outstanding (Details) | 12 Months Ended | |
Mar. 31, 2021$ / sharesshares | ||
Stock Options Number Outstanding | shares | 1,680,000 | [1] |
Stock Option Number Exercisable | shares | 1,580,000 | [1] |
Exercise Price Range One [Member] | ||
Stock Options Outstanding Exercise Price, Lower Range Limit | $ 0.12 | |
Stock Options Outstanding Exercise Price, Upper Range Limit | $ 0.38 | |
Stock Options Number Outstanding | shares | 1,130,000 | |
Stock Option Outstanding Weighted Average Remaining Contractual Life | 4 years | |
Stock Option Outstanding Weighted Average Exercise Price | $ 0.24 | |
Stock Option Number Exercisable | shares | 1,030,000 | |
Stock Option Exercisable Weighted Average Exercise Price | $ 0.23 | |
Exercise Price Range Two [Member] | ||
Stock Options Outstanding Exercise Price, Lower Range Limit | 0.47 | |
Stock Options Outstanding Exercise Price, Upper Range Limit | $ 0.55 | |
Stock Options Number Outstanding | shares | 550,000 | |
Stock Option Outstanding Weighted Average Remaining Contractual Life | 6 years 15 days | |
Stock Option Outstanding Weighted Average Exercise Price | $ 0.50 | |
Stock Option Number Exercisable | shares | 550,000 | |
Stock Option Exercisable Weighted Average Exercise Price | $ 0.50 | |
[1] | Total number of options outstanding as of March 31, 2021 includes 600,000 options issued to five current and two former directors as compensation and 1,040,000 options issued to key employees that were not issued from the Plan. |
Shareholders' Equity - Schedu_2
Shareholders' Equity - Schedule of Employee Stock Options Outstanding (Details) (Parenthetical) | Mar. 31, 2021shares |
Five Current and Two Former Directors [Member] | |
Stock options outstanding | 600,000 |
Employees [Member] | |
Stock options outstanding | 1,040,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net deferred tax assets | $ 887,164 | $ 1,285,721 |
Income tax rate | 17.40% | 18.10% |
Income tax provision | $ 456,869 | $ (641,814) |
Income tax valuation reserve | 23,000 | 88,000 |
Income tax receivable | $ 100,000 | |
Income tax description | The actual tax provision differs from the "expected" tax for the years ended March 31, 2021 and 2020 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes | |
Valuation allowance of deferred tax assets | $ 22,649 | $ 87,842 |
Federal Tax [Member] | ||
Operating loss carryforwards | $ 1,200,000 | |
Operating loss carry forwards expiration description | Begin to expire in the year 2025. | |
Operating loss available to use | $ 150,000 | |
Statel Tax [Member] | ||
Operating loss carryforwards | $ 3,600,000 | |
Operating loss carry forwards expiration description | Begin to expire beginning in 2024. |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Current: Federal | $ 54,487 | $ (104,437) |
Current: State | 3,825 | |
Total current Federal and State tax benefit | 58,312 | (104,437) |
Deferred: Federal | 417,477 | (521,776) |
Deferred: State | (18,920) | (15,601) |
Total Deferred Federal and State | 398,557 | (537,377) |
Total income tax (benefit) provision | $ 456,869 | $ (641,814) |
Income Taxes - Schedule of In_2
Income Taxes - Schedule of Income (Loss) Before Income Tax (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
United States | $ 1,922,947 | $ (3,765,272) |
Foreign | 706,287 | 266,458 |
Net income before income tax benefit | $ 2,629,234 | $ (3,498,814) |
Income Taxes - Schedule of Diff
Income Taxes - Schedule of Difference Between Actual Tax Expenses and Expected Tax Expenses (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Expected tax provision (benefit) | $ 551,982 | $ (734,751) |
State income taxes, net of Federal income tax provision (benefit) | 128,699 | (175,245) |
Permanent differences | (6,578) | 9,977 |
Tax rate differential on foreign earnings | (108,690) | |
Change in valuation allowance | (65,193) | 87,842 |
Effect of IRC §382 on NOL | 100,966 | |
Tax rate differential on NOL carryback | 16,263 | |
Correction of state rate | 83,803 | |
Other | (43,351) | (30,669) |
Actual tax provision (benefit) | $ 456,869 | $ (641,814) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
NOL Federal Carryforward | $ 246,769 | $ 312,430 |
State NOL Carryforward | 194,388 | 157,967 |
General business credit | 14,196 | |
Inventory differences | 348,921 | 303,529 |
Stock option compensation expense | 115,730 | 128,220 |
Allowance for doubtful accounts | 35,877 | 143,748 |
Insurance contingency | 220,425 | |
Reserve for estimated returns | 111,887 | 112,537 |
Accrued vacation | 13,186 | 42,928 |
Business interest deduction | 55,978 | |
Total deferred tax assets, gross | 1,066,758 | 1,491,958 |
Less: valuation allowance | 22,649 | 87,842 |
Total deferred tax assets, net | 1,044,109 | 1,404,116 |
Depreciable and amortizable assets | (119,242) | (82,512) |
Prepaid expenses | (37,703) | (35,883) |
Net deferred tax liability | (156,945) | (118,395) |
Net deferred tax asset | $ 887,164 | $ 1,285,721 |
Segment Information (Details Na
Segment Information (Details Narrative) | 12 Months Ended |
Mar. 31, 2021Segment | |
Segment Reporting [Abstract] | |
Number of operating segment | 1 |
Segment Information - Schedule
