Cover
Cover | 9 Months Ended |
Dec. 31, 2021 | |
Entity Addresses [Line Items] | |
Document Type | S-1/A |
Amendment Flag | true |
Amendment Description | Amendment No. 1 |
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, 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 Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Business Contact [Member] | |
Entity Addresses [Line Items] | |
Entity Address, Address Line One | 6301 NW 5th Way, 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 |
Contact Personnel Name | Gary Atkinson |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Current Assets | |||
Cash | $ 7,375,305 | $ 396,579 | $ 345,200 |
Accounts receivable, net of allowances of $138,580 and $337,461, respectively | 12,254,098 | 2,298,922 | 1,860,500 |
Due from banks | 4,557,120 | 2,388,438 | |
Accounts receivable related party - Stingray Group, Inc. | 159,125 | ||
Accounts receivable related party - Winglight Pacific, Ltd | 100,000 | ||
Insurance claim receivable | 1,268,463 | ||
Inventories, net | 11,126,298 | 5,490,255 | 7,601,277 |
Prepaid expenses and other current assets | 284,206 | 221,071 | 252,473 |
Deferred financing costs | 17,188 | 15,359 | 3,333 |
Total Current Assets | 31,216,220 | 12,979,306 | 13,819,684 |
Property and equipment, net | 580,922 | 674,153 | 771,349 |
Deferred tax assets | 638,391 | 887,164 | 1,285,721 |
Operating Leases - right of use assets | 1,488,258 | 2,074,115 | 573,874 |
Other non-current assets | 136,885 | 147,173 | 150,509 |
Total Assets | 34,060,676 | 16,761,911 | 16,601,137 |
Current Liabilities | |||
Accounts payable | 5,982,552 | 2,461,103 | 5,041,610 |
Accrued expenses | 2,417,409 | 1,659,499 | 1,529,168 |
Due to related party - Starlight Consumer Electronics Co., Ltd. | 14,400 | 14,400 | 14,400 |
Due to related party - Starlight Electronics Co., Ltd | 372,300 | ||
Due to related party - Starlight R&D, Ltd. | 48,650 | 48,650 | 115,016 |
Revolving line of credit - Iron Horse Credit | 8,626,840 | 64,915 | |
Customer deposits | 9,520 | 139,064 | |
Refunds due to customers | 90,075 | 145,408 | 806,475 |
Reserve for sales returns | 2,922,457 | 960,000 | 1,224,000 |
Current portion of finance leases | 7,421 | 2,546 | 14,953 |
Current portion of installment notes | 72,760 | 68,332 | 63,098 |
Current portion of note payable - Paycheck Protection Program | 172,685 | ||
Current portion of operating lease liabilities | 860,528 | 794,938 | 321,389 |
Current portion of related party subordinated note payable - Starlight Marketing Development, Ltd. | 352,659 | 502,659 | |
Total Current Liabilities | 21,405,271 | 7,034,199 | 9,502,409 |
Finance leases, net of current portion | 12,592 | 2,550 | |
Installment notes, net of current portion | 157,812 | 212,949 | 283,193 |
Note payable - Payroll Protection Program, net of current portion | 271,215 | ||
Operating lease liabilities, net of current portion | 685,304 | 1,334,010 | 322,263 |
Subordinated related party debt - Starlight Marketing Development, Ltd., net of current portion | 802,659 | ||
Total Liabilities | 22,260,979 | 8,852,373 | 10,913,074 |
Commitments and Contingencies | |||
Shareholders’ Equity | |||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding | |||
Common stock value | 366,362 | 390,407 | 385,576 |
Additional paid-in capital | 24,542,633 | 19,773,322 | 19,729,043 |
Accumulated deficit | (13,109,298) | (12,254,191) | (14,426,556) |
Total Shareholders’ Equity | 11,799,697 | 7,909,538 | 5,688,063 |
Total Liabilities and Shareholders’ Equity | 34,060,676 | 16,761,911 | 16,601,137 |
Common Class A [Member] | |||
Shareholders’ Equity | |||
Common stock value | |||
Common Class B [Member] | |||
Shareholders’ Equity | |||
Common stock value | $ 366,362 | $ 390,407 | $ 385,576 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Allowance for doubtful accounts receivable, net | $ 306,975 | $ 138,580 | $ 337,461 |
Preferred stock, par value | $ 1 | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common Class A [Member] | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000 | 100,000 | 100,000 |
Common stock, shares issued | 0 | 0 | 0 |
Common stock, shares outstanding | 0 | 0 | 0 |
Common Class B [Member] | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued | 36,636,264 | 39,040,748 | 38,557,643 |
Common stock, shares outstanding | 36,636,264 | 39,040,748 | 38,557,643 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||||||
Net Sales | $ 21,244,306 | $ 16,972,603 | $ 44,678,929 | $ 42,309,825 | $ 45,802,574 | $ 38,500,570 |
Cost of Goods Sold | 15,934,842 | 11,998,640 | 34,464,291 | 30,550,406 | 33,505,356 | 30,323,223 |
Gross Profit | 5,309,464 | 4,973,963 | 10,214,638 | 11,759,419 | 12,297,218 | 8,177,347 |
Operating Expenses | ||||||
Selling expenses | 1,406,175 | 1,490,560 | 2,717,642 | 3,264,364 | 3,976,523 | 4,286,257 |
General and administrative expenses | 2,154,553 | 1,925,233 | 5,352,902 | 5,130,396 | 6,531,932 | 6,564,422 |
Bad debt expense | 65,055 | 302,333 | ||||
Depreciation | 55,007 | 65,465 | 190,087 | 204,353 | 298,357 | 269,107 |
Total Operating Expenses | 3,615,735 | 3,481,258 | 8,260,631 | 8,599,113 | 10,871,867 | 11,422,119 |
Income (Loss) from Operations | 1,693,729 | 1,492,705 | 1,954,007 | 3,160,306 | 1,425,351 | (3,244,772) |
Other Income (Expenses) | ||||||
Gain from Paycheck Protection Plan loan forgiveness | 448,242 | |||||
Gain - related party | 187,988 | 11,236 | 187,988 | |||
Gain from damaged goods insurance claim | 1,067,829 | 1,067,829 | ||||
Gain from extinguishment of accounts payable | 236,472 | 390,000 | ||||
Gain - related party | 220,023 | |||||
Gain from settlement of accounts payable | 390,000 | |||||
Interest expense | (155,573) | (231,034) | (365,966) | (388,355) | (412,270) | (240,709) |
Finance costs | (9,375) | (18,432) | (35,672) | (43,268) | (61,699) | (13,333) |
Total Other Income (Expenses), net | (164,948) | (61,478) | 294,312 | 1,214,194 | 1,203,883 | (254,042) |
Income (Loss) Before Income Tax (Provision) Benefit | 1,528,781 | 1,431,227 | 2,248,319 | 4,374,500 | 2,629,234 | (3,498,814) |
Income Tax (Provision) Benefit | (102,886) | (263,932) | (248,664) | (1,006,135) | (456,869) | 641,814 |
Net Income (Loss) | $ 1,425,895 | $ 1,167,295 | $ 1,999,655 | $ 3,368,365 | $ 2,172,365 | $ (2,857,000) |
Net Income (Loss) per Common Share | ||||||
Basic | $ 0.03 | $ 0.03 | $ 0.04 | $ 0.09 | $ 0.06 | $ (0.07) |
Diluted | $ 0.03 | $ 0.03 | $ 0.04 | $ 0.09 | $ 0.06 | $ (0.07) |
Weighted Average Common and Common Equivalent Shares: | ||||||
Basic | 53,410,249 | 38,885,185 | 46,787,545 | 38,667,221 | 38,760,092 | 38,532,889 |
Diluted | 53,635,368 | 39,156,481 | 47,109,854 | 39,041,074 | 39,128,650 | 38,532,889 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||||
Net Income (Loss) | $ 1,999,655 | $ 3,368,365 | $ 2,172,365 | $ (2,857,000) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
Depreciation | 190,087 | 204,353 | 298,357 | 269,107 |
Amortization of deferred financing costs | 35,672 | 43,268 | 61,699 | 13,333 |
Change in inventory reserve | 297,661 | 482,926 | 202,339 | 180,000 |
Change in allowance for bad debts | 168,395 | (55,960) | (198,881) | 286,365 |
Loss from disposal of property and equipment | 4,394 | |||
Stock based compensation | 38,376 | 17,605 | 22,710 | 32,508 |
Change in net deferred tax assets | 248,773 | 872,386 | 398,557 | (527,355) |
Gain from Paycheck Protection Plan loan forgiveness | (448,242) | |||
Gain - related party | (11,236) | (187,988) | 220,023 | |
Gain from extinguishment of accounts payable | (236,472) | (390,000) | ||
Gain from settlement of accounts payable | 390,000 | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (10,123,571) | (7,055,589) | (239,541) | (377,461) |
Due from banks | 4,557,120 | (1,172,374) | (2,168,682) | (151,659) |
Accounts receivable - related parties | (159,125) | 100,000 | 100,000 | 188,941 |
Insurance receivable | 1,268,463 | 1,268,463 | (1,268,463) | |
Inventories | (5,933,704) | 1,781,439 | 1,908,683 | (1,756,966) |
Prepaid expenses and other current assets | (63,135) | 111,305 | 31,402 | 21,805 |
Other non-current assets | 10,288 | 52,712 | 3,336 | (60,427) |
Accounts payable | 3,769,157 | (689,770) | (3,190,530) | 4,198,902 |
Accrued expenses | 762,252 | 579,732 | 130,331 | 704,433 |
Due to related parties | (184,312) | (438,666) | 501,716 | |
Customer deposits | (129,544) | 139,064 | ||
Refunds due to customers | (55,333) | (704,744) | (661,067) | 775,400 |
Reserve for sales returns | 1,962,457 | 1,742,434 | (264,000) | 327,846 |
Operating lease liabilities, net of operating leases - right of use assets | 2,741 | (18,755) | (14,945) | (56,260) |
Net cash provided by operating activities | (3,113,334) | 165,496 | 171,017 | 444,765 |
Cash flows from investing activities | ||||
Purchase of property and equipment | (77,599) | (88,843) | (201,161) | (517,546) |
Net cash used in investing activities | (77,599) | (88,843) | (201,161) | (517,546) |
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 | 8,561,925 | 64,915 | 64,915 | |
Proceeds from note payable - Payroll Protection Program | 443,900 | 443,900 | ||
Payment of deferred financing charges | (37,501) | (73,726) | (73,725) | |
Payments on installment notes | (50,709) | (48,802) | (65,010) | (19,049) |
Proceeds from exercise of stock options | 14,000 | 26,400 | 26,400 | 10,200 |
Payment on subordinated note payable - related party | (150,000) | (300,000) | (12,708) | |
Payments on finance leases | (6,184) | (11,167) | (14,957) | (14,410) |
Payment of bank term note | (125,000) | |||
Proceeds from installment notes | 365,340 | |||
Proceeds from subscription receivable | 2,200 | |||
Net cash provided by financing activities | 10,169,659 | 401,520 | 81,523 | 206,573 |
Net change in cash | 6,978,726 | 478,173 | 51,379 | 133,792 |
Cash at beginning of year | 396,579 | 345,200 | 345,200 | 211,408 |
Cash at end of year | 7,375,305 | 823,373 | 396,579 | 345,200 |
Supplemental disclosures of cash flow information: | ||||
Cash paid for interest | 378,076 | 429,264 | 461,080 | 179,811 |
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 | 2,184,105 | |
Operating leases - right of use assets initial adoption | 1,108,330 | |||
Operating lease liabilities - initial adoption | $ 1,234,368 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Receivables from Stockholder [Member] | Retained Earnings [Member] | Total |
Balance at Mar. 31, 2019 | $ 384,648 | $ 19,687,263 | $ (2,200) | $ (11,569,556) | $ 8,500,155 | |
Balance, shares at Mar. 31, 2019 | 38,464,753 | |||||
Net income | (2,857,000) | (2,857,000) | ||||
Issuance of common stock - directors | $ 328 | 12,172 | 12,500 | |||
Issuance of common stock - directors, shares | 32,890 | |||||
Employee compensation-stock option | 20,008 | 20,008 | ||||
Exercise of stock options | $ 600 | 9,600 | 10,200 | |||
Exercise of stock options, shares | 60,000 | |||||
Collection of subscription receivable | 2,200 | 2,200 | ||||
Balance at Mar. 31, 2020 | $ 385,576 | 19,729,043 | (14,426,556) | 5,688,063 | ||
Balance, shares at Mar. 31, 2020 | 38,557,643 | |||||
Net income | 3,368,365 | 3,368,365 | ||||
Issuance of common stock - directors | $ 431 | 12,069 | 12,500 | |||
Issuance of common stock - directors, shares | 43,105 | |||||
Employee compensation-stock option | 5,105 | 5,105 | ||||
Exercise of stock options | $ 4,400 | 22,000 | 26,400 | |||
Exercise of stock options, shares | 440,000 | |||||
Balance at Dec. 31, 2020 | $ 390,407 | 19,768,217 | (11,058,191) | 9,100,433 | ||
Balance, shares at Dec. 31, 2020 | 39,040,748 | |||||
Balance at Mar. 31, 2020 | $ 385,576 | 19,729,043 | (14,426,556) | 5,688,063 | ||
Balance, shares at Mar. 31, 2020 | 38,557,643 | |||||
Net income | 2,172,365 | 2,172,365 | ||||
Issuance of common stock - directors | $ 431 | 12,069 | 12,500 | |||
Issuance of common stock - directors, shares | 43,105 | |||||
Employee compensation-stock option | 10,210 | 10,210 | ||||
Exercise of stock options | $ 4,400 | 22,000 | 26,400 | |||
Exercise of stock options, shares | 440,000 | |||||
Balance at Mar. 31, 2021 | $ 390,407 | 19,773,322 | (12,254,191) | 7,909,538 | ||
Balance, shares at Mar. 31, 2021 | 39,040,748 | |||||
Balance at Sep. 30, 2020 | $ 385,576 | 19,729,043 | (12,225,486) | 7,889,133 | ||
Balance, shares at Sep. 30, 2020 | 38,557,643 | |||||
Net income | 1,167,295 | 1,167,295 | ||||
Issuance of common stock - directors | $ 431 | 12,069 | 12,500 | |||
Issuance of common stock - directors, shares | 43,105 | |||||
Employee compensation-stock option | 5,105 | 5,105 | ||||
Exercise of stock options | $ 4,400 | 22,000 | 26,400 | |||
Exercise of stock options, shares | 440,000 | |||||
Balance at Dec. 31, 2020 | $ 390,407 | 19,768,217 | (11,058,191) | 9,100,433 | ||
Balance, shares at Dec. 31, 2020 | 39,040,748 | |||||
Balance at Mar. 31, 2021 | $ 390,407 | 19,773,322 | (12,254,191) | 7,909,538 | ||
Balance, shares at Mar. 31, 2021 | 39,040,748 | |||||
Net income | 1,999,655 | 1,999,655 | ||||
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 | 16,376 | 16,376 | ||||
Exercise of stock options | $ 800 | 13,200 | 14,000 | |||
Exercise of stock options, shares | 80,000 | |||||
Balance at Dec. 31, 2021 | $ 366,362 | 24,542,633 | (13,109,298) | 11,799,697 | ||
Balance, shares at Dec. 31, 2021 | 36,636,264 | |||||
Balance at Sep. 30, 2021 | $ 365,762 | 24,530,384 | (14,535,193) | 10,360,953 | ||
Balance, shares at Sep. 30, 2021 | 36,576,264 | |||||
Net income | 1,425,895 | 1,425,895 | ||||
Issuance of stock | ||||||
Issuance of stock, shares | ||||||
Issuance of common stock - directors | ||||||
Employee compensation-stock option | 3,649 | 3,649 | ||||
Exercise of stock options | $ 600 | 8,600 | 9,200 | |||
Exercise of stock options, shares | 60,000 | |||||
Balance at Dec. 31, 2021 | $ 366,362 | $ 24,542,633 | $ (13,109,298) | $ 11,799,697 | ||
Balance, shares at Dec. 31, 2021 | 36,636,264 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION OVERVIEW The Singing Machine Company, Inc., a Delaware corporation (the “Company”, “SMC”, “The Singing Machine”) and 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. | NOTE 1 - BASIS OF PRESENTATION OVERVIEW The Singing Machine Company, Inc., a Delaware corporation (the “Company,” “SMC”, “The Singing Machine”), and wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (“Macau Subsidiary”), SMC Logistics, Inc. (“SMCL”) and SMC-Music, Inc. (“SMCM”), are primarily engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories and musical recordings. The products are sold directly to distributors and retail customers. The Company is partially held by koncepts International Limited (“koncepts”) who is major shareholder of the Company, owning approximately 49% 2% 51% We do business with a number of entities that are principally owned by the Company’s Chairman, Philip Lau, including Starlight R&D Ltd (“SLRD”), Starlight Consumer Electronics USA, Inc., (“SCE”), Cosmo Communications Corporation of Canada, Inc. (“Cosmo”), Winglight Pacific, Ltd (“Winglight”) and Starlight Electronics Company Ltd (“SLE”), among others. |
LIQUIDITY AND RECENT EQUITY EVE
LIQUIDITY AND RECENT EQUITY EVENTS | 9 Months Ended |
