Cover
Cover - shares | 6 Months Ended | |
Sep. 30, 2021 | Nov. 19, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --03-31 | |
Entity File Number | 000-24968 | |
Entity Registrant Name | SINGING MACHINE CO INC | |
Entity Central Index Key | 0000923601 | |
Entity Tax Identification Number | 95-3795478 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 6301 NW 5th Way, | |
Entity Address, Address Line Two | Suite 2900 | |
Entity Address, City or Town | Fort Lauderdale | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33309 | |
City Area Code | (954) | |
Local Phone Number | 596-1000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 36,576,264 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Mar. 31, 2021 |
Current Assets | ||
Cash | $ 3,337,517 | $ 396,579 |
Accounts receivable, net of allowances of $256,901 and $138,580, respectively | 11,590,574 | 2,210,881 |
Due from Crestmark Bank | 4,557,120 | |
Accounts receivable related party - Stingray Group, Inc. | 70,880 | 88,041 |
Inventories, net | 19,158,186 | 5,490,255 |
Prepaid expenses and other current assets | 197,916 | 221,071 |
Deferred financing costs | 26,563 | 15,359 |
Total Current Assets | 34,381,636 | 12,979,306 |
Property and equipment, net | 635,929 | 674,153 |
Deferred tax assets | 741,386 | 887,164 |
Operating Leases - right of use assets | 1,692,279 | 2,074,115 |
Other non-current assets | 96,911 | 147,173 |
Total Assets | 37,548,141 | 16,761,911 |
Current Liabilities | ||
Accounts payable | 18,622,566 | 2,461,103 |
Accrued expenses | 2,036,370 | 1,659,499 |
Due to related party - Starlight Consumer Electronics Co., Ltd. | 14,400 | 14,400 |
Due to related party - Starlight R&D, Ltd. | 48,650 | 48,650 |
Revolving lines of credit | 2,041,921 | 64,915 |
Customer deposits | 85,815 | 139,064 |
Refunds due to customers | 98,722 | 145,408 |
Reserve for sales returns | 1,863,731 | 960,000 |
Current portion of finance leases | 7,241 | 2,546 |
Current portion of installment notes | 71,253 | 68,332 |
Current portion of note payable - Paycheck Protection Program | 172,685 | |
Current portion of operating lease liabilities | 843,671 | 794,938 |
Current portion of subordinated related party debt - Starlight Marketing Development, Ltd. | 352,659 | 502,659 |
Total Current Liabilities | 26,086,999 | 7,034,199 |
Finance leases, net of current portion | 14,516 | |
Installment notes, net of current portion | 176,577 | 212,949 |
Note payable - Payroll Protection Program, net of current portion | 271,215 | |
Operating lease liabilities, net of current portion | 909,096 | 1,334,010 |
Total Liabilities | 27,187,188 | 8,852,373 |
Commitments and Contingencies | ||
Shareholders’ Equity | ||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding | ||
Common stock | 365,762 | 390,407 |
Additional paid-in capital | 24,530,384 | 19,773,322 |
Accumulated deficit | (14,535,193) | (12,254,191) |
Total Shareholders’ Equity | 10,360,953 | 7,909,538 |
Total Liabilities and Shareholders’ Equity | 37,548,141 | 16,761,911 |
Common Class A [Member] | ||
Shareholders’ Equity | ||
Common stock | ||
Common Class B [Member] | ||
Shareholders’ Equity | ||
Common stock | $ 365,762 | $ 390,407 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2021 | Mar. 31, 2021 |
Accounts receivable, allowance for credit loss, current | $ 256,901 | $ 138,580 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
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 | 36,576,264 | 39,040,748 |
Common stock, shares outstanding | 36,576,264 | 39,040,748 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Net Sales | $ 17,368,973 | $ 22,285,239 | $ 23,434,623 | $ 25,337,222 |
Cost of Goods Sold | 14,041,669 | 16,462,235 | 18,529,449 | 18,551,766 |
Gross Profit | 3,327,304 | 5,823,004 | 4,905,174 | 6,785,456 |
Operating Expenses | ||||
Selling expenses | 733,485 | 1,474,811 | 1,311,467 | 1,773,804 |
General and administrative expenses | 1,776,997 | 1,841,873 | 3,198,349 | 3,205,163 |
Depreciation | 66,809 | 67,781 | 135,080 | 138,888 |
Total Operating Expenses | 2,577,291 | 3,384,465 | 4,644,896 | 5,117,855 |
Income From Operations | 750,013 | 2,438,539 | 260,278 | 1,667,601 |
Other Income (Expenses) | ||||
Gain from Paycheck Protection Plan loan forgiveness | 448,242 | |||
Gain - related party | 11,236 | |||
Gain from damaged goods insurance claim | 936,537 | 1,067,829 | ||
Gain from extinguishment of accounts payable | 236,472 | 236,472 | 390,000 | |
Interest expense | (110,864) | (127,731) | (210,393) | (157,321) |
Finance costs | (9,375) | (18,431) | (26,297) | (24,836) |
Total Other (Expenses) Income, net | 116,233 | 790,375 | 459,260 | 1,275,672 |
Income Before Income Tax Provision | 866,246 | 3,228,914 | 719,538 | 2,943,273 |
Income Tax Provision | (173,873) | (821,040) | (145,778) | (742,203) |
Net Income | $ 692,373 | $ 2,407,874 | $ 573,760 | $ 2,201,070 |
Net Income per Common Share | ||||
Basic | $ 0.01 | $ 0.06 | $ 0.01 | $ 0.06 |
Diluted | $ 0.01 | $ 0.06 | $ 0.01 | $ 0.06 |
Weighted Average Common and Common Equivalent Shares: | ||||
Basic | 47,817,868 | 38,557,643 | 43,458,098 | 38,557,643 |
Diluted | 48,154,029 | 39,107,908 | 43,829,003 | 38,982,775 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities | ||
Net Income | $ 573,760 | $ 2,201,070 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation | 135,080 | 138,888 |
Amortization of deferred financing costs | 26,297 | 24,836 |
Change in inventory reserve | 53,890 | 471,131 |
Change in allowance for bad debts | 118,321 | 263,338 |
Loss from disposal of property and equipment | 4,394 | |
Stock based compensation | 34,727 | |
Change in net deferred tax assets | 145,778 | 608,454 |
Gain from Paycheck Protection Plan loan forgiveness | (448,242) | |
Gain - related party | (11,236) | |
Gain from extinguishment of accounts payable | (236,472) | (390,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (9,409,973) | (16,575,815) |
Due from Crestmark Bank | 4,557,120 | 2,388,438 |
Accounts receivable - related parties | (70,880) | 100,000 |
Insurance receivable | 1,268,463 | |
Inventories | (13,721,821) | (1,071,606) |
Prepaid expenses and other current assets | 23,155 | 136,856 |
Other non-current assets | 50,262 | 52,712 |
Accounts payable | 16,409,171 | 10,277,533 |
Accrued expenses | 381,213 | (100,804) |
Due to related parties | (258,057) | |
Customer deposits | (53,249) | |
Refunds due to customers | (46,686) | (685,910) |
Reserve for sales returns | 903,731 | 499,055 |
Operating lease liabilities, net of operating leases - right of use assets | 5,655 | (22,562) |
Net cash used in operating activities | (576,005) | (673,980) |
Cash flows from investing activities | ||
Purchase of property and equipment | (77,599) | (84,975) |
Net cash used in investing activities | (77,599) | (84,975) |
Cash flows from financing activities | ||
Proceeds from issuance of stock - net of transaction expenses | 9,000,580 | |
Payment of redemption and retirement of treasury stock | (7,162,452) | |
Net proceeds from revolving lines of credit | 1,977,006 | 1,156,323 |
Proceeds from note payable - Paycheck Protection Program | 443,900 | |
Payment of deferred financing charges | (37,501) | (73,725) |
Payments on installment notes | (33,451) | (34,089) |
Proceeds from exercise of stock options | 4,800 | |
Payment on subordinated debt - related party | (150,000) | |
Payments on finance leases | (4,440) | (7,412) |
Net cash provided by financing activities | 3,594,542 | 1,484,997 |
Net change in cash | 2,940,938 | 726,042 |
Cash at beginning of year | 396,579 | 345,200 |
Cash at end of period | 3,337,517 | 1,071,242 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 249,734 | 142,674 |
Equipment purchased under capital lease | 23,651 | |
Issuance of common stock and warrants for stock issuance expenses | 547,838 | |
Operating leases - right of use assets and lease liabilities at inception of lease | $ 16,364 | $ 2,184,105 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity(Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value 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 | 2,201,070 | 2,201,070 | |||
Ending balance, value at Sep. 30, 2020 | $ 385,576 | 19,729,043 | (12,225,486) | 7,889,133 | |
Balance, shares at Sep. 30, 2020 | 38,557,643 | ||||
Beginning balance, value at Jun. 30, 2020 | $ 385,576 | 19,729,043 | (14,633,360) | 5,481,259 | |
Balance, shares at Jun. 30, 2020 | 38,557,643 | ||||
Net income | 2,407,874 | 2,407,874 | |||
Ending balance, value at Sep. 30, 2020 | $ 385,576 | 19,729,043 | (12,225,486) | 7,889,133 | |
Balance, shares at Sep. 30, 2020 | 38,557,643 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 390,407 | 19,773,322 | (12,254,191) | 7,909,538 | |
Balance, shares at Mar. 31, 2021 | 39,040,748 | ||||
Net income | 573,760 | 573,760 | |||
Issuance of stock | $ 165,000 | 4,785,000 | 4,950,000 | ||
Issuance of stock, shares | 16,500,001 | ||||
Issuance of pre-funded warrants | 4,881,667 | 4,881,667 | |||
Payment of stock issuance expenses | (831,087) | (831,087) | |||
Issuance of stock for stock issuance expenses | $ 5,714 | (5,714) | |||
Issuance of stock for stock issuance expenses, shares | 571,428 | ||||
Redemption and retirement of treasury shares | $ (196,231) | (4,111,459) | (2,854,762) | (7,162,452) | |
Redemption and retirement of treasury shares, shares | (19,623,155) | ||||
Issuance of common stock - directors | $ 172 | 4,828 | 5,000 | ||
Issuance of common stock - directors, shares | 17,242 | ||||
