| REVENUE | NOTE
5 - REVENUE The
Company disaggregates revenues by product line as most of its revenue is generated by the sales of karaoke hardware and the Company has
no other material business segments. Revenue
is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended
September 30, 2023 and 2022 consisted of the following: SCHEDULE
OF DISAGGREGATED REVENUE
Three Months Ended Six Months Ended
Product Line September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Classic Karaoke Machines $ 7,259,000 $ 9,132,000 $ 8,461,000 $ 14,343,000
Licensed Products 36,000 4,000 43,000 48,000
SMC Kids Toys 297,000 622,000 327,000 1,557,000
Microphones and Accessories 962,000 2,558,000 1,885,000 5,110,000
Streaming Karaoke Machines * 7,377,000 4,798,000 7,840,000 7,748,000
Total Net Sales $ 15,931,000 $ 17,114,000 $ 18,556,000 $ 28,806,000
* Streaming Karaoke
Machines -The Streaming Karaoke Machines product line is defined as a karaoke hardware unit that contains built-in technology that gives
the user the ability to stream karaoke content directly via WiFi to the karaoke machine without requiring any third-party devices. THE
SINGING MACHINE COMPANY, INC. NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September
30, 2023 and 2022 (Unaudited) Sales
by geographic region for the periods presented are as follows: SCHEDULE
OF REVENUE BY GEOGRAPHICAL REGION
September 30, September 30, September 30, September 30,
FOR THE THREE MONTHS FOR THE SIX MONTHS
September 30, September 30, September 30, September 30,
Australia $ 263,000 $ 670,000 $ 263,000 $ 670,000
Europe 290,000 306,000 290,000 306,000
North America 15,378,000 16,138,000 18,003,000 27,830,000
Total Net Sales $ 15,931,000 $ 17,114,000 $ 18,556,000 $ 28,806,000 The
Company selectively participates in a retailer’s co-op promotion incentives by providing marketing fund allowances to its customers.
As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of
the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded
as a reduction to net sales. For the three months ended September 30, 2023 and 2022, co-op promotion incentives were approximately $ 1,637,000
724,000 1,728,000 1,020,000 The
Company estimates variable consideration under its return allowance programs for goods returned from the customer whereby a revenue return
reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve
for sales returns as of September 30, 2023 and March 31, 2023 was approximately $ 2,289,000
and $ 900,000 ,
respectively. In conjunction with the recording of the revenue sales return reserve, the Company estimates the cost of products that
are expected to be returned under its return allowance program whereby the estimated cost of product returns is recorded as an asset
and is included in inventory on the condensed consolidated balance sheets. The Company’s estimated cost of returns as of September
30, 2023 and March 31, 2023 was approximately $ 840,000 and $ 555,000 ,
respectively. A
return program for defective goods is negotiated with each of the Company’s wholesale customers on a year-to-year basis. Customers
are allowed to return defective goods within a specified period of time after shipment (between six and nine 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. |