Dec. 31, 2021 | |
Liquidity And Recent Equity Events | |
LIQUIDITY AND RECENT EQUITY EVENTS | NOTE 2 – LIQUIDITY AND RECENT EQUITY EVENTS The Company for the nine months ended December 31, 2021 reported net income of approximately $ 2,000,000 3,113,000 444,000 448,000 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, cash expected to be generated from our operating forecast, along with the availability of cash from our credit facilities (See Note 6 – BANK FINANCING) assuming that they are revised and or extended, will be adequate to meet the Company’s liquidity requirements for at least twelve months from the filing of this report. 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 | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 nine months ended December 31, 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 December 31, 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 December 31, 2021 and March 31, 2021 are approximately $ 125,000 225,000 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 December 31, 2021 and March 31, 2021 the estimated amounts for these future inventory returns were approximately $ 1,978,000 528,000 934,000 636,000 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 December 31, 2021 and 2020. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December, 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 financing interest 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 December 31, 2021 and 2020 co-op promotion incentives were approximately $ 796,000 858,000 1,805,000 2,032,000 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 December 31, 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 from our customers 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 $ 2,922,000 960,000 Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and nine months ended December 31, 2021 and 2020 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Revenue by Product Line Three Months Ended Nine Months Ended Product Line December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Classic Karaoke Machines $ 17,732,000 $ 11,998,000 $ 37,216,000 $ 32,337,000 Licensed Product 645,000 1,644,000 1,510,000 4,332,000 SMC Kids Toys 1,051,000 662,000 2,145,000 1,229,000 Microphones and Accessories 1,657,000 2,481,000 3,424,000 4,122,000 Music Subscriptions 159,000 188,000 384,000 290,000 Total Net Sales $ 21,244,000 $ 16,973,000 $ 44,679,000 $ 42,310,000 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 December 31, 2021 and 2020 shipping and handling expenses were approximately $ 369,000 512,000 654,000 900,000 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 nine months ended December 31, 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 December 31, 2021 and 2020, the stock option expense was approximately $ 3,000 5,000 16,000 5,000 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 December 31, 2021 and 2020, these amounts totaled approximately $ 11,000 33,000 61,000 48,000 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 nine months ended December 31, 2021 and 2020 we estimated our effective tax rate to be approximately 11 23 638,000 887,000 103,000 264,000 249,000 1,006,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 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 nine months ended December 31, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three months ended December 31, 2021 For the three months ended December 31, 2020 For the nine months ended December 31, 2021 For the nine months ended December 31, 2020 Basic weighted average common shares outstanding 53,410,249 38,885,185 46,787,545 38,667,221 Effect of dilutive stock options 225,119 271,296 322,309 373,853 Diluted weighted average common shares outstanding 53,635,368 39,156,481 47,109,854 39,041,074 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 16,833,333 225,000 322,000 271,000 374,000 35,416,667 730,000 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 the Company beginning 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. | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMCL, and SMCM. All inter-company accounts and transactions have been eliminated in consolidation for all periods presented. USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial statements. However, circumstances could change which may alter future expectations. COLLECTIBILITY OF ACCOUNTS RECEIVABLE The Singing Machine’s allowance for doubtful accounts is based on management’s estimates of the creditworthiness of its customers, current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient to respond to normal business conditions. Management sets 100% FOREIGN CURRENCY TRANSLATION The functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are recorded in the statement of operations and translations would be recorded in a separate component of shareholders’ equity. Any such amounts were not material during the periods presented. Concentration of Credit Risk At times, the Company maintains cash in United States bank accounts that are in excess of the Federal Deposit Insurance Corporation insured amounts. The Company maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at March 31, 2021 and 2020 were approximately $ 0.2 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable. INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected future inventory returns due to warranty and allowance programs. As of March 31, 2021 and March 31, 2020 the estimated amounts for these future inventory returns were approximately $ 1.0 1.4 0.6 0.4 LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated and straight-line methods. FAIR VALUE OF FINANCIAL INSTRUMENTS We follow FASB ASC 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses, customer deposits, refunds due to customers, and due to related parties approximates fair value due to the relatively short period to maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment notes approximate fair value either due to the relatively short period to maturity or the related interest is accrued at a rate similar to market rates. The carrying amounts on the revolving line of credit approximates fair value due the relatively short period to maturity and related interest accrued at market rates. REVENUE RECOGNITION AND RESERVE FOR SALES RETURNS The Company recognizes revenue in accordance with FASB ASC 606, “Revenue from Contracts with Customers”. All revenue is generated from contracts with customers. The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation. The Company selectively participates in a retailer’s co-op promotion incentives to maximize sales of the Company’s products on the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. Co-op promotion incentives were approximately $ 2.0 2.9 The Company’s contracts with customers consist of one performance obligation (the sale of the Company’s products). The Company’s contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive for the sale of these goods. Costs incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions are included in selling expenses in the accompanying consolidated statements of operations as our underlying customer agreements are less than one year. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 The Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments (See NOTE 10 – SEGMENT INFORMATION). While the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates variable consideration under our return allowance programs for goods returned from the customer for various reasons, whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns were approximately $ 1.0 1.2 During fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product lines consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Product Line March 31, 2021 March 31, 2020 Revenue by Product Line Fiscal Years Ended Product Line March 31, 2021 March 31, 2020 Karaoke Machines $ 34,700,000 $ 32,600,000 Licensed Products 4,700,000 2,000,000 Microphones and Accessories 4,700,000 2,600,000 SMC Kids Toys 1,300,000 900,000 Music Subscriptions 400,000 400,000 Total Net Sales $ 45,800,000 $ 38,500,000 SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For both Fiscal 2021 and 2020 shipping and handling expenses were approximately $ 1.2 STOCK-BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the consolidated statement of operations over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense in fiscal years 2021 and 2020 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the years ended March 31, 2021 and 2020, the stock option expense was approximately $ 10,000 20,000 The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. ● For the year ended March 31, 2021: expected dividend yield of 0% .18% 146.7% three years ● For the year ended March 31, 2020: expected dividend yield of 0% 2.08 194.5% three years The Company’s directors were issued shares of stock as compensation for their service. For the years ended March 31, 2021and 2020, the stock compensation expense to directors was $ 12,500 RESEARCH AND DEVELOPMENT COSTS All research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the consolidated statements of operations. For both years ended March 31, 2021 and 2020, these amounts totaled approximately $ 0.1 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% COMPUTATION OF EARNINGS (LOSS) PER SHARE Computation of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Basic weighted average common shares outstanding 38,760,092 38,532,889 Effect of dilutive stock options 368,558 - Diluted weighted average of common shares outstanding 39,128,650 38,532,889 Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options and the proceeds thereof were used to purchase shares of Company common stock at the average market price during the period using the treasury stock method. 750,000 2,230,000 ADOPTION OF NEW ACCOUNTING STANDARDS In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740). RECENT ACCOUNTING PRONOUNCEMENTS: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326) THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | ||
INVENTORIES, NET | NOTE 4 - INVENTORIES, NET Inventories are comprised of the following components: SCHEDULE OF INVENTORY December 31, March 31, 2021 2021 Finished Goods $ 8,427,000 $ 5,348,000 Inventory in Transit 1,655,000 250,000 Estimated Amount of Future Returns 1,978,000 528,000 Subtotal 12,060,000 6,126,000 Less:Inventory Reserve 934,000 636,000 Inventories, net $ 11,126,000 $ 5,490,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) | NOTE 3 – INVENTORIES, NET Inventories are comprised of the following components: SCHEDULE OF INVENTORY March 31, March 31, 2021 2020 Finished Goods $ 5,400,000 $ 6,600,000 Inventory in Transit 200,000 100,000 Estimated Amount of Future Returns 500,000 1,300,000 Subtotal 6,100,000 8,000,000 Less: Inventory Reserve 600,000 400,000 Total Inventories $ 5,500,000 $ 7,600,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 December 31, 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 2,113,000 1,946,000 $ 581,000 $ 674,000 Depreciation expense for the three months ended December 31, 2021 and 2020 was approximately $ 55,000 65,000 190,000 204,000 | NOTE 4 - PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: SUMMARY OF PROPERTY AND EQUIPMENT USEFUL MARCH 31, MARCH 31, LIFE 2021 2020 Computer and office equipment 5 7 years $ 400,000 $ 400,000 Furniture and fixtures 7 years 100,000 100,000 Warehouse equipment 7 years 200,000 200,000 Molds and tooling 3 5 years 1,900,000 1,700,000 Property and equipment, gross 2,600,000 2,400,000 Less: Accumulated depreciation 1,900,000 1,600,000 Property and equipment, net $ 700,000 $ 800,000 Depreciation expense for fiscal years ended 2021 and 2020 was approximately $ 0.3 |
BANK FINANCING
BANK FINANCING | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 10,000 19,000 36,000 40,000 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. 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 2,000,000 106,000 100,000 202,000 151,000 June 15, 2022 6,637,000 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. The Company was not in compliance with this covenant as of October 31, 2021 and November 30, 2021; however, waivers from default were obtained from IHC for these months. As of December 31, 2021, the Company was in compliance with this covenant. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) 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 34,000 41,000 120,000 103,000 June 15, 2022 1,990,000 65,000 As of December 31, 2021 there was approximately $ 510,000 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 7,459 231,000 281,000 5,000 6,000 16,000 20,000 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 3,000 12,000 17,000 36,000 In connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the 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 December 31, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility and has made cumulative principal payments totaling $ 450,000 As of December 31, 2021 and March 31, 2021, the remaining amount due on the note payable was approximately $ 353,000 503,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) | NOTE 5 – FINANCING 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 5.0 10.0 5.0 74,000 62,000 0 Under the Crestmark Facility: ● Advance rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date. ● Crestmark shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%. ● Crestmark will implement an availability block of 20% of amounts due on Iron Horse Credit (“IHC”) Intercreditor Revolving Credit Facility. See below ● Mandatory pay-down of the loan to zero in January and February each year. The Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable and Inventory. Notwithstanding the foregoing, Crestmark shall subordinate its first security interest in inventory to IHC as agreed between all parties. The Crestmark Facility bears interest at the Wall Street Journal Prime Rate plus 5.50 8.75 2.0 0.2 0.0 June 15, 2022 2.5 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 Under the IHC Facility: ● Advance rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined by an independent third-party appraiser engaged by IHC. ● The Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”) less non-financed capital expenditures, cash dividends and distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. This financial covenant was waived for the first six months of the IHC Facility. As of March 31, 2021, the Company was in compliance with this covenant. The IHC Facility is secured by a perfected security interest in the Company’s inventory. The IHC Facility bears interest at 1.292 15.51 1,000,000 0.1 0.0 June 15, 2022 65,000 0 As both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a revision or extension of these debt facilities upon their maturity however, there can be no assurance that such revision or extension will occur or at what terms. Revolving Credit Facility PNC Bank On June 22, 2017, the Company renewed the existing revolving