Issuance of common stock - non-employee | $ 500 | 16,500 | 17,000 | ||
Issuance of common stock - non-employee, shares | 50,000 | ||||
Employee compensation-stock option | 12,727 | 12,727 | |||
Exercise of stock options | $ 200 | 4,600 | 4,800 | ||
Exercise of stock options, shares | 20,000 | ||||
Ending balance, value at Sep. 30, 2021 | $ 365,762 | 24,530,384 | (14,535,193) | 10,360,953 | |
Balance, shares at Sep. 30, 2021 | 36,576,264 | ||||
Beginning balance, value at Jun. 30, 2021 | $ 390,607 | 19,783,026 | (12,372,804) | 7,800,829 | |
Balance, shares at Jun. 30, 2021 | 39,060,748 | ||||
Net income | 692,373 | 692,373 | |||
Issuance of stock | $ 165,000 | 4,785,000 | 4,950,000 | ||
Issuance of stock, shares | 16,500,001 | ||||
Issuance of pre-funded warrants | 4,881,667 | 4,881,667 | |||
Payment of stock issuance expenses | (831,087) | (831,087) | |||
Issuance of stock for stock issuance expenses | $ 5,714 | (5,714) | |||
Issuance of stock for stock issuance expenses, shares | 571,428 | ||||
Redemption and retirement of treasury shares | $ (196,231) | (4,111,459) | (2,854,762) | (7,162,452) | |
Redemption and retirement of treasury shares, shares | (19,623,155) | ||||
Issuance of common stock - directors | $ 172 | 4,828 | 5,000 | ||
Issuance of common stock - directors, shares | 17,242 | ||||
Issuance of common stock - non-employee | $ 500 | 16,500 | 17,000 | ||
Issuance of common stock - non-employee, shares | 50,000 | ||||
Employee compensation-stock option | 7,623 | 7,623 | |||
Ending balance, value at Sep. 30, 2021 | $ 365,762 | $ 24,530,384 | $ (14,535,193) | $ 10,360,953 | |
Balance, shares at Sep. 30, 2021 | 36,576,264 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Sep. 30, 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 its three wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (“Macau Subsidiary”), SMC Logistics, Inc. (“SMC-L”) and SMC-Music, Inc.(“SMC-M”) are primarily engaged in the development, marketing, and sale of consumer karaoke audio systems, accessories, musical instruments and musical recordings. The products are sold by SMC to retailers and distributors for resale to consumers. |
LIQUIDITY AND RECENT EQUITY EVE
LIQUIDITY AND RECENT EQUITY EVENTS | 6 Months Ended |
Sep. 30, 2021 | |
Liquidity And Recent Equity Events | |
LIQUIDITY AND RECENT EQUITY EVENTS | NOTE 2 – LIQUIDITY AND RECENT EQUITY EVENTS The Company for the six months ended September 30, 2021 reported net income of approximately $ 574,000 576,000 2,201,000 674,000 444,000 448,000 In August 2021, the Company entered into a stock redemption agreement (the “Redemption Agreement”) with its majority shareholders, Koncepts International Limited (“Koncepts”) and Treasure Green Holdings, Ltd. (“Treasure Green”), pursuant to which the Company redeemed 19,623,155 In August 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with large institutional investors and a strategic investor for private placement of (i) 16,500,001 16,500,000 0.35 16,833,333 0.01 16,833,333 0.35 9,832,000 7,162,000 7,162,000 We believe that current working capital, including the net cash obtained from the Purchase and Redemption Agreements along with the availability of cash from our Intercreditor Revolving Credit Facility (See Note 6 – Bank Financing), and cash expected to be generated from our operating forecast will be adequate to meet the Company’s liquidity requirements for at least the next twelve months. We believe the Intercreditor Revolving Credit Facility will be adequate to maintain and grow our business during the remaining term of the agreement. As both the Crestmark Bank (“Crestmark Facility”) and the Iron Horse Credit (“IHC”) Facility (“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. |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES | 6 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF ACCOUNTING POLICIES | NOTE 3 - SUMMARY OF ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial statements for the three months and six months ended September 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by US GAAP for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) The condensed consolidated balance sheet information as of March 31, 2021 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2021. The interim condensed consolidated financial statements should be read in conjunction with that report. USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial condition. However, circumstances could change which may alter future expectations. COLLECTABILITY 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 reserves based upon historical collection experience. Should business conditions deteriorate or any major customer default on its obligations to the Company, this allowance may need to be significantly increased, which would have a negative impact on operations. 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. 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 condensed consolidated statements of income and translations are 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 more than the Federal Deposit Insurance Corporation insured amounts. The Company also maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at September 30, 2021 and March 31, 2021 are approximately $ 748,000 225,000 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 September 30, 2021 and March 31, 2021 the estimated amounts for these future inventory returns were approximately $ 1,276,000 528,000 690,000 636,000 DEFERRED FINANCING COSTS The Company classifies deferred financing costs incurred when obtaining or renewing revolving credit facilities as assets in the accompanying condensed consolidated balance sheets as it is likely that during certain periods during non-peak season there will be no balance due on these credit facilities to offset the deferred financing costs. In June 2021, the Company incurred approximately $ 38,000 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.” No impairment was recorded as of September 30, 2021 and 2020. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) LEASES The Company follows FASB ASC 842, “Leases”. The ASC requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than twelve months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. (See Note 7– 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. 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, due from related parties, 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 goods are delivered and 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’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. 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. For the three months ended September 30, 2021 and 2020 co-op promotion incentives were approximately $ 738,000 902,000 1,010,000 1,174,000 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 condensed consolidated statements of income 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 11 – Geographical Information). THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) 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 to 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 $ 1,864,000 960,000 Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2021 and 2020 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Three Months Ended Six Months Ended Product Line September 30, September 30, September 30, September 30, Classic Karaoke Machines $ 15,042,000 $ 18,135,000 $ 19,521,000 $ 20,519,000 Licensed Product 94,000 2,822,000 827,000 2,828,000 SMC Kids Toys 1,022,000 191,000 1,753,000 319,000 Microphones and Accessories 1,101,000 1,117,000 1,110,000 1,569,000 Music Subscriptions 110,000 20,000 224,000 102,000 Total Net Sales $ 17,369,000 $ 22,285,000 $ 23,435,000 $ 25,337,000 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 the three months ended September 30, 2021 and 2020 shipping and handling expenses were approximately $ 134,000 305,000 285,000 388,000 STOCK BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense for the three and six months ended September 30, 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 three months ended September 30, 2021 and 2020, the stock option expense was approximately $ 8,000 0 13,000 0 RESEARCH AND DEVELOPMENT COSTS 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 condensed consolidated statements of income. For the three months ended September 30, 2021 and 2020, these amounts totaled approximately $ 19,000 2,000 50,000 15,000 INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management’s best estimate of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. For the six months ended September 30, 2021 and 2020 we estimated our effective tax rate to be approximately 20% 25% 741,000 887,000 174,000 821,000 146,000 742,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) 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% COMPUTATION OF EARNINGS PER SHARE Computation of dilutive shares for the three and six months ended September 30, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three months ended September 30, 2021 For the three months ended September 30, 2020 For the six months ended September 30, 2021 For the six months ended September 30, 2020 Basic weighted average common shares outstanding 47,817,868 38,557,643 43,458,098 38,557,643 Effect of dilutive stock options 336,161 550,265 370,905 425,132 Diluted weighted average common shares outstanding 48,154,029 39,107,908 43,829,003 38,982,775 Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period. Pre-funded warrants to purchase 16,833,333 336,000 371,000 550,000 425,000 35,456,667 780,000 RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326) The amendments in ASU 2016-03 for smaller reporting companies are effective for fiscal years beginning after April 1, 2023 including interim periods within that fiscal year. Early adoption is permitted. We are currently evaluating the potential effects of this updated guidance on our condensed consolidated financial statements and related disclosures. ADOPTION OF NEW ACCOUNTING STANDARDS In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40),” to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Amongst other provisions, the amendments in this ASU significantly changed the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer freestanding instruments, like warrants, will require liability treatment. ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. However, early adoption is permitted as early as fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted the new standard on April 1, 2021. The adoption of ASU 2020-06 did not have a material effect on the Company’s condensed consolidated financial statements. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) |