Segment Information - Schedule of Revenue by Geographical Region (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Total Net Sales | $ 45,802,574 | $ 38,500,570 |
North America [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Net Sales | 44,200,000 | 36,000,000 |
Europe [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Net Sales | 1,200,000 | 1,700,000 |
Asia [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Net Sales | 300,000 | |
Australia [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Net Sales | $ 400,000 | $ 500,000 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Retirement Benefits [Abstract] | ||
Defined contribution plan, administrative expenses | $ 74,000 | $ 63,000 |
Concentrations of Credit Risk_2
Concentrations of Credit Risk, Customers, and Suppliers (Details Narrative) - USD ($) | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2018 | |
Total net sales | $ 45,802,574 | $ 38,500,570 | |
Republic of China [Member] | |||
Debt description | The U.S. government imposed tariffs of up to 25% on certain goods imported from China. All of our products are manufactured and imported from China however, only our microphones are currently subject to a 7.5% tariff currently in place. | ||
North America [Member] | |||
Total net sales | $ 44,200,000 | $ 36,000,000 | |
Accounts Receivable [Member] | North America [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 10.00% | 10.00% | |
Accounts Receivable [Member] | Four Customers [Member] | North America [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 70.00% | 82.00% | |
Sales Revenue [Member] | Macau Subsidiary [Member] | |||
Total net sales | $ 4,100,000 | $ 5,100,000 | |
Sales Revenue [Member] | Three Customers [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 69.00% | 64.00% | |
Sales Revenue [Member] | Customers [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 10.00% | ||
Sales Revenue [Member] | Customer One [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 36.00% | 41.00% | |
Sales Revenue [Member] | Customer Two [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 20.00% | 13.00% | |
Sales Revenue [Member] | Customer Three [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 13.00% | 10.00% | |
Sales Revenue [Member] | Customer Four [Member] | Customer Concentration Risk [Member] | |||
Concentration of sales risk, percentage | 12.00% | ||
Purchases [Member] | Customer Concentration Risk [Member] | Republic of China [Member] | |||
Concentration of sales risk, percentage | 100.00% | 100.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Jul. 30, 2020 | |
Related Party Transaction [Line Items] | |||
Due to related parties | $ 100,000 | $ 500,000 | |
Inventory | 5,490,255 | 7,601,277 | |
Purchase and Sale Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 200,000 | ||
Inventory | $ 700,000 | ||
StarLight Electronics Co, Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Payments to related party | 400,000 | 400,000 | |
Winglight Pacific Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 0 | $ 900,000 |
Reserve for Sales Returns - Sch
Reserve for Sales Returns - Schedule of Reserve for Sales Returns (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
First Priority Lien Percentage | ||
Reserve for sales returns at beginning of the year | $ 1,224,000 | $ 896,000 |
Provision for estimated sales returns | 3,881,000 | 5,771,000 |
Sales returns received | (4,145,000) | (5,443,000) |
Reserve for sales returns at end of the period | $ 960,000 | $ 1,224,000 |
Damaged Goods Incident (Details
Damaged Goods Incident (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Environmental Remediation Obligations [Abstract] | ||
Damaged goods | $ 2,300,000 | $ 1,700,000 |
Reduction of net sales | 1,600,000 | 1,600,000 |
Freight charges | 100,000 | 100,000 |
Additional related expenses | 600,000 | 300,000 |
Refund due to customer | 145,408 | 806,475 |
Payment of chargebacks by customer | 1,700,000 | |
Payment remittances | 1,200,000 | |
Insurance claim receivable | $ 1,268,463 | |
Gain on Settlement of accounts payable | $ 400,000 |
Refunds Due to Customers (Detai
Refunds Due to Customers (Details Narrative) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Refund due to customer | $ 145,408 | $ 806,475 |
One Major Customer [Member] | ||
Refund due to customer | 1,700,000 | |
Deducted on payment remittances | 1,200,000 | |
Two Major Customer [Member] | ||
Refund due to customer | $ 300,000 |
Reserves - Schedule of Valuatio
Reserves - Schedule of Valuation and Qualifying Accounts (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Allowance for Doubtful Accounts [Member] | ||
Balance at Beginning of Year | $ 337,461 | $ 51,096 |
Charged to Costs and Expenses | 16,086 | 303,843 |
Reduction to Allowance for Write off | (227,184) | (15,303) |
Credited to Costs and Expenses | 12,217 | (2,175) |
Balance at End of Year | 138,580 | 337,461 |
Inventory Reserve [Member] | ||
Balance at Beginning of Year | 434,000 | 254,000 |
Charged to Costs and Expenses | 688,200 | 398,730 |
Reduction to Allowance for Write off | (485,861) | (218,730) |
Credited to Costs and Expenses | ||
Balance at End of Year | $ 636,339 | $ 434,000 |