credit facility (the “PNC Revolving Credit Facility”) with PNC Bank, National Association (“PNC”) for an additional three years which was terminated on June 16, 2020 and replaced by the Intercreditor Revolving Credit Facility with Crestmark and IHC. In September 2019, the Company defaulted on the PNC Revolving Credit Facility due to non-compliance with the fixed charge coverage ratio requirement. In November 2019, the Company entered into a Forbearance Agreement with PNC whereby PNC delayed taking action they would have been entitled to under a default through March 31, 2020. The Company remained in default of the Forbearance Agreement up until termination of the Revolving Credit Facility on June 16, 2020 at which time the Company executed the Intercreditor Revolving Credit Facility with Crestmark and IHC. As of March 31, 2021, and 2020 there were no amounts due on the PNC Revolving Credit Facility. During the fiscal years ended March 31, 2021 and 2020 the Company incurred interest expense of approximately $ 0.0 0.1 Note Payable Payroll Protection Plan On May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $ 0.4 4,000 0 0.4 0.0 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 0.4 7.58 8.55 9.25 7,459 0.3 26,000 23,000 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 47,000 74,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 In connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the subordinated note payable. Both the Crestmark Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any amounts borrowed against these credit facilities are paid in full, the Company maintains a 1 : 1 debt coverage ratio and exhibits sufficient cash liquidity to support on-going operations. As of March 31, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility to make principal payments totaling $ 0.3 As of March 31, 2021 and 2020 the remaining amount due on the note payable was approximately $ 0.5 0.8 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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, any 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 Management is not aware of any 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 9,700 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 forklift in the amount of approximately $ 24,000 755 36 9.9 20,000 0 696 1,072 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) Supplemental balance sheet information related to leases as of December 31, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES Assets: Operating lease - right-of-use assets $ 1,488,258 Finance leases as a component of Property and equipment, net of accumulated depreciation of $ 1,735 18,278 Liabilities Current Current portion of operating leases $ 860,528 Current portion of finance leases 7,421 Noncurrent Operating lease liabilities, net of current portion $ 685,304 Finance leases, net of current portion 12,592 Supplemental statement of operations information related to leases for the three and nine months ended December 31, 2021 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Three Months Ended Nine Months Ended December 31, 2021 December 31, 2021 Operating lease expense as a component of general and administrative expenses $ 140,016 $ 604,347 Finance lease cost Depreciation of leased assets as a component of depreciation $ 1,041 $ 1,735 Interest on lease liabilities as a component of interest expense $ 692 $ 1,068 Supplemental cash flow information related to leases for the nine months ended December 31, 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 $ 693,657 Financing cash flow paid for finance leases $ 6,184 Lease term and Discount Rate Weighted average remaining lease term (months) Operating leases 21.1 Finance leases 31.0 Weighted average discount rate Operating leases 6.25 % Finance leases 9.86 % Scheduled maturities of operating and finance lease liabilities outstanding as of December 31, 2021 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Year Operating Leases Finance Leases 2022 $ 937,590 $ 9,065 2023 674,488 9,065 2024 30,739 4,533 2025 30,739 - Total Minimum Future Payments 1,642,817 22,663 Less: Imputed Interest 96,985 2,650 Present Value of Lease Liabilities $ 1,545,832 $ 20,013 | NOTE 6 - COMMITMENTS AND CONTINGENCIES LEGAL MATTERS On September 11, 2020 a Complaint was filed against the Company’s SMCL subsidiary and various staffing agencies used by SMCL in a Superior Court of San Bernadino County. The complaint alleges an employee of SMCL committed employment practice violations against a former temporary employee not employed by SMC Logistics. Management has investigated the allegation and has engaged with an employment attorney to defend the lawsuit. Management does not believe the claims have merit and does not believe the lawsuit will have a material adverse effect on our financial results. As of this filing management is not aware of any other legal proceedings other than matters that arise in the ordinary course of business. LEASES The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date. The liability is equal to the present value of the remaining minimum lease payments. The asset is based on the liability, subject to certain adjustments. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). As the interest rate implicit in the Company’s operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease payments. The Company utilizes the implicit rate for its finance leases. Operating Leases We have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through 2024. We entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida where we lease approximately 6,500 March 31, 2024 9,400 We entered into an operating lease agreement, effective June 1, 2013, for 86,000 August 31, 2023 65,300 We entered into an operating lease agreement, effective May 1, 2018, for 424 1,600 April 30, 2021 we executed a one-year lease extension which will expire on 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 May 25, 2018 and June 4, 2018, we entered into two long-term capital leasing arrangements with Wells Fargo Equipment Finance (“Wells Fargo”) to finance the leasing of two used forklift vehicles in the amount of approximately $ 44,000 1,279 36 4.5 3,000 18,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 Supplemental balance sheet information related to leases as of March 31, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 1 Assets: Operating lease - right-of-use assets $ 2,074,115 Finance leases as a component of property and equipment, net of accumulated depreciation of $ 18,136 25,390 Liabilities Current Current portion of operating leases $ 794,938 Current portion of finance leases 2,546 Noncurrent Operating lease liabilities, net of current portion $ 1,334,010 Finance leases, net of current portion - Supplemental statement of operations information related to leases for the fiscal year ended March 31, 2021 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Fiscal Year Ended March 31, 2021 Operating lease expense as a component of general and administrative expenses $ 790,715 Finance lease cost Depreciation of leased assets as a component of depreciation $ 6,218 Interest on lease liabilities as a component of interest expense $ 370 Supplemental cash flow information related to leases for the nine months ended March 31, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION Fiscal Year Ended March 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases $ 805,662 Financing cash flow paid for finance leases $ 14,957 Lease term and Discount Rate Weighted average remaining lease term (months) 30.0 Operating leases 2.0 Finance leases Weighted average discount rate Operating leases 6.25 % Finance leases 3.68 % Scheduled maturities of operating and finance lease liabilities outstanding as of March 31, 2021 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Fiscal Year Operating Leases Finance Leases 2022 $ 682,373 $ 2,558 2023 931,948 - 2024 674,488 - 2025 30,739 - Total Minimum Future Payments 2,319,548 2,558 Less: Imputed Interest 190,600 12 Present Value of Lease Liabilities $ 2,128,948 $ 2,546 |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | ||
STOCK OPTIONS AND WARRANTS | NOTE 8 - STOCK OPTIONS AND WARRANTS During the nine months ended December 31, 2021 the Company issued 40,000 20,000 .29 .27 During the three and nine months ended December 31, 2021 the Company issued 50,000 .22 During the three and nine months ended December 31, 2020 the Company issued 100,000 .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 the nine months ended December 31, 2021: expected dividend yield of 0 0.43 0.96 149.5 157.0 three years ● For the nine months ended December 31, 2020: expected dividend yield of 0 0.18 146.7 three years THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) A summary of stock option activity for the nine months ended December 31, 2021 is summarized below: SUMMARY OF STOCK OPTION ACTIVITY December 31, 2021 Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of period 1,680,000 $ 0.32 Granted 110,000 $ 0.25 Exercised (80,000 ) $ 0.18 Balance at end of period 1,710,000 $ 0.33 Options exercisable at end of period 1,600,000 $ 0.33 The following table summarizes information about employee stock options outstanding at December 31, 2021: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Exercise Price Number Outstanding at December 31, 2021 Weighted Average Remaining Contractural Life Weighted Average Exercise Price Number Exercisable at December 31, 2021 Weighted Average Exercise Price $ .12 .38 1,160,000 2.9 $ 0.24 1,050,000 $ 0.24 $ .47 .55 550,000 5.2 $ 0.50 550,000 $ 0.50 - * * 1,710,000 1,600,000 * Total number of options outstanding as of December 31, 2021 includes 650,000 1,090,000 As of December 31, 2021, there was unrecognized expense of approximately $ 17,000 The intrinsic value of vested options as of December 31, 2021 was approximately $ 40,000 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 December 31, 2021 are 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 December 31, 2021 51,500,000 As of December 31, 2021, the Company’s warrants by expiration date were as follows: SCHEDULE OF WARRANTS EXPIRATION Number of CommonWarrants 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. | NOTE 7 – SHAREHOLDERS’ EQUITY STOCK OPTIONS AND WARRANTS COMMON STOCK ISSUANCES During the years ended March 31, 2021 and 2020 the Company issued the following common stock shares: Fiscal 2021: On October 30, 2020 the Company issued 440,000 .06 On November 6, 2020, the Company issued 43,105 0.29 Fiscal 2020: On August 30, 2019 the Company issued 60,000 0.17 On June 12, 2019, the Company issued 32,890 0.38 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 STOCK OPTIONS On June 1, 2001, the Board of Directors approved the 2001 Stock Option Plan (“Plan”), as amended. The Plan was developed to provide a means whereby directors and selected employees, officers, consultants, and advisors of the Company may be granted incentive or non-qualified stock options to purchase common stock of the Company. As of March 31, 2021, the Plan had expired and no shares were available to be issued nor were any additional shares issued from the plan in Fiscal 2021 or 2020. A summary of stock option activity for each of the years presented is summarized below. SUMMARY OF STOCK OPTION ACTIVITY Fiscal 2021 Fiscal 2020 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of year 2,230,000 $ 0.26 2,210,000 $ 0.25 Granted 100,000 $ 0.29 100,000 $ 0.38 Exercised (440,000 ) $ 0.06 (60,000 ) $ 0.17 Forfeited (210,000 ) $ 0.17 (20,000 ) $ 0.03 Balance at end of year * 1,680,000 $ 0.32 2,230,000 $ 0.26 Options exercisable at end of year 1,580,000 $ 0.33 2,130,000 $ 0.25 The following table summarizes information about employee stock options outstanding at March 31, 2021: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Exercise Price Number Outstanding at March 31, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at March 31, 2021 Weighted Average Exercise Price $ 0.12 0.38 1,130,000 4.0 $ 0.24 1,030,000 $ 0.23 $ 0.47 0.55 550,000 6.4 $ 0.50 550,000 $ 0.50 * 1,680,000 1,580,000 * Total number of options outstanding as of March 31, 2021 includes 600,000 1,040,000 |
AUGUST 2021 STOCK REDEMPTION
AUGUST 2021 STOCK REDEMPTION | 9 Months Ended |
Dec. 31, 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 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) |
AUGUST 2021 PRIVATE PLACEMENT
AUGUST 2021 PRIVATE PLACEMENT | 9 Months Ended |
Dec. 31, 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 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. As of December 31, 2021 an application with NASDAQ has been submitted and is pending approval. Should the NASDAQ application be approved, the shareholders of the Company have approved a reverse stock split simultaneous with the up-listing. 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 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) |
GEOGRAPHICAL INFORMATION
GEOGRAPHICAL INFORMATION | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Segment Reporting [Abstract] | ||
GEOGRAPHICAL INFORMATION | NOTE 11 - GEOGRAPHICAL INFORMATION Sales to customers outside of the United States for the three and nine months ended December 31, 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 THREE MONTHS ENDED FOR THE NINE MONTHS ENDED December 31, December 31, 2021 2020 2021 2020 North America $ 20,997,000 $ 16,623,000 $ 43,691,000 $ 41,014,000 Europe 219,000 31,000 375,000 924,000 Australia 28,000 319,000 613,000 372,000 Net sales $ 21,244,000 $ 16,973,000 $ 44,679,000 $ 42,310,000 The geographic area of sales was based on the location where the product is delivered. | NOTE 9 - SEGMENT INFORMATION GEOGRAPHICAL INFORMATION The Company operates in one SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION 2021 2020 FOR THE FISCAL YEARS ENDED March 31, March 31, 2021 2020 North America $ 44,200,000 $ 36,000,000 Europe 1,200,000 1,700,000 Asia - 300,000 Australia 400,000 500,000 Net Sales $ 45,800,000 $ 38,500,000 The geographic area of sales is based primarily on where the product was delivered. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 December 31, 2021 and March 31, 2021, the Company had amounts due to related parties in the amounts of approximately $ 63,000 On December 31, 2021 and March 31, 2021, the Company had amounts due from Stingray of approximately $ 159,000 TRADE The Company has a music subscription sharing agreement with Stingray. For the three months ended December 31, 2021 and 2020 the Company received music subscription revenue of approximately $ 160,000 188,000 384,000 290,000 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 $ 91,000 272,000 | NOTE 12 – RELATED PARTY TRANSACTIONS DUE TO/FROM RELATED PARTIES On March 31, 2021 the Company had approximately $ 0.1 0.5 TRADE During both Fiscal 2021 and 2020 the Company paid approximately $ 0.4 During Fiscal 2021 and 2020 the Company sold approximately $ 0.0 0.9 On July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company’s Canadian distributor and the Company became the sole and exclusive distributor of the Company’s products in Canada. As part of the agreement, the companies executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo’s karaoke inventory for approximately $ 0.7 0.2 |