INVENTORIES, NET
INVENTORIES, NET | 6 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | NOTE 4 - INVENTORIES, NET Inventories are comprised of the following components: SCHEDULE OF INVENTORY September 30, March 31, 2021 2021 Finished Goods $ 9,272,000 $ 5,348,000 Inventory in Transit 9,300,000 250,000 Estimated Amount of Future Returns 1,276,000 528,000 Subtotal 19,848,000 6,126,000 Less:Inventory Reserve 690,000 636,000 Inventories, net $ 19,158,000 $ 5,490,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: SUMMARY OF PROPERTY AND EQUIPMENT USEFUL September 30, March 31, LIFE 2021 2021 Computer and office equipment 5 7 $ 440,000 $ 445,000 Furniture and fixtures 7 98,000 98,000 Warehouse equipment 7 210,000 199,000 Molds and tooling 3 5 1,946,000 1,878,000 2,694,000 2,620,000 Less: Accumulated depreciation 2,058,000 1,946,000 $ 636,000 $ 674,000 Depreciation expense for the three months ended September 30, 2021 and 2020 was approximately $ 67,000 68,000 135,000 139,000 |
BANK FINANCING
BANK FINANCING | 6 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
BANK FINANCING | NOTE 6 – BANK 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 10.0 5.0 74,000 9,000 18,000 26,000 18,000 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 Intercreditor Revolving Credit Facility. ● 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% 8.75% 2,000,000 51,000 96,000 51,000 June 15, 2022 1,052,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) In addition, the Company executed a two-year Loan and Security Agreement with Iron Horse Credit for up to $ 2,500,000 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 September 30, 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% 15.51% 1,000,000 38,000 48,000 54,000 86,000 54,000 June 15, 2022 990,000 65,000 As of September 30, 2021 there was approximately $ 1,448,000 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. Note Payable Payroll Protection Plan On May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $ 444,000 448,000 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 60 365,000 365,000 7.58% 8.55% 9.25% 7,459 248,000 281,000 5,000 7,000 11,000 14,000 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 $ 803,000 803,000 6% 5,000 12,000 14,000 24,000 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 September 30, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility to make principal payments totaling $ 450,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) As of September 30, 2021 and March 31, 2021, the remaining amount due on the note payable was approximately $ 353,000 503,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 - COMMITMENTS AND CONTINGENCIES COVID-19 In January 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (“COVID-19”) and the risks to the international community. The WHO declared COVID-19 a global pandemic on March 11, 2020 and since that time many of the previously imposed restrictions and other measures which were instituted in response have been subsequently reduced or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic and its duration and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional strains of COVID-19, the administration and ultimate effectiveness of vaccines, and the eventual timeline to achieve a sufficient level of herd immunity among the general population. Accordingly, the COVID-19 pandemic may continue to have negative effects on the health of the U.S. economy for the foreseeable future. We continue to experience various degrees of manufacturing cost pressures due to raw material and electronic component shortages as well as inflationary price increases. Although we regularly monitor the financial health and operations of companies in our supply chain, and use alternative suppliers when necessary and available, financial hardship or government restrictions on our suppliers or sub-suppliers caused by the COVID-19 pandemic could cause a disruption in our ability to obtain raw materials or components required to manufacture our products and adversely affect our operations. 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. Management is not aware of any other legal proceedings other than matters that arise in the ordinary course of business. 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 March 31, 2024 9,400 We entered into an operating lease agreement, effective June 1, 2013, for 86,000 we executed a three-year lease extension which will expire on August 31, 2023 65,300 In May 2021 we executed a one-year lease for 424 April 30, 2022 1,700 Lease expense for our operating leases is recognized on a straight-line basis over the lease terms. Finance Leases On July 1, 2021 we entered into a long-term capital leasing arrangement with Union Credit Corporation to finance the leasing of a used reach truck vehicle in the amount of approximately $ 24,000 755 36 9.9% 22,000 0 376 0 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) Supplemental balance sheet information related to leases as of September 30, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES Assets: Operating lease - right-of-use assets $ 1,692,279 Finance leases as a component of Property and equipment, net of accumulated depreciation of $ 694 21,757 Liabilities Current Current portion of operating leases $ 843,671 Current portion of finance leases 7,241 Noncurrent Operating lease liabilities, net of current portion $ 909,096 Finance leases, net of current portion 14,516 Supplemental statement of operations information related to leases for the three and six months ended September 30, 2021 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Three Months Ended Six Months Ended September 30 2021 September 30 2021 Operating lease expense as a component of general and administrative expenses $ 232,069 $ 464,331 Finance lease cost Depreciation of leased assets as a component of depreciation $ 694 $ 694 Interest on lease liabilities as a component of interest expense $ 376 $ 376 Supplemental cash flow information related to leases for the six months ended September 30, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases $ 458,675 Financing cash flow paid for finance leases $ 4,440 Lease term and Discount Rate Weighted average remaining lease term (months) Operating leases 24 Finance leases 33 Weighted average discount rate Operating leases 6.25 % Finance leases 9.86 % Scheduled maturities of operating and finance lease liabilities outstanding as of September 30, 2021 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Year Operating Leases Finance Leases 2021, for the remaining 3 months $ 234,983 $ 2,266 2022 868,313 9,065 2023 743,765 9,065 2024 30,739 4,534 Total Minimum Future Payments 1,877,800 24,930 Less: Imputed Interest 125,033 3,173 Present Value of Lease Liabilities $ 1,752,767 $ 21,757 |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 6 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS AND WARRANTS | NOTE 8 - STOCK OPTIONS AND WARRANTS During the six months ended September 30, 2021 and 2020 the Company issued 40,000 0 .29 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. The following inputs were used to value each option grant: ● For six months ended September 30, 2021: expected dividend yield of 0 0.43 149.5 three years THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) A summary of stock option activity for the six months ended September 30, 2021 is summarized below: SUMMARY OF STOCK OPTION ACTIVITY September 30, 2021 Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of period 1,680,000 $ 0.32 Granted 40,000 $ 0.29 Exercised (20,000 ) $ 0.24 Balance at end of period 1,700,000 $ 0.32 Options exercisable at end of period 1,560,000 $ 0.33 The following table summarizes information about employee stock options outstanding at September 30, 2021: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Exercise Price Number Outstanding at September 30, 2021 Weighted Average Remaining Contractural Life Weighted Average Exercise Price Number Exercisable at September 30, 2021 Weighted Average Exercise Price $ .12 .38 1,150,000 3.1 $ 0.24 1,010,000 $ 0.23 $ .47 .55 550,000 5.4 $ 0.50 550,000 $ 0.50 - * 1,700,000 1,560,000 * Total number of options outstanding as of September 30, 2021 includes 660,000 options issued to two current and four former directors as compensation, 1,040,000 options issued to key employees. As per the execution of the August 2021 private placement as disclosed in Note 2 and Note 10, common warrants and pre-funded warrants issued and outstanding as of September 30, 2021 as follows: SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING Number of Shares Warrants outstanding at March 31, 2021 - Common warrants issued 34,666,667 Pre-funded warrants issued 16,833,333 Warrants outstanding at September 30, 2021 51,500,000 As of September 30, 2021, the Company’s warrants by expiration date were as follows: SCHEDULE OF WARRANTS EXPIRATION Number of Common Warrants Number of Pre-funded Warrants Exercise Price Expiration Date 34,666,667 - $ 0.35 9/15/2026 - 16,833,333 $ 0.01 - N/A * 34,666,667 16,833,333 * Pre-funded warrants expire on the dates they are exercised. All outstanding warrants are fully vested. |