RESERVE FOR SALES RETURNS
RESERVE FOR SALES RETURNS | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020 (Unaudited) Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Nine Months Ended December 31, December 31, 2021 2020 Reserve for sales returns at beginning of the year $ 960,000 $ 1,224,000 Provision for estimated sales returns 4,020,000 4,187,000 Sales returns received (2,058,000 ) (2,445,000 ) Reserve for sales returns at end of the period $ 2,922,000 $ 2,966,000 | NOTE 13 – RESERVE FOR SALES RETURNS A return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are either allowed to return defective goods within a specified period of time after shipment (between 6 and 9 months) or granted a “defective allowance” consisting of a fixed percentage (between 1% and 5%) off of invoice price in lieu of returning defective products. The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the consolidated balance sheets. Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Fiscal Year Ended March 31, March 31, 2021 2020 Reserve for sales returns at beginning of the fiscal year $ 1,224,000 $ 896,000 Provision for estimated sales returns 3,881,000 5,771,000 Sales returns received (4,145,000 ) (5,443,000 ) Reserve for sales returns at end of the year $ 960,000 $ 1,224,000 |
REFUNDS DUE TO CUSTOMERS
REFUNDS DUE TO CUSTOMERS | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Refunds Due To Customers | ||
REFUNDS DUE TO CUSTOMERS | NOTE 14 – REFUNDS DUE TO CUSTOMERS As of December 31, 2021 and March 31, 2021 the amount of refunds due to customers was approximately $ 90,000 145,000 | NOTE 15 – REFUNDS DUE TO CUSTOMERS As of March 31, 2021 and 2020 the amount of refunds due to customers was approximately $ 0.1 0.8 1.7 1.2 0.3 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 both December 31, 2021 and 2020 totaled approximately $ 20,000 55,000 54,000 | NOTE 10 - EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee’s contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged to operations for contributions to this plan and administrative costs during the fiscal years ended March 31, 2021 and 2020 totaled approximately $ 74,000 63,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 |
CONCENTRATIONS OF CREDIT AND SA
CONCENTRATIONS OF CREDIT AND SALES RISK | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 December 31, 2021, approximately 75 70 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 December 31, 2021, there were five 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 25 24 17 17 10 22 22 19 12 12 For the nine months ended December 31, 2021, there were four 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 37 19 16 11 34 19 13 13 In August 2021, the Company secured vendor invoice credits of approximately $ 236,000 | NOTE 11 - CONCENTRATIONS OF CREDIT RISK, CUSTOMERS, AND SUPPLIERS CONCENTRATIONS OF CREDIT AND SALES RISK The Company derives a majority of its revenues from retailers in the United States. The Company’s allowance for doubtful accounts is based upon management’s estimates and historical experience and reflects the fact that accounts receivable are concentrated with several large customers. At March 31, 2021, 70 82 Revenues derived from three customers in 2021 and 2020 were 69 64 36 20 13 12 41 13 10 The Macau Subsidiary recorded net sales of approximately $ 4.1 5.1 The Company is dependent upon foreign companies for the manufacture of all its electronic products. The Company’s arrangements with manufacturers are subject to the risk of doing business abroad, such as import duties, trade restrictions, work stoppages, foreign currency fluctuations, political instability, and other factors, which could have an adverse impact on its business. The Company believes that the loss of any one or more of their suppliers would not have a long-term material adverse effect because other manufacturers with whom the Company does business would be able to increase production to fulfill their requirements. However, the loss of certain suppliers in the short-term could adversely affect business until alternative supply arrangements are secured. During fiscal years 2021 and 2020, manufacturers in the People’s Republic of China accounted for 100 the U.S. government-imposed tariffs of up to 25% on certain goods imported from China. All of our products are manufactured and imported from China however, only our microphones are currently subject to a 7.5% tariff currently in place. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 - INCOME TAXES The Company files separate tax returns in the United States and in Macau. The Macau Subsidiary has received approval from the Macau government to operate its business as a Macau Offshore Company (MOC), and is exempt from the Macau income tax. For the fiscal years ended March 31, 2021 and 2020, the Macau Subsidiary recorded no tax provision. The U.S. Federal net operating loss carryforward is subject to an IRS Section 382 limitation. As of March 31, 2021 and 2020, the Company had net deferred tax assets of approximately $ 0.9 1.3 17.4 0.5 23,000 18.1 0.6 88,000 0.1 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 The income tax provision (benefit) for federal, foreign, and state income taxes in the consolidated statements of operations consisted of the following components for 2021 and 2020: SCHEDULE OF INCOME TAX PROVISION (BENEFIT) 2021 2020 (Restated) Income tax provision (benefit): Current: Federal $ 54,487 $ (114,459 ) State 3,825 - Total current Federal and State tax benefit $ 58,312 $ (114,459 ) Deferred: Federal $ 417,477 $ (576,004 ) State (18,920 ) 48,649 Total Deferred Federal and State 398,557 (527,355 ) Total income tax (benefit) provision $ 456,869 $ (641,814 ) The United States and foreign components of income (loss) before income taxes are as follows: SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX 2021 2020 United States $ 1,922,947 $ (3,765,272 ) Foreign 706,287 266,458 Net income before income tax benefit $ 2,629,234 $ (3,498,814 ) The actual tax provision differs from the “expected” tax for the years ended March 31, 2021 and 2020 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows: SCHEDULE OF DIFFERENCE BETWEEN ACTUAL TAX EXPENSES AND EXPECTED TAX EXPENSES 2021 2020 Expected tax provision (benefit) $ 551,982 $ (734,751 ) State income taxes, net of Federal income tax provision (benefit) 128,699 (175,245 ) Permanent differences (6,578 ) 9,977 Tax rate differential on foreign earnings (108,690 ) - Change in valuation allowance (65,193 ) 87,842 Effect of IRC §382 on NOL - 100,966 Tax rate differential on NOL carryback - 16,263 Correction of state rate - 83,803 Other (43,351 ) (30,669 ) Actual tax provision (benefit) $ 456,869 $ (641,814 ) THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 2021 and 2020 The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2021 2020 NOL Federal Carryforward $ 246,769 $ 312,430 State NOL Carryforward 194,388 157,967 General business credit - 14,196 Inventory differences 348,921 303,529 Stock option compensation expense 115,730 128,220 Allowance for doubtful accounts 35,877 143,748 Insurance contingency - 220,425 Reserve for estimated returns 111,887 112,537 Accrued vacation 13,186 42,928 Business interest deduction - 55,978 Total deferred tax assets, gross 1,066,758 1,491,958 Less: valuation allowance 22,649 87,842 Total deferred tax assets, net 1,044,109 1,404,116 Depreciable and amortizable assets (119,242 ) (82,512 ) Prepaid expenses (37,703 ) (35,883 ) Net deferred tax liabilities (156,945 ) (118,395 ) Net deferred tax asset $ 887,164 $ 1,285,721 The Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences and the length of carryback and carryforward periods available under the applicable federal and state laws; and the amount and timing of future taxable income. At March 31, 2021, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP and concluded that a $ 22,649 At March 31, 2021, the Company has federal tax net operating loss carryforwards in the amount of approximately $ 1.2 begin to expire in the year 2025. .15 3.6 begin to expire beginning in 2024. |
DAMAGED GOODS INCIDENT
DAMAGED GOODS INCIDENT | 12 Months Ended |
Mar. 31, 2021 | |
Environmental Remediation Obligations [Abstract] | |
DAMAGED GOODS INCIDENT | NOTE 14 – DAMAGED GOODS INCIDENT In August 2019, we received notification from a major customer that several containers of goods from multiple vessels purchased direct import by the customer had arrived severely water damaged. Upon inspection of the damaged goods by insurance surveyors it was their opinion that the source of the damage was due to moisture in the pallets provided by the factory which caused significant condensation and consequently water damage to the merchandise. Actual damage to the goods occurred while the goods were in transit. We filed insurance claims on our cargo insurance policy which provided for recovery of the sales value plus additional expenses associated with the damaged goods. For the fiscal year ended March 31, 2020, the customer charged us back a total of approximately $ 1.7 1.6 0.1 0.3 0.5 1.7 1.2 1.3 During Fiscal 2021, we recovered approximately $ 2.3 1.6 0.1 0.6 1.1 0.4 |
RESERVES
RESERVES | 12 Months Ended |
Mar. 31, 2021 | |
Reserves | |
RESERVES | NOTE 16 – RESERVES Asset reserves and allowances for years ended March 31, 2021 and 2020 are presented in the following table: SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS Balance at Charged to Reduction to Credited to Balance at Beginning of Costs and Allowance for Costs and End of Description Year Expenses Write off Expenses Year Year ended March 31, 2021 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 337,461 $ 16,086 $ (227,184 ) $ 12,217 $ 138,580 Inventory reserve $ 434,000 $ 688,200 $ (485,861 ) $ - $ 636,339 Year ended March 31, 2020 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 51,096 $ 303,843 $ (15,303 ) $ (2,175 ) $ 337,461 Inventory reserve $ 254,000 $ 398,730 $ (218,730 ) $ - $ 434,000 |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Accounting Policies [Abstract] | ||
PRINCIPLES OF CONSOLIDATION | 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 nine months ended December 31, 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 December 31, 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. | PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMCL, and SMCM. All inter-company accounts and transactions have been eliminated in consolidation for all periods presented. |
USE OF ESTIMATES | USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial condition. However, circumstances could change which may alter future expectations. | USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial statements. However, circumstances could change which may alter future expectations. |
COLLECTIBILITY OF ACCOUNTS RECEIVABLE | 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. | COLLECTIBILITY OF ACCOUNTS RECEIVABLE The Singing Machine’s allowance for doubtful accounts is based on management’s estimates of the creditworthiness of its customers, current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient to respond to normal business conditions. Management sets 100% |
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. | FOREIGN CURRENCY TRANSLATION The functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are recorded in the statement of operations and translations would be recorded in a separate component of shareholders’ equity. Any such amounts were not material during the periods presented. |
Concentration of Credit Risk | CONCENTRATION OF CREDIT RISK At times, the Company maintains cash in United States bank accounts that are 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 December 31, 2021 and March 31, 2021 are approximately $ 125,000 225,000 Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable. | Concentration of Credit Risk At times, the Company maintains cash in United States bank accounts that are in excess of the Federal Deposit Insurance Corporation insured amounts. The Company maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at March 31, 2021 and 2020 were approximately $ 0.2 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 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 December 31, 2021 and March 31, 2021 the estimated amounts for these future inventory returns were approximately $ 1,978,000 528,000 934,000 636,000 | INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected future inventory returns due to warranty and allowance programs. As of March 31, 2021 and March 31, 2020 the estimated amounts for these future inventory returns were approximately $ 1.0 1.4 0.6 0.4 |
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 December 31, 2021 and 2020. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December, 2021 and 2020 (Unaudited) | 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.” |
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 financing interest 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. | 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. | FAIR VALUE OF FINANCIAL INSTRUMENTS We follow FASB ASC 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses, customer deposits, refunds due to customers, and due to related parties approximates fair value due to the relatively short period to maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment notes approximate fair value either due to the relatively short period to maturity or the related interest is accrued at a rate similar to market rates. The carrying amounts on the revolving line of credit approximates fair value due the relatively short period to maturity and related interest accrued at market rates. |
REVENUE RECOGNITION AND RESERVE FOR SALES RETURNS | REVENUE RECOGNITION AND RESERVE FOR SALES RETURNS The Company recognizes revenue in accordance with FASB ASC 606, “Revenue from Contracts with Customers”. All revenue is generated from contracts with customers. The Company recognizes revenue when the 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 December 31, 2021 and 2020 co-op promotion incentives were approximately $ 796,000 858,000 1,805,000 2,032,000 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 December 31, 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 from our customers 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 $ 2,922,000 960,000 Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and nine months ended December 31, 2021 and 2020 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Revenue by Product Line Three Months Ended Nine Months Ended Product Line December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Classic Karaoke Machines $ 17,732,000 $ 11,998,000 $ 37,216,000 $ 32,337,000 Licensed Product 645,000 1,644,000 1,510,000 4,332,000 SMC Kids Toys 1,051,000 662,000 2,145,000 1,229,000 Microphones and Accessories 1,657,000 2,481,000 3,424,000 4,122,000 Music Subscriptions 159,000 188,000 384,000 290,000 Total Net Sales $ 21,244,000 $ 16,973,000 $ 44,679,000 $ 42,310,000 | REVENUE RECOGNITION AND RESERVE FOR SALES RETURNS The Company recognizes revenue in accordance with FASB ASC 606, “Revenue from Contracts with Customers”. All revenue is generated from contracts with customers. The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation. The Company selectively participates in a retailer’s co-op promotion incentives to maximize sales of the Company’s products on the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. Co-op promotion incentives were approximately $ 2.0 2.9 The Company’s contracts with customers consist of one performance obligation (the sale of the Company’s products). The Company’s contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive for the sale of these goods. Costs incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions are included in selling expenses in the accompanying consolidated statements of operations as our underlying customer agreements are less than one year. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 The Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments (See NOTE 10 – SEGMENT INFORMATION). While the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates variable consideration under our return allowance programs for goods returned from the customer for various reasons, whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns were approximately $ 1.0 1.2 During fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product lines consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Product Line March 31, 2021 March 31, 2020 Revenue by Product Line Fiscal Years Ended Product Line March 31, 2021 March 31, 2020 Karaoke Machines $ 34,700,000 $ 32,600,000 Licensed Products 4,700,000 2,000,000 Microphones and Accessories 4,700,000 2,600,000 SMC Kids Toys 1,300,000 900,000 Music Subscriptions 400,000 400,000 Total Net Sales $ 45,800,000 $ 38,500,000 |
SHIPPING AND HANDLING COSTS | SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For the three months ended December 31, 2021 and 2020 shipping and handling expenses were approximately $ 369,000 512,000 654,000 900,000 | SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For both Fiscal 2021 and 2020 shipping and handling expenses were approximately $ 1.2 |
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 nine months ended December 31, 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 December 31, 2021 and 2020, the stock option expense was approximately $ 3,000 5,000 16,000 5,000 | 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 consolidated statement of operations over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense in fiscal years 2021 and 2020 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the years ended March 31, 2021 and 2020, the stock option expense was approximately $ 10,000 20,000 The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. ● For the year ended March 31, 2021: expected dividend yield of 0% .18% 146.7% three years ● For the year ended March 31, 2020: expected dividend yield of 0% 2.08 194.5% three years The Company’s directors were issued shares of stock as compensation for their service. For the years ended March 31, 2021and 2020, the stock compensation expense to directors was $ 12,500 |
RESEARCH AND DEVELOPMENT COSTS | RESEARCH AND DEVELOPMENT COSTS 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 December 31, 2021 and 2020, these amounts totaled approximately $ 11,000 33,000 61,000 48,000 | RESEARCH AND DEVELOPMENT COSTS All research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the consolidated statements of operations. For both years ended March 31, 2021 and 2020, these amounts totaled approximately $ 0.1 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 |
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 nine months ended December 31, 2021 and 2020 we estimated our effective tax rate to be approximately 11 23 638,000 887,000 103,000 264,000 249,000 1,006,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 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% | INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% |
COMPUTATION OF EARNINGS (LOSS) PER SHARE | COMPUTATION OF EARNINGS PER SHARE Computation of dilutive shares for the three and nine months ended December 31, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three months ended December 31, 2021 For the three months ended December 31, 2020 For the nine months ended December 31, 2021 For the nine months ended December 31, 2020 Basic weighted average common shares outstanding 53,410,249 38,885,185 46,787,545 38,667,221 Effect of dilutive stock options 225,119 271,296 322,309 373,853 Diluted weighted average common shares outstanding 53,635,368 39,156,481 47,109,854 39,041,074 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 16,833,333 225,000 322,000 271,000 374,000 35,416,667 730,000 | COMPUTATION OF EARNINGS (LOSS) PER SHARE Computation of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Basic weighted average common shares outstanding 38,760,092 38,532,889 Effect of dilutive stock options 368,558 - Diluted weighted average of common shares outstanding 39,128,650 38,532,889 Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options and the proceeds thereof were used to purchase shares of Company common stock at the average market price during the period using the treasury stock method. 750,000 2,230,000 |
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 the Company beginning 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. | RECENT ACCOUNTING PRONOUNCEMENTS: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326) THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 |
ADOPTION OF NEW ACCOUNTING STANDARDS | ADOPTION OF NEW ACCOUNTING STANDARDS In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740). |
SUMMARY OF ACCOUNTING POLICIE_2
SUMMARY OF ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 nine months ended December 31, 2021 and 2020 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Revenue by Product Line Three Months Ended Nine Months Ended Product Line December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Classic Karaoke Machines $ 17,732,000 $ 11,998,000 $ 37,216,000 $ 32,337,000 Licensed Product 645,000 1,644,000 1,510,000 4,332,000 SMC Kids Toys 1,051,000 662,000 2,145,000 1,229,000 Microphones and Accessories 1,657,000 2,481,000 3,424,000 4,122,000 Music Subscriptions 159,000 188,000 384,000 290,000 Total Net Sales $ 21,244,000 $ 16,973,000 $ 44,679,000 $ 42,310,000 | During fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product lines consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Product Line March 31, 2021 March 31, 2020 Revenue by Product Line Fiscal Years Ended Product Line March 31, 2021 March 31, 2020 Karaoke Machines $ 34,700,000 $ 32,600,000 Licensed Products 4,700,000 2,000,000 Microphones and Accessories 4,700,000 2,600,000 SMC Kids Toys 1,300,000 900,000 Music Subscriptions 400,000 400,000 Total Net Sales $ 45,800,000 $ 38,500,000 |
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE | Computation of dilutive shares for the three and nine months ended December 31, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three months ended December 31, 2021 For the three months ended December 31, 2020 For the nine months ended December 31, 2021 For the nine months ended December 31, 2020 Basic weighted average common shares outstanding 53,410,249 38,885,185 46,787,545 38,667,221 Effect of dilutive stock options 225,119 271,296 322,309 373,853 Diluted weighted average common shares outstanding 53,635,368 39,156,481 47,109,854 39,041,074 | Computation of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2020 Basic weighted average common shares outstanding 38,760,092 38,532,889 Effect of dilutive stock options 368,558 - Diluted weighted average of common shares outstanding 39,128,650 38,532,889 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | ||
SCHEDULE OF INVENTORY | Inventories are comprised of the following components: SCHEDULE OF INVENTORY December 31, March 31, 2021 2021 Finished Goods $ 8,427,000 $ 5,348,000 Inventory in Transit 1,655,000 250,000 Estimated Amount of Future Returns 1,978,000 528,000 Subtotal 12,060,000 6,126,000 Less:Inventory Reserve 934,000 636,000 Inventories, net $ 11,126,000 $ 5,490,000 | Inventories are comprised of the following components: SCHEDULE OF INVENTORY March 31, March 31, 2021 2020 Finished Goods $ 5,400,000 $ 6,600,000 Inventory in Transit 200,000 100,000 Estimated Amount of Future Returns 500,000 1,300,000 Subtotal 6,100,000 8,000,000 Less: Inventory Reserve 600,000 400,000 Total Inventories $ 5,500,000 $ 7,600,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 December 31, 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 2,113,000 1,946,000 $ 581,000 $ 674,000 | A summary of property and equipment is as follows: SUMMARY OF PROPERTY AND EQUIPMENT USEFUL MARCH 31, MARCH 31, LIFE 2021 2020 Computer and office equipment 5 7 years $ 400,000 $ 400,000 Furniture and fixtures 7 years 100,000 100,000 Warehouse equipment 7 years 200,000 200,000 Molds and tooling 3 5 years 1,900,000 1,700,000 Property and equipment, gross 2,600,000 2,400,000 Less: Accumulated depreciation 1,900,000 1,600,000 Property and equipment, net $ 700,000 $ 800,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES | Supplemental balance sheet information related to leases as of December 31, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES Assets: Operating lease - right-of-use assets $ 1,488,258 Finance leases as a component of Property and equipment, net of accumulated depreciation of $ 1,735 18,278 Liabilities Current Current portion of operating leases $ 860,528 Current portion of finance leases 7,421 Noncurrent Operating lease liabilities, net of current portion $ 685,304 Finance leases, net of current portion 12,592 | Supplemental balance sheet information related to leases as of March 31, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 1 Assets: Operating lease - right-of-use assets $ 2,074,115 Finance leases as a component of property and equipment, net of accumulated depreciation of $ 18,136 25,390 Liabilities Current Current portion of operating leases $ 794,938 Current portion of finance leases 2,546 Noncurrent Operating lease liabilities, net of current portion $ 1,334,010 Finance leases, net of current portion - |
SCHEDULE OF LEASE TERM AND DISCOUNT RATE | Supplemental statement of operations information related to leases for the three and nine months ended December 31, 2021 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Three Months Ended Nine Months Ended December 31, 2021 December 31, 2021 Operating lease expense as a component of general and administrative expenses $ 140,016 $ 604,347 Finance lease cost Depreciation of leased assets as a component of depreciation $ 1,041 $ 1,735 Interest on lease liabilities as a component of interest expense $ 692 $ 1,068 | Supplemental statement of operations information related to leases for the fiscal year ended March 31, 2021 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Fiscal Year Ended March 31, 2021 Operating lease expense as a component of general and administrative expenses $ 790,715 Finance lease cost Depreciation of leased assets as a component of depreciation $ 6,218 Interest on lease liabilities as a component of interest expense $ 370 |
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION | Supplemental cash flow information related to leases for the nine months ended December 31, 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 $ 693,657 Financing cash flow paid for finance leases $ 6,184 Lease term and Discount Rate Weighted average remaining lease term (months) Operating leases 21.1 Finance leases 31.0 Weighted average discount rate Operating leases 6.25 % Finance leases 9.86 % | Supplemental cash flow information related to leases for the nine months ended March 31, 2021 is as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION Fiscal Year Ended March 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow paid for operating leases $ 805,662 Financing cash flow paid for finance leases $ 14,957 Lease term and Discount Rate Weighted average remaining lease term (months) 30.0 Operating leases 2.0 Finance leases Weighted average discount rate Operating leases 6.25 % Finance leases 3.68 % |
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES | Scheduled maturities of operating and finance lease liabilities outstanding as of December 31, 2021 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Year Operating Leases Finance Leases 2022 $ 937,590 $ 9,065 2023 674,488 9,065 2024 30,739 4,533 2025 30,739 - Total Minimum Future Payments 1,642,817 22,663 Less: Imputed Interest 96,985 2,650 Present Value of Lease Liabilities $ 1,545,832 $ 20,013 | Scheduled maturities of operating and finance lease liabilities outstanding as of March 31, 2021 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Fiscal Year Operating Leases Finance Leases 2022 $ 682,373 $ 2,558 2023 931,948 - 2024 674,488 - 2025 30,739 - Total Minimum Future Payments 2,319,548 2,558 Less: Imputed Interest 190,600 12 Present Value of Lease Liabilities $ 2,128,948 $ 2,546 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | ||
SUMMARY OF STOCK OPTION ACTIVITY | A summary of stock option activity for the nine months ended December 31, 2021 is summarized below: SUMMARY OF STOCK OPTION ACTIVITY December 31, 2021 Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of period 1,680,000 $ 0.32 Granted 110,000 $ 0.25 Exercised (80,000 ) $ 0.18 Balance at end of period 1,710,000 $ 0.33 Options exercisable at end of period 1,600,000 $ 0.33 | A summary of stock option activity for each of the years presented is summarized below. SUMMARY OF STOCK OPTION ACTIVITY Fiscal 2021 Fiscal 2020 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Stock Options: Balance at beginning of year 2,230,000 $ 0.26 2,210,000 $ 0.25 Granted 100,000 $ 0.29 100,000 $ 0.38 Exercised (440,000 ) $ 0.06 (60,000 ) $ 0.17 Forfeited (210,000 ) $ 0.17 (20,000 ) $ 0.03 Balance at end of year * 1,680,000 $ 0.32 2,230,000 $ 0.26 Options exercisable at end of year 1,580,000 $ 0.33 2,130,000 $ 0.25 |
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING | The following table summarizes information about employee stock options outstanding at December 31, 2021: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Exercise Price Number Outstanding at December 31, 2021 Weighted Average Remaining Contractural Life Weighted Average Exercise Price Number Exercisable at December 31, 2021 Weighted Average Exercise Price $ .12 .38 1,160,000 2.9 $ 0.24 1,050,000 $ 0.24 $ .47 .55 550,000 5.2 $ 0.50 550,000 $ 0.50 - * * 1,710,000 1,600,000 * Total number of options outstanding as of December 31, 2021 includes 650,000 1,090,000 | The following table summarizes information about employee stock options outstanding at March 31, 2021: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Exercise Price Number Outstanding at March 31, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at March 31, 2021 Weighted Average Exercise Price $ 0.12 0.38 1,130,000 4.0 $ 0.24 1,030,000 $ 0.23 $ 0.47 0.55 550,000 6.4 $ 0.50 550,000 $ 0.50 * 1,680,000 1,580,000 * Total number of options outstanding as of March 31, 2021 includes 600,000 1,040,000 |