AUGUST 2021 STOCK REDEMPTION
AUGUST 2021 STOCK REDEMPTION | 6 Months Ended |
Sep. 30, 2021 | |
August 2021 Stock Redemption | |
AUGUST 2021 STOCK REDEMPTION | NOTE 9 – AUGUST 2021 STOCK REDEMPTION On August 5, 2021, the Company entered into a stock redemption agreement (the “Redemption Agreement”) with Koncepts and Treasure Green, pursuant to which the Company redeemed 19,623,155 7,162,000 Pursuant to the Redemption Agreement, neither Koncepts nor Treasure Green remained shareholders of the Company. |
AUGUST 2021 PRIVATE PLACEMENT
AUGUST 2021 PRIVATE PLACEMENT | 6 Months Ended |
Sep. 30, 2021 | |
August 2021 Private Placement | |
AUGUST 2021 PRIVATE PLACEMENT | NOTE 10 – AUGUST 2021 PRIVATE PLACEMENT On August 5, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with large institutional investors and the strategic investor for private placement of (i) 16,500,001 16,500,000 0.35 16,833,333 0.01 16,833,333 0.35 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) The Common Warrants and Pre-Funded Warrants are collectively referred to as (the “Warrants”). The Warrants are exercisable at any time at the option of the holder, have a term of 5 years from the issuance date and provide for cashless exercise under certain conditions. The Company determined that the Warrants meet the conditions for equity classification. Shares issuable upon exercise of the Warrants are hereinafter referred to as the “Warrant Shares”. The exercise price and number of the Warrant Shares are subject to anti-dilution and other adjustments for certain stock dividends, stock splits, subsequent rights offerings, pro rata distributions or certain equity structure changes. Pursuant to the terms of the Purchase Agreement, on September 3, 2021, the Company filed a registration statement providing for the resale by the purchasers of the Shares and Warrant Shares sold in the Private Placement, which registration statement became effective on September 15, 2021. Additionally, under the terms of the Purchase Agreement, the Company is obligated to use its reasonable best efforts to submit an application to have the Company’s common stock listed on a national exchange by December 31, 2021, and to use its reasonable best efforts to have the Shares and Warrant Shares listed on such national exchange as soon as practicable following the submission of such application. The closing of the Private Placement took place on August 10, 2021, when the Shares and Warrants were delivered to the purchasers and funds, in the amount of approximately $ 9,832,000 7,162,000 Stingray Group Inc. (“Stingray” or the “strategic investor”), a leading music, media and technology is part of the group of investors who participated in the Private Placement and have acquired a minority interest in the Company. Stingray is a long-standing business partner with the Company that provides our customers with music content from their extensive library of expertly produced and licensed karaoke content and is now a related party (see Note 12- Related Party Transactions). In connection with the Private Placement, on July 6, 2021, the Company entered into a Placement Agency Agreement with A.G.P./Alliance Global Partners (“AGP”), which provided for AGP to serve as the exclusive placement agent, advisor or underwriter (the “placement agent services”). Pursuant to the Placement Agency Agreement, upon closing of the Private Placement, the Company paid AGP placement fees of $ 630,000 (representing 7% of the gross proceeds raised in the Private Placement excluding proceeds raised from the strategic investor, plus 3.5% of the aggregate gross proceeds raised from the strategic investor), 1,333,333 5 0.35 359,000 0.33 2.5 168 0 2.65 In addition to the placement fees paid to AGP, the Company incurred additional offering costs for direct incremental legal, consulting, accounting and filing fees related to the Private Placement of approximately $ 390,000 571,428 189,000 100,000 1,379,000 |
GEOGRAPHICAL INFORMATION
GEOGRAPHICAL INFORMATION | 6 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
GEOGRAPHICAL INFORMATION | NOTE 11 - GEOGRAPHICAL INFORMATION Sales to customers outside of the United States for the three and six months ended September 30, 2021 and 2020 were primarily made by the Macau Subsidiary in US dollars. Sales by geographic region for the periods presented are as follows: SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION 2021 2020 2021 2020 FOR THE FOR THE September 30, September 30, 2021 2020 2021 2020 North America $ 16,729,000 $ 21,574,000 $ 22,695,000 $ 24,391,000 Europe 156,000 711,000 156,000 893,000 Australia 484,000 - 584,000 53,000 Net sales $ 17,369,000 $ 22,285,000 $ 23,435,000 $ 25,337,000 The geographic area of sales was based on the location where the product is delivered. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS All transactions listed below are related to the Company as Cosmo Communications, Inc (“Cosmo”) and Starlight Electronics Co., Ltd (“SLE”) are affiliates of our former Chairman of the Board, Mr. Phillip Lau. Additionally, Stingray is part of the group of investors who participated in the Private Placement and have acquired a minority interest in the Company (see Note 10 – August 2021 Private Placement ). DUE TO/FROM RELATED PARTIES On September 30, 2021 and March 31, 2021, the Company had amounts due to related parties in the amounts of approximately $ 63,000 On September 30, 2021 and March 31, 2021, the Company had amounts due from Stingray in the amounts of approximately $ 71,000 88,000 TRADE The Company has a music subscription sharing agreement with Stingray. For the three months ended September 30, 2021 and 2020 the Company received music subscription revenue of approximately $ 110,000 13,000 224,000 102,000 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 $ 685,000 11,000 The Company incurred service expenses from SLE. The services from SLE were approximately $ 90,000 181,000 191,000 |
RESERVE FOR SALES RETURNS
RESERVE FOR SALES RETURNS | 6 Months Ended |
Sep. 30, 2021 | |
Reserve For Sales Returns | |
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 allowed to return defective goods within a specified period of time after shipment (between 6 and 9 months). The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates. The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets. Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Six Months Ended September 30, September 30, 2021 2020 Reserve for sales returns at beginning of the year $ 960,000 $ 1,224,000 Provision for estimated sales returns 2,110,222 2,306,668 Sales returns received (1,206,491 ) (1,807,613 ) Reserve for sales returns at end of the period $ 1,863,731 $ 1,723,055 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) |
REFUNDS DUE TO CUSTOMERS
REFUNDS DUE TO CUSTOMERS | 6 Months Ended |
Sep. 30, 2021 | |
Refunds Due To Customers | |
REFUNDS DUE TO CUSTOMERS | NOTE 14 – REFUNDS DUE TO CUSTOMERS As of September 30, 2021 and March 31, 2021 the amount of refunds due to customers was approximately $ 99,000 145,000 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Sep. 30, 2021 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | NOTE 15 - EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee’s contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged to operations for contributions to this plan and administrative costs during the three months ended September 30, 2021 and 2020 totaled approximately $ 17,000 20,000 35,000 34,000 |
CONCENTRATIONS OF CREDIT AND SA
CONCENTRATIONS OF CREDIT AND SALES RISK | 6 Months Ended |