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 December 31, 2021 are 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 December 31, 2021 51,500,000 | |
SCHEDULE OF WARRANTS EXPIRATION | As of December 31, 2021, the Company’s warrants by expiration date were as follows: SCHEDULE OF WARRANTS EXPIRATION Number of CommonWarrants 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) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Segment Reporting [Abstract] | ||
SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION | Sales to customers outside of the United States for the three and nine months ended December 31, 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 THREE MONTHS ENDED FOR THE NINE MONTHS ENDED December 31, December 31, 2021 2020 2021 2020 North America $ 20,997,000 $ 16,623,000 $ 43,691,000 $ 41,014,000 Europe 219,000 31,000 375,000 924,000 Australia 28,000 319,000 613,000 372,000 Net sales $ 21,244,000 $ 16,973,000 $ 44,679,000 $ 42,310,000 | The Company operates in one SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION 2021 2020 FOR THE FISCAL YEARS ENDED March 31, March 31, 2021 2020 North America $ 44,200,000 $ 36,000,000 Europe 1,200,000 1,700,000 Asia - 300,000 Australia 400,000 500,000 Net Sales $ 45,800,000 $ 38,500,000 |
RESERVE FOR SALES RETURNS (Tabl
RESERVE FOR SALES RETURNS (Tables) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 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 Nine Months Ended December 31, December 31, 2021 2020 Reserve for sales returns at beginning of the year $ 960,000 $ 1,224,000 Provision for estimated sales returns 4,020,000 4,187,000 Sales returns received (2,058,000 ) (2,445,000 ) Reserve for sales returns at end of the period $ 2,922,000 $ 2,966,000 | Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Fiscal Year Ended March 31, March 31, 2021 2020 Reserve for sales returns at beginning of the fiscal year $ 1,224,000 $ 896,000 Provision for estimated sales returns 3,881,000 5,771,000 Sales returns received (4,145,000 ) (5,443,000 ) Reserve for sales returns at end of the year $ 960,000 $ 1,224,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF INCOME TAX PROVISION (BENEFIT) | The income tax provision (benefit) for federal, foreign, and state income taxes in the consolidated statements of operations consisted of the following components for 2021 and 2020: SCHEDULE OF INCOME TAX PROVISION (BENEFIT) 2021 2020 (Restated) Income tax provision (benefit): Current: Federal $ 54,487 $ (114,459 ) State 3,825 - Total current Federal and State tax benefit $ 58,312 $ (114,459 ) Deferred: Federal $ 417,477 $ (576,004 ) State (18,920 ) 48,649 Total Deferred Federal and State 398,557 (527,355 ) Total income tax (benefit) provision $ 456,869 $ (641,814 ) |
SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX | The United States and foreign components of income (loss) before income taxes are as follows: SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX 2021 2020 United States $ 1,922,947 $ (3,765,272 ) Foreign 706,287 266,458 Net income before income tax benefit $ 2,629,234 $ (3,498,814 ) |
SCHEDULE OF DIFFERENCE BETWEEN ACTUAL TAX EXPENSES AND EXPECTED TAX EXPENSES | The actual tax provision differs from the “expected” tax for the years ended March 31, 2021 and 2020 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows: SCHEDULE OF DIFFERENCE BETWEEN ACTUAL TAX EXPENSES AND EXPECTED TAX EXPENSES 2021 2020 Expected tax provision (benefit) $ 551,982 $ (734,751 ) State income taxes, net of Federal income tax provision (benefit) 128,699 (175,245 ) Permanent differences (6,578 ) 9,977 Tax rate differential on foreign earnings (108,690 ) - Change in valuation allowance (65,193 ) 87,842 Effect of IRC §382 on NOL - 100,966 Tax rate differential on NOL carryback - 16,263 Correction of state rate - 83,803 Other (43,351 ) (30,669 ) Actual tax provision (benefit) $ 456,869 $ (641,814 ) |
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2021 2020 NOL Federal Carryforward $ 246,769 $ 312,430 State NOL Carryforward 194,388 157,967 General business credit - 14,196 Inventory differences 348,921 303,529 Stock option compensation expense 115,730 128,220 Allowance for doubtful accounts 35,877 143,748 Insurance contingency - 220,425 Reserve for estimated returns 111,887 112,537 Accrued vacation 13,186 42,928 Business interest deduction - 55,978 Total deferred tax assets, gross 1,066,758 1,491,958 Less: valuation allowance 22,649 87,842 Total deferred tax assets, net 1,044,109 1,404,116 Depreciable and amortizable assets (119,242 ) (82,512 ) Prepaid expenses (37,703 ) (35,883 ) Net deferred tax liabilities (156,945 ) (118,395 ) Net deferred tax asset $ 887,164 $ 1,285,721 |
RESERVES (Tables)
RESERVES (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Reserves | |
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS | Asset reserves and allowances for years ended March 31, 2021 and 2020 are presented in the following table: SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS Balance at Charged to Reduction to Credited to Balance at Beginning of Costs and Allowance for Costs and End of Description Year Expenses Write off Expenses Year Year ended March 31, 2021 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 337,461 $ 16,086 $ (227,184 ) $ 12,217 $ 138,580 Inventory reserve $ 434,000 $ 688,200 $ (485,861 ) $ - $ 636,339 Year ended March 31, 2020 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 51,096 $ 303,843 $ (15,303 ) $ (2,175 ) $ 337,461 Inventory reserve $ 254,000 $ 398,730 $ (218,730 ) $ - $ 434,000 |
LIQUIDITY AND RECENT EQUITY E_2
LIQUIDITY AND RECENT EQUITY EVENTS (Details Narrative) - USD ($) | May 05, 2020 | Aug. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Aug. 05, 2021 |
Short-term Debt [Line Items] | |||||||||
Net loss | $ 1,425,895 | $ 1,167,295 | $ 1,999,655 | $ 3,368,365 | $ 2,172,365 | $ (2,857,000) | |||
Cash used in operating activities | 3,113,334 | $ (165,496) | $ (171,017) | $ (444,765) | |||||
Debt forgiveness | 448,000 | ||||||||
Proceeds from equity | $ 9,832,000 | ||||||||
Payments on redeemed shares | $ 7,162,000 | ||||||||
Private Placement [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Issuance of warrant shares | 16,833,333 | ||||||||
Exercise price of warrants | $ 0.35 | ||||||||
Pre-Funded Warrants [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Issuance of warrant shares | 16,833,333 | ||||||||
Exercise price of warrants | $ 0.01 | ||||||||
Issuance of warrant shares | 16,833,333 | ||||||||
Redemption Agreement [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Shares redeemed | 19,623,155 | ||||||||
Proceeds from equity | $ 7,162,000 | ||||||||
Purchase Agreement [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Common stock, shares, issued | 16,500,001 | ||||||||
Issuance of warrant shares | 16,500,000 | ||||||||
Exercise price of warrants | $ 0.35 | ||||||||
Paycheck Protection Program [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt forgiveness | $ 448,000 | ||||||||
Paycheck Protection Program [Member] | Crestmark Bank [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Proceeds from loan | $ 444,000 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Product Information [Line Items] | ||||||
Total Net Sales | $ 21,244,000 | $ 16,973,000 | $ 44,679,000 | $ 42,310,000 | $ 45,800,000 | $ 38,500,000 |
Classic Karaoke Machines [Member] | ||||||
Product Information [Line Items] | ||||||
Total Net Sales | 17,732,000 | 11,998,000 | 37,216,000 | 32,337,000 | 34,700,000 | 32,600,000 |
License [Member] | ||||||
Product Information [Line Items] | ||||||
Total Net Sales | 645,000 | 1,644,000 | 1,510,000 | 4,332,000 | 4,700,000 | 2,000,000 |
SMC Kids Toys [Member] | ||||||
Product Information [Line Items] | ||||||
Total Net Sales | 1,051,000 | 662,000 | 2,145,000 | 1,229,000 | 1,300,000 | 900,000 |
Microphones And Accessories [Member] | ||||||
Product Information [Line Items] | ||||||
Total Net Sales | 1,657,000 | 2,481,000 | 3,424,000 | 4,122,000 | 4,700,000 | 2,600,000 |
Music Subscription [Member] | ||||||
Product Information [Line Items] | ||||||
Total Net Sales | $ 159,000 | $ 188,000 | $ 384,000 | $ 290,000 | $ 400,000 | $ 400,000 |
SCHEDULE OF ANTIDILUTIVE SECURI
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE (Details) - shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Accounting Policies [Abstract] | ||||||
Basic weighted average common shares outstanding | 53,410,249 | 38,885,185 | 46,787,545 | 38,667,221 | 38,760,092 | 38,532,889 |
Effect of dilutive stock options | 225,119 | 271,296 | 322,309 | 373,853 | 368,558 | |
Diluted weighted average of common shares outstanding | 53,635,368 | 39,156,481 | 47,109,854 | 39,041,074 | 39,128,650 | 38,532,889 |
SUMMARY OF ACCOUNTING POLICIE_3
SUMMARY OF ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jul. 06, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Aug. 05, 2021 | Jun. 30, 2021 | Mar. 31, 2019 |
Foreign financial institutions actual deposits | $ 125,000 | $ 125,000 | $ 225,000 | $ 200,000 | ||||||
Future inventory returns | 1,978,000 | 1,978,000 | 528,000 | |||||||
Inventory reserves | 934,000 | 934,000 | 636,000 | |||||||
Deferred financing costs | $ 38,000 | |||||||||
Co-op promotion incentives | 796,000 | $ 858,000 | 1,805,000 | $ 2,032,000 | 2,000,000 | 2,900,000 | ||||
Reserve for sales returns | 2,922,000 | 2,966,000 | 2,922,000 | 2,966,000 | 960,000 | 1,224,000 | $ 896,000 | |||
Shipping and handling expenses | 369,000 | 512,000 | 654,000 | 900,000 | 1,200,000 | 1,200,000 | ||||
Stock option expense | 3,000 | 5,000 | 16,000 | 5,000 | 10,000 | 20,000 | ||||
Research and development costs | 11,000 | 33,000 | $ 61,000 | $ 48,000 | $ 100,000 | $ 100,000 | ||||
Effective income tax rate, percentage | 11.00% | 23.00% | 17.40% | 18.10% | ||||||
Deferred tax assets | 638,000 | $ 638,000 | $ 887,000 | |||||||
Income tax provision | $ 102,886 | $ 263,932 | $ 248,664 | $ 1,006,135 | $ 456,869 | $ (641,814) | ||||
Percentage of tax benefits recognized likelihood of being realized | greater than 50% | greater than 50% | ||||||||
Potentially dilutive securities | 225,000 | 271,000 | 322,000 | 374,000 | ||||||
Percentage of reserves for customers | 100.00% | |||||||||
Future inventory returns | $ 1,000,000 | 1,400,000 | ||||||||
Inventory reserves | $ 934,000 | $ 934,000 | 636,000 | 400,000 | ||||||
Reserve for sales returns | $ 2,922,457 | $ 2,922,457 | $ 960,000 | $ 1,224,000 | ||||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.65% | 0.18% | 2.08% | |||||||
Volatility rate | 168.00% | 146.70% | 194.50% | |||||||
Expected term | 3 years | 3 years | 3 years | 3 years | ||||||
Stock compensation expense | $ 12,500 | $ 12,500 | ||||||||
Options to purchase | 750,000 | 2,230,000 | ||||||||
Options And Warrants [Member] | ||||||||||
Potentially dilutive securities | 35,416,667 | 730,000 | 35,416,667 | 730,000 | ||||||
Pre-Funded Warrants [Member] | ||||||||||
Warrants to purchase | 16,833,333 |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Long-term Purchase Commitment [Line Items] | |||
Finished Goods | $ 8,427,000 | $ 5,348,000 | |
Inventory in Transit | 1,655,000 | 250,000 | |
Estimated Amount of Future Returns | 1,978,000 | 528,000 | |
Subtotal | 12,060,000 | 6,126,000 | |
Less: Inventory Reserve | 934,000 | 636,000 | $ 400,000 |
Total Inventories | $ 11,126,000 | 5,490,000 | |
Inventories [Member] | |||
Long-term Purchase Commitment [Line Items] | |||
Finished Goods | 5,400,000 | 6,600,000 | |
Inventory in Transit | 200,000 | 100,000 | |
Estimated Amount of Future Returns | 500,000 | 1,300,000 | |
Subtotal | 6,100,000 | 8,000,000 | |
Less: Inventory Reserve | 600,000 | 400,000 | |
Total Inventories | $ 5,500,000 | $ 7,600,000 |
SUMMARY OF PROPERTY AND EQUIPME
SUMMARY OF PROPERTY AND EQUIPMENT (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 2,694,000 | $ 2,620,000 | |
Less: Accumulated depreciation | 2,113,000 | 1,946,000 | |
Property and equipment, net | 581,000 | 674,000 | |
Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,600,000 | $ 2,400,000 | |
Less: Accumulated depreciation | 1,900,000 | 1,600,000 | |
Property and equipment, net | 700,000 | 800,000 | |
Computer and Office Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 440,000 | 445,000 | |
Computer and Office Equipment [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 400,000 | $ 400,000 | |
Computer and Office Equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 5 years | ||
Computer and Office Equipment [Member] | Minimum [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 5 years | 5 years | |
Computer and Office Equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 7 years | ||
Computer and Office Equipment [Member] | Maximum [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 7 years | 7 years | |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 7 years | ||
Property and equipment, gross | $ 98,000 | $ 98,000 | |
Furniture and Fixtures [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 7 years | 7 years | |
Property and equipment, gross | $ 100,000 | $ 100,000 | |
Warehouse Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 7 years | ||
Property and equipment, gross | $ 210,000 | $ 199,000 | |
Warehouse Equipment [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 7 years | 7 years | |
Property and equipment, gross | $ 200,000 | $ 200,000 | |
Molds and tooling [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 1,946,000 | 1,878,000 | |
Molds and tooling [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 1,900,000 | $ 1,700,000 | |
Molds and tooling [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 3 years | ||
Molds and tooling [Member] | Minimum [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 3 years | 3 years | |
Molds and tooling [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 5 years | ||
Molds and tooling [Member] | Maximum [Member] | Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Average useful life (in years) | 5 years | 5 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||||||
Depreciation expense | $ 55,007 | $ 65,465 | $ 190,087 | $ 204,353 | $ 298,357 | $ 269,107 |
Depreciation expense | $ 204,000 |
BANK FINANCING (Details Narrati
BANK FINANCING (Details Narrative) - USD ($) | Jun. 16, 2020 | Jun. 01, 2020 | May 05, 2020 | Jun. 18, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 02, 2020 |
Debt Instrument [Line Items] | |||||||||||
Amortization expense | $ 10,000 | $ 19,000 | $ 36,000 | $ 40,000 | |||||||
Debt forgiveness | 448,000 | ||||||||||
Amortization of deferred financing costs | 9,375 | 18,432 | 35,672 | 43,268 | $ 61,699 | $ 13,333 | |||||
Paycheck Protection Program [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt forgiveness | 448,000 | ||||||||||
Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal payments | 450,000 | 30,000 | |||||||||
Revolving Credit Facility [Member] | Amortized Over One Year [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Cost associated with Revolving credit facility deferred | $ 74,000 | ||||||||||
Revolving Credit Facility [Member] | Off Peak Season [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, maximum amount outstanding during period | 5,000,000 | ||||||||||
Revolving Credit Facility [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, maximum amount outstanding during period | 10,000,000 | ||||||||||
Crestmark Bank [Member] | Paycheck Protection Program [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from loan | $ 444,000 | ||||||||||
Proceeds from loan | 444,000 | ||||||||||
IHC Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest expenses | 34,000 | 41,000 | 120,000 | 103,000 | |||||||
Loan balance | 1,990,000 | 1,990,000 | 65,000 | ||||||||
Borrowings | 510,000 | 510,000 | |||||||||
Two-Year Loan and Security Agreement [Member] | Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, maximum borrowing amount | 10,000,000 | ||||||||||
Two-Year Loan and Security Agreement [Member] | IHC Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, maximum amount outstanding during period | 65,000 | 0 | |||||||||
Interest expenses | 1,000,000 | $ 100,000 | 0 | ||||||||
Credit facility expiry date | Jun. 15, 2022 | ||||||||||
Inventory financing | $ 2,500,000 | ||||||||||
Deferred cost | $ 38,000 | ||||||||||
Loan balance | 1,000,000 | ||||||||||
Two-Year Loan and Security Agreement [Member] | IHC Facility [Member] | Interest Rate Per Month [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, interest rate during period | 1.292% | ||||||||||
Two-Year Loan and Security Agreement [Member] | IHC Facility [Member] | Interest Rate Per Annually [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, interest rate during period | 15.51% | ||||||||||
Two-Year Loan and Security Agreement [Member] | IHC Facility [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Inventory financing | 2,500,000 | ||||||||||
Revolving Credit Facility [Member] | Crestmark Bank [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Average loan balance | $ 2,000,000 | ||||||||||
Interest expenses | 106,000 | 100,000 | 202,000 | 151,000 | $ 200,000 | 0 | |||||
Credit facility expiry date | Jun. 15, 2022 | Jun. 15, 2022 | |||||||||
Line of credit | 6,637,000 | 6,637,000 | |||||||||
Revolving Credit Facility [Member] | Crestmark Bank [Member] | Interest Rate Floor [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, interest rate during period | 8.75% | ||||||||||
Revolving Credit Facility [Member] | Crestmark Bank [Member] | Prime Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, interest rate during period | 5.50% | ||||||||||
Revolving Credit Facility [Member] | Crestmark Bank [Member] | Peak Selling Season Between January 1 and July 31 [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit facility, maximum amount outstanding during period | $ 5,000,000 | ||||||||||
Revolving Credit Facility [Member] | IHC Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility expiry date | Jun. 15, 2022 | ||||||||||
Revolving Credit Facility [Member] | PNC Bank [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest expenses | $ 0 | 100,000 | |||||||||
Financing Agreement [Member] | Dimension Funding LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest expenses | 5,000 | 6,000 | 16,000 | 20,000 | 26,000 | 23,000 | |||||
Debt instrument, term | 60 months | ||||||||||
Debt face amount | $ 365,000 | ||||||||||
Debt monthly payments | 7,459 | ||||||||||
Notes payable | $ 365,000 | $ 231,000 | 231,000 | 281,000 | |||||||
Financing Agreement [Member] | Three Installment Notes [Member] | Dimension Funding LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt principal payments | $ 365,000 | ||||||||||
Notes payable | 400,000 | ||||||||||
Financing Agreement [Member] | Installment Note One [Member] | Dimension Funding LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, interest rate | 7.58% | 7.58% | 7.58% | ||||||||
Financing Agreement [Member] | Installment Note Two [Member] | Dimension Funding LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, interest rate | 8.55% | 8.55% | 8.55% | ||||||||
Financing Agreement [Member] | Installment Note Three [Member] | Dimension Funding LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, interest rate | 9.25% | 9.25% | 9.25% | ||||||||
Financing Agreement [Member] | Payments of notes payable with principal and interest [Member] | Dimension Funding LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Repayments of notes payable | $ 7,459 | ||||||||||
Subordination Agreement [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Notes payable | $ 353,000 | $ 353,000 | 503,000 | 800,000 | |||||||
Subordination Agreement [Member] | Starlight Marketing Development, Ltd [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Notes payable | 803,000 | ||||||||||
Notes payable to related parties | 803,000 | 803,000 | |||||||||
Conversion of debt | $ 803,000 | ||||||||||
Interest expense, related party | $ 3,000 | $ 12,000 | $ 17,000 | $ 36,000 | 47,000 | 74,000 | |||||
Subordination Agreement [Member] | Subordinated Notes Payable [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Conversion of debt percentage | 6.00% | ||||||||||
Subordination Agreement [Member] | Subordinated Notes Payable [Member] | Starlight Marketing Development, Ltd [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, interest rate | 6.00% | ||||||||||
Notes payable | $ 803,000 | ||||||||||
Intercreditor Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Amortization of deferred financing costs | 62,000 | 0 | |||||||||
Paycheck Protection Program [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest expenses | 4,000 | 0 | |||||||||
Notes payable | $ 400,000 | $ 0 | |||||||||
Proceeds from loan | $ 400,000 |
SCHEDULE OF SUPPLEMENTAL INFORM
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details) - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease - right-of-use assets | $ 1,488,258 | $ 2,074,115 | $ 573,874 |
Finance leases as a component of property and equipment, net of accumulated depreciation of $18,136 | 18,278 | 25,390 | |
Current portion of operating leases | 860,528 | 794,938 | 321,389 |
Current portion of finance leases | 7,421 | 2,546 | 14,953 |
Operating lease liabilities, net of current portion | 685,304 | 1,334,010 | 322,263 |
Finance leases, net of current portion | $ 12,592 | $ 2,550 |
SCHEDULE OF SUPPLEMENTAL INFO_2
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details) (Parenthetical) - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Property, plant and equipment and finance lease right-of-use asset | $ 1,735 | $ 18,136 |
SCHEDULE OF LEASE TERM AND DISC
SCHEDULE OF LEASE TERM AND DISCOUNT RATE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2021 | Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease expense as a component of general and administrative expenses | $ 140,016 | $ 604,347 | $ 790,715 |
Depreciation of leased assets as a component of depreciation | 1,041 | 1,735 | 6,218 |
Interest on lease liabilities as a component of interest expense | $ 692 | $ 1,068 | $ 370 |
SCHEDULE OF SUPPLEMENTAL CASH F
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flow paid for operating leases | $ 693,657 | $ 805,662 |
Financing cash flow paid for finance leases | $ 6,184 | $ 14,957 |
Operating lease term | 21 months 3 days | |
Finance lease term | 31 months | |
Operating lease discount rate | 6.25% | |
Finance lease discount rate | 9.86% | |
Weighted average remaining lease term (months), Operating leases | 30 months | |
Weighted average remaining lease term (months), Finance leases | 2 months | |
Weighted average discount rate, Operating leases | 6.25% | |
Weighted average discount rate, Finance leases | 3.68% |
SCHEDULE OF FUTURE MINIMUM RENT
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES (Details) - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases, 2022 | $ 937,590 | $ 682,373 |
Finance Leases, 2022 | 9,065 | 2,558 |
Operating Leases, 2023 | 674,488 | 931,948 |
Finance Leases, 2023 | 9,065 | |
Operating Leases, 2024 | 30,739 | 674,488 |
Finance Leases, 2024 | 4,533 | |
Operating Leases, 2025 | 30,739 | |
Finance Leases, 2025 | ||
Operating Leases, Total Minimum Future Payments | 1,642,817 | 2,319,548 |
Finance Leases, Total Minimum Future Payments | 22,663 | 2,558 |
Operating Leases, Less: Imputed Interest | 96,985 | 190,600 |
Finance Leases, Less: Imputed Interest | 2,650 | 12 |
Operating Leases, Present Value of Lease Liabilities | 1,545,832 | 2,128,948 |
Finance Leases, Present Value of Lease Liabilities | $ 20,013 | $ 2,546 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Jul. 02, 2021USD ($) | May 01, 2021ft² | Jun. 15, 2020USD ($) | Jun. 15, 2020USD ($) | Jun. 04, 2018USD ($) | May 25, 2018USD ($) | May 01, 2018USD ($)ft² | Oct. 01, 2017ft² | Jun. 01, 2013ft² | May 30, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||
Rent expense | $ 9,400 | |||||||||||||||
Finance lease interest expense | $ 20,013 | $ 20,013 | $ 2,546 | |||||||||||||
Lease term | 31 months | 31 months | ||||||||||||||
Effective nterest rate | 3.68% | |||||||||||||||
Interest expense | $ 692 | $ 1,068 | $ 370 | |||||||||||||
Monthly lease payments | 6,184 | 14,957 | ||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||
Rent expense | $ 1,700 | |||||||||||||||
Lease extend term | we executed a one-year lease extension which will expire on April 30, 2022. | |||||||||||||||
Operating Lease Agreement [Member] | ||||||||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||
Operating lease space for office | ft² | 424 | 424 | 6,500 | 86,000 | ||||||||||||
Lease expiration date | Apr. 30, 2022 | Aug. 31, 2023 | Apr. 30, 2021 | Mar. 31, 2024 | ||||||||||||
Rent expense | $ 65,300 | $ 65,300 | $ 1,600 | $ 1,700 | 9,700 | |||||||||||
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. | |||||||||||||||
Long Term Capital Leasing Arrangement [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% | |||||||||||||||
Remaining capital lease arrangements | 20,000 | 20,000 | 0 | |||||||||||||
Interest expense | $ 696 | $ 1,072 | $ 696 | $ 1,072 | ||||||||||||
Long-Term Capital Leasing Arrangements [Member] | Wells Fargo Equipment Finance [Member] | ||||||||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||
Remaining capital lease arrangements | $ 3,000 | $ 18,000 | ||||||||||||||
Financing lease costs | $ 44,000 | $ 44,000 | ||||||||||||||
Monthly lease payments | $ 1,279 | $ 1,279 | ||||||||||||||
Financing lease term | 36 months | 36 months | ||||||||||||||
Effective interest rate | 4.50% | 4.50% |
SUMMARY OF STOCK OPTION ACTIVIT
SUMMARY OF STOCK OPTION ACTIVITY (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | |||||||||
Number of Options, Granted | 100,000 | 100,000 | |||||||
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 | [1] | 2,230,000 | [1] | 2,230,000 | [1] | 2,210,000 | ||
Weighted Average Exercise Price, Balance at Beginning of Year | $ 0.32 | [1] | $ 0.26 | [1] | $ 0.26 | [1] | $ 0.25 | ||
Number of Options, Granted | 110,000 | 100,000 | 100,000 | ||||||
Weighted Average Exercise Price, Granted | $ 0.25 | $ 0.29 | $ 0.38 | ||||||
Number of Options, Exercised | (80,000) | (440,000) | (60,000) | ||||||
Weighted Average Exercise Price, Exercised | $ 0.18 | $ 0.06 | $ 0.17 | ||||||
Number of Options, Balance at End of Year | 1,710,000 | 1,680,000 | [1] | 2,230,000 | [1] | ||||
Weighted Average Exercise Price, Balance at End of Year | $ 0.33 | $ 0.32 | [1] | $ 0.26 | [1] | ||||
Number of Options, exercisable at end of period | 1,600,000 | 1,580,000 | 2,130,000 | ||||||
Weighted Average Exercise Price, Options exercisable at end of period | $ 0.33 | $ 0.33 | $ 0.25 | ||||||
Number of Options, Forfeited | (210,000) | (20,000) | |||||||
Weighted Average Exercise Price, Forfeited | $ 0.17 | $ 0.03 | |||||||
Number of Options, Exercisable at End of Year | 1,600,000 | 1,580,000 | 2,130,000 | ||||||
Weighted Average Exercise Price, Options Exercisable at End of Year | $ 0.33 | $ 0.33 | $ 0.25 | ||||||
[1] | Total number of options outstanding as of March 31, 2021 includes 600,000 1,040,000 |
SCHEDULE OF EMPLOYEE STOCK OPTI
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING (Details) - $ / shares | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 31, 2021 | |||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Stock Options Outstanding Exercise Price, Lower Range Limit | [1] | |||
Stock Options Number Outstanding | 1,710,000 | 1,680,000 | [2] | |
Stock Option Number Exercisable | 1,600,000 | 1,580,000 | [2] | |
Exercise Price Range One [Member] | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Stock Options Outstanding Exercise Price, Lower Range Limit | $ 0.12 | $ 0.12 | ||
Stock Options Outstanding Exercise Price, Upper Range Limit | $ 0.38 | $ 0.38 | ||
Stock Options Number Outstanding | 1,160,000 | 1,130,000 | ||
Stock Option Outstanding Weighted Average Remaining Contractual Life | 2 years 10 months 24 days | 4 years | ||
Stock Option Outstanding Weighted Average Exercise Price | $ 0.24 | $ 0.24 | ||
Stock Option Number Exercisable | 1,050,000 | 1,030,000 | ||
Stock Option Exercisable Weighted Average Exercise Price | $ 0.24 | $ 0.23 | ||
Exercise Price Range Two [Member] | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Stock Options Outstanding Exercise Price, Lower Range Limit | 0.47 | 0.47 | ||
Stock Options Outstanding Exercise Price, Upper Range Limit | $ 0.55 | $ 0.55 | ||
Stock Options Number Outstanding | 550,000 | 550,000 | ||
Stock Option Outstanding Weighted Average Remaining Contractual Life | 5 years 2 months 12 days | 6 years 4 months 24 days | ||
Stock Option Outstanding Weighted Average Exercise Price | $ 0.50 | $ 0.50 | ||
Stock Option Number Exercisable | 550,000 | 550,000 | ||
Stock Option Exercisable Weighted Average Exercise Price | $ 0.50 | $ 0.50 | ||
[1] | Total number of options outstanding as of December 31, 2021 includes 650,000 1,090,000 | |||
[2] | Total number of options outstanding as of March 31, 2021 includes 600,000 1,040,000 |
SCHEDULE OF EMPLOYEE STOCK OP_2
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING (Details) (Parenthetical) - shares | Dec. 31, 2021 | Mar. 31, 2021 |
Three Current and Four Former Directors [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options outstanding | 650,000 | |
Employees [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options outstanding | 1,090,000 | 1,040,000 |
Five Current and Two Former Directors [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options outstanding | 600,000 |
SCHEDULE OF COMMON STOCK WARRAN
SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING (Details) | 9 Months Ended |