Sep. 30, 2021 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF CREDIT AND SALES RISK | NOTE 16 - CONCENTRATIONS OF CREDIT AND SALES RISK The Company derives a majority of its revenues from retailers of products 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 September 30, 2021, 69 70 10 The Company generates most of its revenue from retailers of products in the United States with a significant amount of sales concentrated with several large customers the loss of which could have an adverse impact on the financial position of the Company. For the three months ended September 30, 2021, there were three customers who individually accounted for 10% or more of the Company’s net sales. Revenue derived from these customers as a percentage of net sales were 49 16 12 46 20 10 For the six months ended September 30, 2021, there were three customers who individually accounted for 10% or more of the Company’s net sales. Revenue derived from these customers as a percentage of net sales were 48 16 14 43 20 14 In August 2021, the Company secured vendor invoice credits of approximately $ 236,000 |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION | PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial statements for the three months and six months ended September 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by US GAAP for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) The condensed consolidated balance sheet information as of March 31, 2021 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2021. The interim condensed consolidated financial statements should be read in conjunction with that report. |
USE OF ESTIMATES | USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial condition. However, circumstances could change which may alter future expectations. |
COLLECTABILITY OF ACCOUNTS RECEIVABLE | COLLECTABILITY 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 reserves based upon historical collection experience. Should business conditions deteriorate or any major customer default on its obligations to the Company, this allowance may need to be significantly increased, which would have a negative impact on operations. 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. |
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 condensed consolidated statements of income and translations are 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 more than the Federal Deposit Insurance Corporation insured amounts. The Company also maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at September 30, 2021 and March 31, 2021 are approximately $ 748,000 225,000 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 September 30, 2021 and March 31, 2021 the estimated amounts for these future inventory returns were approximately $ 1,276,000 528,000 690,000 636,000 |
DEFERRED FINANCING COSTS | DEFERRED FINANCING COSTS The Company classifies deferred financing costs incurred when obtaining or renewing revolving credit facilities as assets in the accompanying condensed consolidated balance sheets as it is likely that during certain periods during non-peak season there will be no balance due on these credit facilities to offset the deferred financing costs. In June 2021, the Company incurred approximately $ 38,000 |
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.” No impairment was recorded as of September 30, 2021 and 2020. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) |
LEASES | LEASES The Company follows FASB ASC 842, “Leases”. The ASC requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than twelve months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. (See Note 7– 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. |
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, due from related parties, 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 goods are delivered and 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’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. 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. For the three months ended September 30, 2021 and 2020 co-op promotion incentives were approximately $ 738,000 902,000 1,010,000 1,174,000 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 condensed consolidated statements of income 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 11 – Geographical Information). THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) 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 to 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 $ 1,864,000 960,000 Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2021 and 2020 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Three Months Ended Six Months Ended Product Line September 30, September 30, September 30, September 30, Classic Karaoke Machines $ 15,042,000 $ 18,135,000 $ 19,521,000 $ 20,519,000 Licensed Product 94,000 2,822,000 827,000 2,828,000 SMC Kids Toys 1,022,000 191,000 1,753,000 319,000 Microphones and Accessories 1,101,000 1,117,000 1,110,000 1,569,000 Music Subscriptions 110,000 20,000 224,000 102,000 Total Net Sales $ 17,369,000 $ 22,285,000 $ 23,435,000 $ 25,337,000 |
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 the three months ended September 30, 2021 and 2020 shipping and handling expenses were approximately $ 134,000 305,000 285,000 388,000 |
STOCK BASED COMPENSATION | STOCK BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense for the three and six months ended September 30, 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 three months ended September 30, 2021 and 2020, the stock option expense was approximately $ 8,000 0 13,000 0 |
RESEARCH AND DEVELOPMENT COSTS | RESEARCH AND DEVELOPMENT COSTS Research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the condensed consolidated statements of income. For the three months ended September 30, 2021 and 2020, these amounts totaled approximately $ 19,000 2,000 50,000 15,000 |
INCOME TAXES | INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management’s best estimate of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. For the six months ended September 30, 2021 and 2020 we estimated our effective tax rate to be approximately 20% 25% 741,000 887,000 174,000 821,000 146,000 742,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 and 2020 (Unaudited) 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% |
COMPUTATION OF EARNINGS PER SHARE | COMPUTATION OF EARNINGS PER SHARE Computation of dilutive shares for the three and six months ended September 30, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three months ended September 30, 2021 For the three months ended September 30, 2020 For the six months ended September 30, 2021 For the six months ended September 30, 2020 Basic weighted average common shares outstanding 47,817,868 38,557,643 43,458,098 38,557,643 Effect of dilutive stock options 336,161 550,265 370,905 425,132 Diluted weighted average common shares outstanding 48,154,029 39,107,908 43,829,003 38,982,775 Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period. Pre-funded warrants to purchase 16,833,333 336,000 371,000 550,000 425,000 35,456,667 780,000 |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326) The amendments in ASU 2016-03 for smaller reporting companies are effective for fiscal years beginning after April 1, 2023 including interim periods within that fiscal year. Early adoption is permitted. We are currently evaluating the potential effects of this updated guidance on our condensed consolidated financial statements and related disclosures. |
ADOPTION OF NEW ACCOUNTING STANDARDS | ADOPTION OF NEW ACCOUNTING STANDARDS In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40),” to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Amongst other provisions, the amendments in this ASU significantly changed the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer freestanding instruments, like warrants, will require liability treatment. ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. However, early adoption is permitted as early as fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted the new standard on April 1, 2021. The adoption of ASU 2020-06 did not have a material effect on the Company’s condensed consolidated financial statements. |
SUMMARY OF ACCOUNTING POLICIE_2
SUMMARY OF ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SCHEDULE OF DISAGGREGATION OF REVENUE | Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2021 and 2020 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Three Months Ended Six Months Ended Product Line September 30, September 30, September 30, September 30, Classic Karaoke Machines $ 15,042,000 $ 18,135,000 $ 19,521,000 $ 20,519,000 Licensed Product 94,000 2,822,000 827,000 2,828,000 SMC Kids Toys 1,022,000 191,000 1,753,000 319,000 Microphones and Accessories 1,101,000 1,117,000 1,110,000 1,569,000 Music Subscriptions 110,000 20,000 224,000 102,000 Total Net Sales $ 17,369,000 $ 22,285,000 $ 23,435,000 $ 25,337,000 |
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE | Computation of dilutive shares for the three and six months ended September 30, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three months ended September 30, 2021 For the three months ended September 30, 2020 For the six months ended September 30, 2021 For the six months ended September 30, 2020 Basic weighted average common shares outstanding 47,817,868 38,557,643 43,458,098 38,557,643 Effect of dilutive stock options 336,161 550,265 370,905 425,132 Diluted weighted average common shares outstanding 48,154,029 39,107,908 43,829,003 38,982,775 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORY | Inventories are comprised of the following components: SCHEDULE OF INVENTORY September 30, March 31, 2021 2021 Finished Goods $ 9,272,000 $ 5,348,000 Inventory in Transit 9,300,000 250,000 Estimated Amount of Future Returns 1,276,000 528,000 Subtotal 19,848,000 6,126,000 Less:Inventory Reserve 690,000 636,000 Inventories, net $ 19,158,000 $ 5,490,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