Dec. 31, 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) | 9 Months Ended | |
Dec. 31, 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 | |
Expiration Date | [1] | |
[1] | Pre-funded warrants expire on the dates they are exercised. |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | Jul. 06, 2021 | Nov. 06, 2020 | Oct. 30, 2020 | Aug. 30, 2019 | Jun. 12, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of stock option issued during period | 100,000 | 100,000 | |||||||||
Stock option of exercise price | $ 0.29 | $ 0.29 | |||||||||
Stock option, expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ||||||
Stock option, risk free interest rate | 2.65% | 0.18% | 2.08% | ||||||||
Stock option, volatility | 168.00% | 146.70% | 194.50% | ||||||||
Stock option, expected term | 3 years | 3 years | 3 years | 3 years | |||||||
Unrecognised expense | $ 17,000 | $ 17,000 | |||||||||
Vested options | 40,000 | ||||||||||
Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock option, risk free interest rate | 0.43% | 0.18% | |||||||||
Stock option, volatility | 149.50% | ||||||||||
Maximum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock option, risk free interest rate | 0.96% | 146.70% | |||||||||
Stock option, volatility | 157.00% | ||||||||||
Director [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of stock option issued during period | 40,000 | 20,000 | |||||||||
Stock option of exercise price | $ 0.29 | $ 0.27 | |||||||||
Vice President [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of stock option issued during period | 50,000 | 50,000 | |||||||||
Stock option of exercise price | $ 0.22 | $ 0.22 | |||||||||
Three Executive Officers [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares of common stock | 440,000 | ||||||||||
Shares exercise price per share | $ 0.06 | ||||||||||
Board of Directors [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares of common stock | 43,105 | 32,890 | |||||||||
Shares exercise price per share | $ 0.29 | $ 0.38 | |||||||||
Former Director [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares of common stock | 60,000 | ||||||||||
Shares exercise price per share | $ 0.17 |
AUGUST 2021 STOCK REDEMPTION (D
AUGUST 2021 STOCK REDEMPTION (Details Narrative) - Redemption Agreement [Member] - USD ($) | Aug. 10, 2021 | Aug. 05, 2021 | Aug. 31, 2021 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Shares redeemed | 19,623,155 | ||
Koncepts and Treasure Green [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Shares redeemed | 19,623,155 | ||
Conversion of stock, amount issued | $ 7,162,000 | $ 7,162,000 |
AUGUST 2021 PRIVATE PLACEMENT (
AUGUST 2021 PRIVATE PLACEMENT (Details Narrative) - USD ($) | Aug. 10, 2021 | Aug. 05, 2021 | Jul. 06, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 |
Proceeds from Warrant Exercises | $ 9,832,000 | ||||||
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) | ||||||
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% | 146.70% | 194.50% | ||||
Expected dividend rate | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ||
Stock option, risk free interest rate | 2.65% | 0.18% | 2.08% | ||||
Stock issued for restricted shares, value | $ 189,000 | ||||||
Cash | 100,000 | ||||||
Offering costs | $ 1,379,000 | ||||||
AGP Warrants [Member] | |||||||
Proceeds from issuance of private placement | 1,333,333 | ||||||
Private Placement [Member] | |||||||
Proceeds from issuance of private placement | 16,833,333 | ||||||
Exercise price of warrants | $ 0.35 | ||||||
Payments for repurchase of private placement | $ 630,000 | ||||||
Legal fees | $ 390,000 | ||||||
Stock issued for restricted shares | 571,428 | ||||||
Pre-Funded Warrants [Member] | |||||||
Proceeds from issuance of private placement | 16,833,333 | ||||||
Exercise price of warrants | $ 0.01 | ||||||
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right | 16,833,333 | ||||||
Purchase Agreement [Member] | |||||||
Common stock, shares, issued | 16,500,001 | ||||||
Proceeds from issuance of private placement | 16,500,000 | ||||||
Exercise price of warrants | $ 0.35 | ||||||
Redemption Agreement [Member] | Koncepts and Treasure Green [Member] | |||||||
Conversion of Stock, Amount Issued | $ 7,162,000 | $ 7,162,000 |
SCHEDULE OF REVENUE BY GEOGRAPH
SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net Sales | $ 21,244,000 | $ 16,973,000 | $ 44,679,000 | $ 42,310,000 | $ 45,800,000 | $ 38,500,000 |
North America [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net Sales | 20,997,000 | 16,623,000 | 43,691,000 | 41,014,000 | 44,200,000 | 36,000,000 |
Europe [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net Sales | 219,000 | 31,000 | 375,000 | 924,000 | 1,200,000 | 1,700,000 |
AUSTRALIA | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net Sales | $ 28,000 | $ 319,000 | $ 613,000 | $ 372,000 | 400,000 | 500,000 |
Asia [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net Sales | $ 300,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jul. 30, 2020 | |
Related Party Transaction [Line Items] | |||||||
Due to related parties | $ 63,000 | $ 63,000 | $ 63,000 | ||||
Revenues | 21,244,306 | $ 16,972,603 | 44,678,929 | $ 42,309,825 | 45,802,574 | $ 38,500,570 | |
Inventory | 11,126,298 | 11,126,298 | 5,490,255 | 7,601,277 | |||
Due from related party debt | 11,000 | 11,000 | |||||
Starlight Electronics CoLtd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Service expenses | 91,000 | 91,000 | 272,000 | 272,000 | |||
Payments to related party | 400,000 | 400,000 | |||||
Related Parties [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due to related parties | 100,000 | 500,000 | |||||
Winglight Pacific Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related parties | 0 | $ 900,000 | |||||
Music Subscription [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenues | 160,000 | $ 188,000 | 384,000 | $ 290,000 | |||
Purchase And Sales Agreement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Inventory | $ 685,000 | ||||||
Purchase and Sale Agreement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Inventory | $ 700,000 | ||||||
Revenue from related parties | $ 200,000 | ||||||
Stingray [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due to related parties | $ 159,000 | $ 159,000 |
SCHEDULE OF RESERVE FOR SALES R
SCHEDULE OF RESERVE FOR SALES RETURNS (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Reserve For Sales Returns | ||||
Reserve for sales returns at beginning of the year | $ 960,000 | $ 1,224,000 | $ 1,224,000 | $ 896,000 |
Provision for estimated sales returns | 4,020,000 | 4,187,000 | 3,881,000 | 5,771,000 |
Sales returns received | (2,058,000) | (2,445,000) | (4,145,000) | (5,443,000) |
Reserve for sales returns at end of the period | $ 2,922,000 | $ 2,966,000 | $ 960,000 | $ 1,224,000 |
REFUNDS DUE TO CUSTOMERS (Detai
REFUNDS DUE TO CUSTOMERS (Details Narrative) - USD ($) | Dec. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Refund due to customer | $ 90,000 | $ 145,000 | |
Refund due to customer | $ 90,075 | $ 145,408 | $ 806,475 |
One Major Customer [Member] | |||
Refund due to customer | 1,700,000 | ||
Deducted on payment remittances | 1,200,000 | ||
Two Major Customer [Member] | |||
Refund due to customer | $ 300,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Retirement Benefits [Abstract] | ||||||
Defined contribution plan, administrative expenses | $ 20,000 | $ 20,000 | $ 55,000 | $ 54,000 | $ 74,000 | $ 63,000 |
CONCENTRATIONS OF CREDIT AND _2
CONCENTRATIONS OF CREDIT AND SALES RISK (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Aug. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2018 | |
Concentration Risk [Line Items] | ||||||||
Damaged goods | $ 236,000 | $ 2,300,000 | $ 1,700,000 | |||||
Total net sales | $ 21,244,306 | $ 16,972,603 | $ 44,678,929 | $ 42,309,825 | $ 45,802,574 | $ 38,500,570 | ||
Republic of China [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Debt description | the U.S. government-imposed tariffs of up to 25% on certain goods imported from China. All of our products are manufactured and imported from China however, only our microphones are currently subject to a 7.5% tariff currently in place. | |||||||
koncepts International Limited [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Equity method investment, ownership percentage | 49.00% | |||||||
Treasure Green Holdings Ltd [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Equity method investment, ownership percentage | 2.00% | |||||||
Koncepts International Limited and Treasure Green [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Equity method investment, ownership percentage | 51.00% | |||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Customers [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 75.00% | |||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Customers [Member] | North America [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 70.00% | 82.00% | ||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Customers [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 70.00% | |||||||
Revenue Benchmark [Member] | Macau Subsidiary [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Total net sales | $ 4,100,000 | $ 5,100,000 | ||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customers [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 69.00% | 64.00% | ||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 25.00% | 22.00% | 37.00% | 34.00% | 36.00% | 41.00% | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 24.00% | 22.00% | 19.00% | 19.00% | 20.00% | 13.00% | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 17.00% | 19.00% | 16.00% | 13.00% | 13.00% | 10.00% | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 17.00% | 12.00% | 11.00% | 13.00% | 12.00% | |||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Five [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 10.00% | 12.00% | ||||||
Purchases [Member] | Customer Concentration Risk [Member] | Republic of China [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration of sales risk, percentage | 100.00% | 100.00% |
SCHEDULE OF INCOME TAX PROVISIO
SCHEDULE OF INCOME TAX PROVISION (BENEFIT) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||||
Federal | $ 54,487 | $ (114,459) | ||||
State | 3,825 | |||||
Total current Federal and State tax benefit | 58,312 | (114,459) | ||||
Federal | 417,477 | (576,004) | ||||
State | (18,920) | 48,649 | ||||
Total Deferred Federal and State | $ 248,773 | $ 872,386 | 398,557 | (527,355) | ||
Total income tax (benefit) provision | $ 102,886 | $ 263,932 | $ 248,664 | $ 1,006,135 | $ 456,869 | $ (641,814) |
SCHEDULE OF INCOME (LOSS) BEFOR
SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||||
United States | $ 1,922,947 | $ (3,765,272) | ||||
Foreign | 706,287 | 266,458 | ||||
Income (Loss) Before Income Tax (Provision) Benefit | $ 1,528,781 | $ 1,431,227 | $ 2,248,319 | $ 4,374,500 | $ 2,629,234 | $ (3,498,814) |
SCHEDULE OF DIFFERENCE BETWEEN
SCHEDULE OF DIFFERENCE BETWEEN ACTUAL TAX EXPENSES AND EXPECTED TAX EXPENSES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||||
Expected tax provision (benefit) | $ 551,982 | $ (734,751) | ||||
State income taxes, net of Federal income tax provision (benefit) | 128,699 | (175,245) | ||||
Permanent differences | (6,578) | 9,977 | ||||
Tax rate differential on foreign earnings | (108,690) | |||||
Change in valuation allowance | (65,193) | 87,842 | ||||
Effect of IRC §382 on NOL | 100,966 | |||||
Tax rate differential on NOL carryback | 16,263 | |||||
Correction of state rate | 83,803 | |||||
Other | (43,351) | (30,669) | ||||
Total income tax (benefit) provision | $ 102,886 | $ 263,932 | $ 248,664 | $ 1,006,135 | $ 456,869 | $ (641,814) |
SCHEDULE OF DEFERRED TAX ASSETS
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
NOL Federal Carryforward | $ 246,769 | $ 312,430 |
State NOL Carryforward | 194,388 | 157,967 |
General business credit | 14,196 | |
Inventory differences | 348,921 | 303,529 |
Stock option compensation expense | 115,730 | 128,220 |
Allowance for doubtful accounts | 35,877 | 143,748 |
Insurance contingency | 220,425 | |
Reserve for estimated returns | 111,887 | 112,537 |
Accrued vacation | 13,186 | 42,928 |
Business interest deduction | 55,978 | |
Total deferred tax assets, gross | 1,066,758 | 1,491,958 |
Less: valuation allowance | 22,649 | 87,842 |
Total deferred tax assets, net | 1,044,109 | 1,404,116 |
Depreciable and amortizable assets | 119,242 | 82,512 |
Prepaid expenses | (37,703) | (35,883) |
Net deferred tax liabilities | (156,945) | (118,395) |
Net deferred tax asset | $ 887,164 | $ 1,285,721 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||||||
Net deferred tax assets | $ 887,164 | $ 1,285,721 | ||||
Income tax rate | 11.00% | 23.00% | 17.40% | 18.10% | ||
Income tax provision | $ 102,886 | $ 263,932 | $ 248,664 | $ 1,006,135 | $ 456,869 | $ (641,814) |
Income tax valuation reserve | 23,000 | 88,000 | ||||
Income tax provision | $ (102,886) | $ (263,932) | $ (248,664) | $ (1,006,135) | (456,869) | 641,814 |
Income tax receivable | 100,000 | |||||
Valuation allowance of deferred tax assets | 22,649 | $ 87,842 | ||||
Federal Tax [Member] | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Operating loss carryforwards | $ 1,200,000 | |||||
Operating loss carry forwards expiration description | begin to expire in the year 2025. | |||||
Operating loss available to use | $ 150,000 | |||||
Statel Tax [Member] | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Operating loss carryforwards | $ 3,600,000 | |||||
Operating loss carry forwards expiration description | begin to expire beginning in 2024. |
DAMAGED GOODS INCIDENT (Details
DAMAGED GOODS INCIDENT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | |
Environmental Remediation Obligations [Abstract] | |||
Damaged goods | $ 236,000 | $ 2,300,000 | $ 1,700,000 |
Reduction of net sales | 1,600,000 | 1,600,000 | |
Freight charges | 100,000 | 100,000 | |
Additional related expenses | 600,000 | 300,000 | |
Refund due to customer | 1,100,000 | 500,000 | |
Payment of chargebacks by customer | 1,700,000 | ||
Payment remittances | 1,200,000 | ||
Insurance claim receivable | $ 1,268,463 | ||
Gain on Settlement of accounts payable | $ 400,000 |
SCHEDULE OF VALUATION AND QUALI
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
SEC Schedule, 12-09, Allowance, Credit Loss [Member] | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at Beginning of Year | $ 337,461 | $ 51,096 |
Charged to Costs and Expenses | 16,086 | 303,843 |
Reduction to Allowance for Write off | (227,184) | (15,303) |
Credited to Costs and Expenses | 12,217 | (2,175) |
Balance at End of Year | 138,580 | 337,461 |
SEC Schedule, 12-09, Reserve, Inventory [Member] | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at Beginning of Year | 434,000 | 254,000 |
Charged to Costs and Expenses | 688,200 | 398,730 |
Reduction to Allowance for Write off | (485,861) | (218,730) |
Credited to Costs and Expenses | ||
Balance at End of Year | $ 636,339 | $ 434,000 |