SUMMARY OF PROPERTY AND EQUIPMENT | A summary of property and equipment is as follows: SUMMARY OF PROPERTY AND EQUIPMENT USEFUL September 30, March 31, LIFE 2021 2021 Computer and office equipment 5 7 $ 440,000 $ 445,000 Furniture and fixtures 7 98,000 98,000 Warehouse equipment 7 210,000 199,000 Molds and tooling 3 5 1,946,000 1,878,000 2,694,000 2,620,000 Less: Accumulated depreciation 2,058,000 1,946,000 $ 636,000 $ 674,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES | Supplemental balance sheet information related to leases as of September 30, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES Assets: Operating lease - right-of-use assets $ 1,692,279 Finance leases as a component of Property and equipment, net of accumulated depreciation of $ 694 21,757 Liabilities Current Current portion of operating leases $ 843,671 Current portion of finance leases 7,241 Noncurrent Operating lease liabilities, net of current portion $ 909,096 Finance leases, net of current portion 14,516 |
SCHEDULE OF LEASE TERM AND DISCOUNT RATE | Supplemental statement of operations information related to leases for the three and six months ended September 30, 2021 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Three Months Ended Six Months Ended September 30 2021 September 30 2021 Operating lease expense as a component of general and administrative expenses $ 232,069 $ 464,331 Finance lease cost Depreciation of leased assets as a component of depreciation $ 694 $ 694 Interest on lease liabilities as a component of interest expense $ 376 $ 376 |
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION | Supplemental cash flow information related to leases for the six months ended September 30, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases $ 458,675 Financing cash flow paid for finance leases $ 4,440 Lease term and Discount Rate Weighted average remaining lease term (months) Operating leases 24 Finance leases 33 Weighted average discount rate Operating leases 6.25 % Finance leases 9.86 % |
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES | Scheduled maturities of operating and finance lease liabilities outstanding as of September 30, 2021 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Year Operating Leases Finance Leases 2021, for the remaining 3 months $ 234,983 $ 2,266 2022 868,313 9,065 2023 743,765 9,065 2024 30,739 4,534 Total Minimum Future Payments 1,877,800 24,930 Less: Imputed Interest 125,033 3,173 Present Value of Lease Liabilities $ 1,752,767 $ 21,757 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
SUMMARY OF STOCK OPTION ACTIVITY | A summary of stock option activity for the six months ended September 30, 2021 is summarized below: SUMMARY OF STOCK OPTION ACTIVITY September 30, 2021 Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of period 1,680,000 $ 0.32 Granted 40,000 $ 0.29 Exercised (20,000 ) $ 0.24 Balance at end of period 1,700,000 $ 0.32 Options exercisable at end of period 1,560,000 $ 0.33 |
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING | The following table summarizes information about employee stock options outstanding at September 30, 2021: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Exercise Price Number Outstanding at September 30, 2021 Weighted Average Remaining Contractural Life Weighted Average Exercise Price Number Exercisable at September 30, 2021 Weighted Average Exercise Price $ .12 .38 1,150,000 3.1 $ 0.24 1,010,000 $ 0.23 $ .47 .55 550,000 5.4 $ 0.50 550,000 $ 0.50 - * 1,700,000 1,560,000 * Total number of options outstanding as of September 30, 2021 includes 660,000 options issued to two current and four former directors as compensation, 1,040,000 options issued to key employees. |
SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING | As per the execution of the August 2021 private placement as disclosed in Note 2 and Note 10, common warrants and pre-funded warrants issued and outstanding as of September 30, 2021 as follows: SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING Number of Shares Warrants outstanding at March 31, 2021 - Common warrants issued 34,666,667 Pre-funded warrants issued 16,833,333 Warrants outstanding at September 30, 2021 51,500,000 |
SCHEDULE OF WARRANTS EXPIRATION | As of September 30, 2021, the Company’s warrants by expiration date were as follows: SCHEDULE OF WARRANTS EXPIRATION Number of Common Warrants Number of Pre-funded Warrants Exercise Price Expiration Date 34,666,667 - $ 0.35 9/15/2026 - 16,833,333 $ 0.01 - N/A * 34,666,667 16,833,333 * Pre-funded warrants expire on the dates they are exercised. |
GEOGRAPHICAL INFORMATION (Table
GEOGRAPHICAL INFORMATION (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION | Sales to customers outside of the United States for the three and six months ended September 30, 2021 and 2020 were primarily made by the Macau Subsidiary in US dollars. Sales by geographic region for the periods presented are as follows: SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION 2021 2020 2021 2020 FOR THE FOR THE September 30, September 30, 2021 2020 2021 2020 North America $ 16,729,000 $ 21,574,000 $ 22,695,000 $ 24,391,000 Europe 156,000 711,000 156,000 893,000 Australia 484,000 - 584,000 53,000 Net sales $ 17,369,000 $ 22,285,000 $ 23,435,000 $ 25,337,000 |
RESERVE FOR SALES RETURNS (Tabl
RESERVE FOR SALES RETURNS (Tables) | 6 Months Ended |
Sep. 30, 2021 | |
Reserve For Sales Returns | |
SCHEDULE OF RESERVE FOR SALES RETURNS | Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Six Months Ended September 30, September 30, 2021 2020 Reserve for sales returns at beginning of the year $ 960,000 $ 1,224,000 Provision for estimated sales returns 2,110,222 2,306,668 Sales returns received (1,206,491 ) (1,807,613 ) Reserve for sales returns at end of the period $ 1,863,731 $ 1,723,055 |
LIQUIDITY AND RECENT EQUITY E_2
LIQUIDITY AND RECENT EQUITY EVENTS (Details Narrative) - USD ($) | Aug. 05, 2021 | Aug. 31, 2021 | May 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2021 |
Net loss | $ 692,373 | $ 2,407,874 | $ 573,760 | $ 2,201,070 | ||||
Cash used in operating activities | 576,005 | 673,980 | ||||||
Debt forgiveness | 448,000 | |||||||
Shares redeemed | $ 19,623,155 | $ 19,623,155 | ||||||
Common stock, shares, issued | 16,500,001 | 16,500,001 | ||||||
Warrants and rights outstanding | $ 16,500,000 | $ 16,500,000 | $ 51,500,000 | $ 51,500,000 | ||||
Exercise price of warrants | $ 0.01 | $ 0.01 | ||||||
Issuance of warrant shares | 16,833,333 | |||||||
Issuance of warrant shares | 16,833,333 | 16,833,333 | 16,833,333 | 16,833,333 | ||||
Warrant or right expense | $ 9,832,000 | |||||||
Redemption expenes | 7,162,000 | |||||||
Increase (decrease) in operating capital | $ 7,162,000 | |||||||
Common Stock [Member] | ||||||||
Net loss | ||||||||
Exercise price of warrants | $ 0.35 | $ 0.35 | ||||||
Common Stock Warrant [Member] | ||||||||
Exercise price of warrants | $ 0.35 | $ 0.35 | ||||||
Paycheck Protection Program [Member] | ||||||||
Proceeds from loan originations | $ 444,000 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Product Information [Line Items] | ||||
Total Net Sales | $ 17,369,000 | $ 22,285,000 | $ 23,435,000 | $ 25,337,000 |
Classic Karaoke Machines [Member] | ||||
Product Information [Line Items] | ||||
Total Net Sales | 15,042,000 | 18,135,000 | 19,521,000 | 20,519,000 |
Licensed Product [Member] | ||||
Product Information [Line Items] | ||||
Total Net Sales | 94,000 | 2,822,000 | 827,000 | 2,828,000 |
SMC Kids Toys [Member] | ||||
Product Information [Line Items] | ||||
Total Net Sales | 1,022,000 | 191,000 | 1,753,000 | 319,000 |
Microphones and Accessories [Member] | ||||
Product Information [Line Items] | ||||
Total Net Sales | 1,101,000 | 1,117,000 | 1,110,000 | 1,569,000 |
Music Subscription [Member] | ||||
Product Information [Line Items] | ||||
Total Net Sales | $ 110,000 | $ 20,000 | $ 224,000 | $ 102,000 |
SCHEDULE OF ANTIDILUTIVE SECURI
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accounting Policies [Abstract] | ||||
Basic weighted average common shares outstanding | 47,817,868 | 38,557,643 | 43,458,098 | 38,557,643 |
Effect of dilutive stock options | 336,161 | 550,265 | 370,905 | 425,132 |
Diluted weighted average common shares outstanding | 48,154,029 | 39,107,908 | 43,829,003 | 38,982,775 |
SUMMARY OF ACCOUNTING POLICIE_3
SUMMARY OF ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Aug. 31, 2021 | Aug. 05, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||
Foreign financial institutions actual deposits | $ 748,000 | $ 748,000 | $ 225,000 | ||||||
Future inventory returns | 1,276,000 | 1,276,000 | 528,000 | ||||||
Inventory reserves | 690,000 | 690,000 | 636,000 | ||||||
Deferred costs | $ 38,000 | ||||||||
Co-op promotion incentives | 738,000 | $ 902,000 | 1,010,000 | $ 1,174,000 | |||||
Reserve for sales returns | 1,863,731 | 1,723,055 | 1,863,731 | 1,723,055 | 960,000 | $ 1,224,000 | |||
Shipping and handling expenses | 134,000 | 305,000 | 285,000 | 388,000 | |||||
Stock option expense | 8,000 | 0 | 13,000 | 0 | |||||
Research and development costs | 19,000 | 2,000 | $ 50,000 | $ 15,000 | |||||
Effective income tax rate, percentage | 20.00% | 25.00% | |||||||
Deferred tax assets | 741,000 | $ 741,000 | $ 887,000 | ||||||
Income tax provision | $ 173,873 | $ 821,040 | $ 145,778 | $ 742,203 | |||||
Percentage of tax benefits recognized likelihood of being realized | greater than 50% | ||||||||
Warrants to purchase | 16,833,333 | 16,833,333 | 16,833,333 | 16,833,333 | |||||
Potentially dilutive securities | 336,000 | 550,000 | 371,000 | 425,000 | |||||
Options And Warrants [Member] | |||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||
Potentially dilutive securities | 35,456,667 | 780,000 | 35,456,667 | 780,000 |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) | Sep. 30, 2021 | Mar. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 9,272,000 | $ 5,348,000 |
Inventory in Transit | 9,300,000 | 250,000 |
Estimated Amount of Future Returns | 1,276,000 | 528,000 |
Subtotal | 19,848,000 | 6,126,000 |
Less:Inventory Reserve | 690,000 | 636,000 |
Inventories, net | $ 19,158,186 | $ 5,490,255 |
SUMMARY OF PROPERTY AND EQUIPME
SUMMARY OF PROPERTY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | |
Sep. 30, 2021 | Mar. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,694,000 | $ 2,620,000 |
Less: Accumulated depreciation | 2,058,000 | 1,946,000 |
Property and equipment, net | 635,929 | 674,153 |
Computer and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 440,000 | 445,000 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | |
Property and equipment, gross | $ 98,000 | 98,000 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | |
Property and equipment, gross | $ 210,000 | 199,000 |
Molds and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,946,000 | $ 1,878,000 |
Minimum [Member] | Computer and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 5 years | |
Minimum [Member] | Molds and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 3 years | |
Maximum [Member] | Computer and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | |
Maximum [Member] | Molds and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 5 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 67,000 | $ 68,000 | $ 135,000 | $ 139,000 |
BANK FINANCING (Details Narrati
BANK FINANCING (Details Narrative) - USD ($) | Jun. 16, 2020 | Jun. 16, 2020 | Jun. 18, 2019 | Jun. 18, 2019 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Jun. 30, 2021 | Jun. 02, 2021 | Mar. 31, 2021 | Jun. 02, 2020 | May 05, 2020 |
Line of Credit Facility [Line Items] | ||||||||||||||
Amortization | $ 9,000 | $ 18,000 | $ 26,000 | $ 18,000 | ||||||||||
Interest expenses | 376 | 0 | 376 | 0 | ||||||||||
Deferred cost | $ 38,000 | |||||||||||||
Available borrowing capacity | 1,448,000 | 1,448,000 | $ 1,448,000 | |||||||||||
Credit facility principal payments | 450,000 | |||||||||||||
Paycheck Protection Program [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Loan balance | $ 444,000 | |||||||||||||
Proceeds from loan originations | 448,000 | |||||||||||||
Financing Agreement [Member] | Dimension FundingLLC [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Interest expenses | 5,000 | 7,000 | 11,000 | 14,000 | ||||||||||
Debt instrument, term | 60 months | |||||||||||||
Notes payable | $ 365,000 | $ 365,000 | 248,000 | 248,000 | 248,000 | $ 281,000 | ||||||||
Financing Agreement [Member] | Dimension FundingLLC [Member] | Three Installment Notes [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Notes payable | 365,000 | 365,000 | ||||||||||||
Financing Agreement [Member] | Dimension FundingLLC [Member] | Installment Note One [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Debt instrument, interest rate | 7.58% | 7.58% | ||||||||||||
Financing Agreement [Member] | Dimension FundingLLC [Member] | Installment Note Two [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Debt instrument, interest rate | 8.55% | 8.55% | ||||||||||||
Financing Agreement [Member] | Dimension FundingLLC [Member] | Installment Note Three [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Debt instrument, interest rate | 9.25% | 9.25% | ||||||||||||
Subordination Agreement [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Notes payable | 353,000 | 353,000 | 353,000 | 503,000 | ||||||||||
Subordination Agreement [Member] | Starlight Marketing Development, Ltd [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Notes payable | 803,000 | 803,000 | 803,000 | $ 803,000 | ||||||||||
Interest expense, related party | 5,000 | 12,000 | 14,000 | 24,000 | ||||||||||
Subordination Agreement [Member] | Starlight Marketing Development, Ltd [Member] | Subordinated Notes Payable [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Debt instrument, interest rate | 6.00% | |||||||||||||
Payments of notes payable with principal and interest [Member] | Financing Agreement [Member] | Dimension FundingLLC [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 | |||||||||||||
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 | 2,000,000 | $ 2,000,000 | ||||||||||||
Interest expenses | 51,000 | 51,000 | $ 96,000 | 51,000 | ||||||||||
Credit facility expiry date | Jun. 15, 2022 | |||||||||||||
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] | Two-Year Loan and Security Agreement [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Loan balance | 1,052,000 | $ 1,052,000 | 1,052,000 | |||||||||||
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] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Deferred cost | 38,000 | 38,000 | 38,000 | |||||||||||
IHC Facility [Member] | Revolving Credit Facility [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Interest expenses | 48,000 | $ 54,000 | $ 86,000 | $ 54,000 | ||||||||||
Credit facility expiry date | Jun. 15, 2022 | |||||||||||||
IHC Facility [Member] | Two-Year Loan and Security Agreement [Member] | ||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||
Interest expenses | $ 1,000,000 | |||||||||||||
Loan balance | $ 990,000 | $ 990,000 | $ 990,000 | 65,000 | ||||||||||
Inventory financing | $ 2,500,000 | |||||||||||||
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% |
SCHEDULE OF SUPPLEMENTAL INFORM
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details) - USD ($) | Sep. 30, 2021 | Mar. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease - right-of-use assets | $ 1,692,279 | $ 2,074,115 |
Finance leases as a component of Property and equipment, net of accumulated depreciation of $694 | 21,757 | |
Current portion of operating leases | 843,671 | 794,938 |
Current portion of finance leases | 7,241 | 2,546 |
Operating lease liabilities, net of current portion | 909,096 | 1,334,010 |
Finance leases, net of current portion | $ 14,516 |
SCHEDULE OF SUPPLEMENTAL INFO_2
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details)(Parenthetical) | Sep. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Property, plant and equipment and finance lease right-of-use asset | $ 694 |
SCHEDULE OF LEASE TERM AND DISC
SCHEDULE OF LEASE TERM AND DISCOUNT RATE (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease expense as a component of general and administrative expenses | $ 232,069 | $ 464,331 |
Depreciation of leased assets as a component of depreciation | 694 | 694 |
Interest on lease liabilities as a component of interest expense | $ 376 | $ 376 |
SCHEDULE OF SUPPLEMENTAL CASH F
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION (Details) | 6 Months Ended |
Sep. 30, 2021USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating cash flow paid for operating leases | $ 458,675 |
Financing cash flow paid for finance leases | $ 4,440 |
Operating lease term | 24 months |
Finance lease term | 33 months |
Operating lease discount rate | 6.25% |
Finance lease discount rate | 9.86% |
SCHEDULE OF FUTURE MINIMUM RENT
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES (Details) | Sep. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases 2021, for the remaining 3 months | $ 234,983 |
Finance Leases 2021, for the remaining 3 months | 2,266 |
Operating Leases 2022 | 868,313 |
Finance Leases 2022 | 9,065 |
Operating Leases 2023 | 743,765 |
Finance Leases 2023 | 9,065 |
Operating Leases 2024 | 30,739 |
Finance Leases 2024 | 4,534 |
Operating Leases Total Minimum Future Payments | 1,877,800 |
Finance Leases Total Minimum Future Payments | 24,930 |
Operating Leases Less: Imputed Interest | 125,033 |
Finance Leases Less: Imputed Interest | 3,173 |
Operating Leases Present Value of Lease Liabilities | 1,752,767 |
Finance Leases Present Value of Lease Liabilities | $ 21,757 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Jul. 02, 2021USD ($) | Jun. 15, 2020USD ($) | Oct. 01, 2017USD ($)ft² | May 31, 2021USD ($)ft² | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Jul. 01, 2021 | Mar. 31, 2021USD ($) | Jun. 01, 2013ft² |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||||
Rent expense | $ 1,700 | ||||||||||
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 with a 3% increase every 12 months for the remaining term of the extension. | ||||||||||
Finance lease interest expense | $ 376 | $ 376 | |||||||||
Lease term | 33 months | 33 months | |||||||||
Remaining capital lease arrangements | $ 22,000 | $ 22,000 | $ 0 | ||||||||
Interest expense | $ 376 | $ 0 | $ 376 | $ 0 | |||||||
Finance Leases [Member] | |||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||||
Finance lease interest expense | $ 24,000 | ||||||||||
Finance lease monthly payments | $ 755 | ||||||||||
Lease term | 36 months | ||||||||||
Effective nterest rate | 9.90% | ||||||||||
Operating Lease Agreement [Member] | |||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||||
Operating lease space for office | ft² | 6,500 | 424 | 86,000 | ||||||||
Lease expiration date | Mar. 31, 2024 | Apr. 30, 2022 | |||||||||
Rent expense | $ 9,400 | ||||||||||
Three Year Lease Extension Agreement [Member] | |||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||||||
Lease expiration date | Aug. 31, 2023 | ||||||||||
Rent expense | $ 65,300 |
SUMMARY OF STOCK OPTION ACTIVIT
SUMMARY OF STOCK OPTION ACTIVITY (Details) - $ / shares | 6 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Number of Options, Granted | 40,000 | 0 |
Weighted Average Exercise Price, Granted | $ 0.29 | $ 0.29 |
Equity Option [Member] | ||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Number of Options, Balance at Beginning of Year | 1,680,000 | |
Weighted Average Exercise Price, Balance at Beginning of Year | $ 0.32 | |
Number of Options, Granted | 40,000 | |
Weighted Average Exercise Price, Granted | $ 0.29 | |
Number of Options, Exercised | (20,000) | |
Weighted Average Exercise Price, Exercised | $ 0.24 | |
Number of Options, Balance at End of Year | 1,700,000 | |
Weighted Average Exercise Price, Balance at End of Year | $ 0.32 | |
Number of Options, Exercisable at End of Year | 1,560,000 | |
Weighted Average Exercise Price, Options Exercisable at End of Year | $ 0.33 |
SCHEDULE OF EMPLOYEE STOCK OPTI
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING (Details) | 6 Months Ended | |
Sep. 30, 2021$ / sharesshares | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock Options Outstanding Exercise Price | [1] | |
Stock Options Number Outstanding | shares | 1,700,000 | |
Stock Option Number Exercisable | shares | 1,560,000 | |
Exercise Price Range One [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock Options Outstanding Exercise Price | $ 0.12 | |
Stock Options Outstanding Exercise Price, Upper Range Limit | $ 0.38 | |
Stock Options Number Outstanding | shares | 1,150,000 | |
Stock Option Outstanding Weighted Average Remaining Contractual Life | 3 years 1 month 6 days | |
Stock Option Outstanding Weighted Average Exercise Price | $ 0.24 | |
Stock Option Number Exercisable | shares | 1,010,000 | |
Stock Option Exercisable Weighted Average Exercise Price | $ 0.23 | |
Exercise Price Range Two [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock Options Outstanding Exercise Price | 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 | 5 years 4 months 24 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 September 30, 2021 includes 660,000 |
SCHEDULE OF EMPLOYEE STOCK OP_2
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING (Details) (Parenthetical) | Sep. 30, 2021shares |
Five Current and Two Former Directors [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 660,000 |
Employees [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 1,040,000 |
SCHEDULE OF COMMON STOCK WARRAN
SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING (Details) | 6 Months Ended |
Sep. 30, 2021USD ($) | |
Share-based Payment Arrangement [Abstract] | |
Warrants outstanding beginning balance | |
Common warrants issued | 34,666,667 |
Pre-funded warrants issued | 16,833,333 |
Warrants outstanding Ending balance | $ 51,500,000 |
SCHEDULE OF WARRANTS EXPIRATION
SCHEDULE OF WARRANTS EXPIRATION (Details) | 6 Months Ended |
Sep. 30, 2021USD ($)$ / shares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of common warrants | $ 34,666,667 |
Number of pre-funded warrants | 16,833,333 |
Exercise Price Range One [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of common warrants | 34,666,667 |
Number of pre-funded warrants | |
Warrant Exercise Price | $ / shares | $ 0.35 |
Expiration Date | Sep. 15, 2026 |
Exercise Price Range Two [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of common warrants | |
Number of pre-funded warrants | $ 16,833,333 |
Warrant Exercise Price | $ / shares | $ 0.01 |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details Narrative) - $ / shares | Jul. 06, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Share-based Payment Arrangement [Abstract] | |||
Number of stock option issued during period | 40,000 | 0 | |
Stock option of exercise price | $ 0.29 | $ 0.29 | |
Stock option, expected dividend yield | 0.00% | 0.00% | |
Stock option, risk free interest rate | 2.65% | 0.43% | |
Stock option, volatility | 168.00% | 149.50% | |
Stock option, expected term | 3 years |
AUGUST 2021 STOCK REDEMPTION (D
AUGUST 2021 STOCK REDEMPTION (Details Narrative) - USD ($) | Aug. 05, 2021 | Aug. 31, 2021 |
August 2021 Stock Redemption | ||
Shares redeemed | $ 19,623,155 | $ 19,623,155 |
Conversion of stock, shares issued | 7,162,000 |
AUGUST 2021 PRIVATE PLACEMENT (
AUGUST 2021 PRIVATE PLACEMENT (Details Narrative) - USD ($) | Aug. 05, 2021 | Jul. 06, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Aug. 31, 2021 | Mar. 31, 2021 |
Common stock, shares, issued | 16,500,001 | 16,500,001 | ||||
Warrants and rights outstanding | $ 16,500,000 | $ 51,500,000 | $ 16,500,000 | |||
Exercise price of warrants | $ 0.01 | $ 0.01 | ||||
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right | 16,833,333 | |||||
Issuance of warrant shares | 16,833,333 | 16,833,333 | 16,833,333 | |||
Proceeds from Warrant Exercises | $ 9,832,000 | |||||
Conversion of Stock, Shares Issued | 7,162,000 | |||||
Derivative, Description of Terms | (representing 7% of the gross proceeds raised in the Private Placement excluding proceeds raised from the strategic investor, plus 3.5% of the aggregate gross proceeds raised from the strategic investor), | |||||
Proceeds from Issuance of Private Placement | $ 1,333,333 | |||||
Aggregate number of shares | 5.00% | |||||
Exercise price | $ 0.35 | |||||
Equity Fair Value Disclosure | $ 359,000 | |||||
Common stock price | 0.33 | |||||
Expected life of the warrants | 2 years 6 months | |||||
Stock option, volatility | 168.00% | 149.50% | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | ||||
Stock option, risk free interest rate | 2.65% | 0.43% | ||||
Stock issued | $ 547,838 | |||||
Aggregate fair value | 189,000 | |||||
Cash | 100,000 | |||||
Offering costs | 1,379,000 | |||||
Private Placement [Member] | ||||||
Payments for Repurchase of Private Placement | $ 630,000 | |||||
Legal fees | 390,000 | |||||
Stock issued | $ 571,428 | |||||
Common Stock [Member] | ||||||
Exercise price of warrants | $ 0.35 | $ 0.35 | ||||
Common Stock Warrant [Member] | ||||||
Exercise price of warrants | $ 0.35 | $ 0.35 |
SCHEDULE OF REVENUE BY GEOGRAPH
SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 17,369,000 | $ 22,285,000 | $ 23,435,000 | $ 25,337,000 |
North America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 16,729,000 | 21,574,000 | 22,695,000 | 24,391,000 |
Europe [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 156,000 | 711,000 | 156,000 | 893,000 |
AUSTRALIA | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 484,000 | $ 584,000 | $ 53,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2021 | Jul. 30, 2020 | |
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 63,000 | $ 63,000 | $ 63,000 | |||
Revenues | 17,369,000 | $ 22,285,000 | 23,435,000 | $ 25,337,000 | ||
Inventory, net | 19,158,186 | 19,158,186 | 5,490,255 | |||
Due from related party debt | 11,000 | 11,000 | ||||
Starlight Electronics CoLtd [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Service expenses | 90,000 | 90,000 | 181,000 | 191,000 | ||
Music Subscription [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Revenues | 110,000 | $ 13,000 | 224,000 | $ 102,000 | ||
Purchase And Sales Agreement [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Inventory, net | $ 685,000 | |||||
Stingray [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 71,000 | $ 71,000 | $ 88,000 |
SCHEDULE OF RESERVE FOR SALES R
SCHEDULE OF RESERVE FOR SALES RETURNS (Details) - USD ($) | 6 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Reserve For Sales Returns | ||
Reserve for sales returns at beginning of the year | $ 960,000 | $ 1,224,000 |
Provision for estimated sales returns | 2,110,222 | 2,306,668 |
Sales returns received | (1,206,491) | (1,807,613) |
Reserve for sales returns at end of the period | $ 1,863,731 | $ 1,723,055 |
REFUNDS DUE TO CUSTOMERS (Detai
REFUNDS DUE TO CUSTOMERS (Details Narrative) - USD ($) | Sep. 30, 2021 | Mar. 31, 2021 |
Refunds Due To Customers | ||
Refund due to customer | $ 99,000 | $ 145,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Retirement Benefits [Abstract] | ||||
Defined contribution plan, administrative expenses | $ 17,000 | $ 20,000 | $ 35,000 | $ 34,000 |
CONCENTRATIONS OF CREDIT AND _2
CONCENTRATIONS OF CREDIT AND SALES RISK (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2021 | |
Concentration Risk [Line Items] | ||||||
Damaged goods | $ 236,000 | |||||
Three Customers [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 69.00% | |||||
Three Customers [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | North America [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 70.00% | |||||
Four Customers [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | North America [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 10.00% | |||||
Customer One [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 49.00% | 46.00% | 43.00% | |||
Customer Two [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 16.00% | 20.00% | 16.00% | 20.00% | ||
Customer Three [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 12.00% | 10.00% | 14.00% | 14.00% | ||
Customer Four [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration of sales risk, percentage | 48.00% |