Cover
Cover - shares | 6 Months Ended | |
Sep. 30, 2022 | Nov. 11, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --03-31 | |
Entity File Number | 001-41405 | |
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 | |
Entity Address, Address Line Two | 5th Way | |
Entity Address, Address Line Three | 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 | |
Title of 12(b) Security | Common Stock, Par Value $0.01 | |
Trading Symbol | MICS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 3,108,814 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Mar. 31, 2022 |
Current Assets | ||
Cash | $ 2,978,683 | $ 2,290,483 |
Accounts receivable, net of allowances of $277,953 and $122,550, respectively | 10,640,685 | 2,785,038 |
Due from Crestmark Bank | 1,076,988 | 100,822 |
Accounts receivable related party - Stingray Group, Inc. | 81,665 | 152,212 |
Inventories, net | 16,022,436 | 14,161,636 |
Prepaid expenses and other current assets | 158,238 | 344,409 |
Deferred financing costs | 7,813 | |
Total Current Assets | 30,958,695 | 19,842,413 |
Property and equipment, net | 532,505 | 565,094 |
Deferred tax assets | 812,478 | 892,559 |
Operating Leases - right of use assets | 862,279 | 1,279,347 |
Other non-current assets | 193,841 | 86,441 |
Total Assets | 33,359,798 | 22,665,854 |
Current Liabilities | ||
Accounts payable | 10,133,743 | 5,391,265 |
Accrued expenses | 2,544,287 | 1,732,355 |
Revolving line of credit - Iron Horse Credit | 2,500,000 | 2,500,000 |
Refunds due to customers | 93,925 | 97,968 |
Reserve for sales returns | 1,690,606 | 990,000 |
Current portion of finance leases | 7,988 | 7,605 |
Current portion of installment notes | 77,479 | 74,300 |
Current portion of operating lease liabilities | 848,723 | 876,259 |
Subordinated note payable - Starlight Marketing Development, Ltd. | 352,659 | 352,659 |
Total Current Liabilities | 18,249,410 | 12,022,411 |
Finance leases, net of current portion | 6,528 | 10,620 |
Installment notes, net of current portion | 99,098 | 138,649 |
Operating lease liabilities, net of current portion | 60,374 | 457,750 |
Total Liabilities | 18,415,410 | 12,629,430 |
Commitments and Contingencies | ||
Shareholders’ Equity | ||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding | ||
Common stock $0.01 par value;100,000,000 shares authorized; 3,108,814 and 1,221,209 shares issued and outstanding, respectively | 31,088 | 12,212 |
Additional paid-in capital | 29,511,318 | 24,902,694 |
Accumulated deficit | (14,598,018) | (14,878,482) |
Total Shareholders’ Equity | 14,944,388 | 10,036,424 |
Total Liabilities and Shareholders’ Equity | $ 33,359,798 | $ 22,665,854 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2022 | Mar. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable, net | $ 277,953 | $ 122,550 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 3,108,814 | 1,221,209 |
Common stock, shares outstanding | 3,108,814 | 1,221,209 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Net Sales | $ 17,113,636 | $ 17,368,973 | $ 28,805,690 | $ 23,434,623 |
Cost of Goods Sold | 13,149,667 | 14,041,669 | 21,661,191 | 18,529,449 |
Gross Profit | 3,963,969 | 3,327,304 | 7,144,499 | 4,905,174 |
Operating Expenses | ||||
Selling expenses | 899,590 | 733,485 | 1,504,787 | 1,311,467 |
General and administrative expenses | 2,417,405 | 1,776,997 | 4,787,829 | 3,198,349 |
Depreciation | 62,323 | 66,809 | 120,390 | 135,080 |
Total Operating Expenses | 3,379,318 | 2,577,291 | 6,413,006 | 4,644,896 |
Income from Operations | 584,651 | 750,013 | 731,493 | 260,278 |
Other (Expenses) Income | ||||
Gain - related party | 11,236 | |||
Gain from Payroll Protection Plan loan forgiveness | 448,242 | |||
Gain from settlement of accounts payable | 236,472 | 236,472 | ||
Interest expense | (185,827) | (110,864) | (345,940) | (210,393) |
Finance costs | (9,375) | (7,813) | (26,297) | |
Total Other (Expenses) Income, net | (185,827) | 116,233 | (353,753) | 459,260 |
Income Before Income Tax Provision | 398,824 | 866,246 | 377,740 | 719,538 |
Income Tax Provision | (102,357) | (173,873) | (97,276) | (145,778) |
Net Income | $ 296,467 | $ 692,373 | $ 280,464 | $ 573,760 |
Net Income per Common Share | ||||
Basic | $ 0.10 | $ 0.43 | $ 0.11 | $ 0.40 |
Diluted | $ 0.08 | $ 0.43 | $ 0.09 | $ 0.39 |
Equivalent Shares: | ||||
Basic | 3,071,131 | 1,593,929 | 2,484,660 | 1,448,603 |
Diluted | 3,610,188 | 1,605,134 | 2,961,631 | 1,460,967 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net Income | $ 280,464 | $ 573,760 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation | 120,390 | 135,080 |
Amortization of deferred financing costs | 7,813 | 26,297 |
Change in inventory reserve | (93,447) | 53,890 |
Change in allowance for bad debts | 155,403 | 118,321 |
Loss from disposal of property and equipment | 4,394 | |
Stock based compensation | 231,213 | 34,727 |
Change in net deferred tax assets | 80,081 | 145,778 |
Paycheck Protection Plan loan forgiveness | (448,242) | |
Gain - related party | (11,236) | |
Gain from extinguishment of accounts payable | (236,472) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (8,011,050) | (9,409,973) |
Due from Crestmark Bank | (976,166) | 4,557,120 |
Accounts receivable - related parties | 70,547 | (70,880) |
Inventories | (1,767,353) | (13,721,821) |
Prepaid expenses and other current assets | 186,171 | 23,155 |
Other non-current assets | (107,400) | 50,262 |
Accounts payable | 4,742,478 | 16,409,171 |
Accrued expenses | 811,932 | 381,213 |
Customer deposits | (53,249) | |
Refunds due to customers | (4,043) | (46,686) |
Reserve for sales returns | 700,606 | 903,731 |
Operating lease liabilities, net of operating leases - right of use assets | (7,844) | 5,655 |
Net cash used in operating activities | (3,580,205) | (576,005) |
Cash flows from investing activities | ||
Purchase of property and equipment | (87,801) | (77,599) |
Net cash used in investing activities | (87,801) | (77,599) |
Cash flows from financing activities | ||
Proceeds from Issuance of stock - net of transaction expenses | 3,362,751 | 9,000,580 |
Payment of redemption and retirement of treasury stock | (7,162,452) | |
Net proceeds from revolving lines of credit | 1,977,006 | |
Payment of deferred financing charges | (37,501) | |
Payments on installment notes | (36,372) | (33,451) |
Proceeds from exercise of stock options | 4,800 | |
Proceeds from exercise of pre-funded warrants | 168,334 | |
Proceeds from exercise of common warrants | 865,202 | |
Payment on subordinated note payable | (150,000) | |
Payments on finance leases | (3,709) | (4,440) |
Net cash provided by financing activities | 4,356,206 | 3,594,542 |
Net change in cash | 688,200 | 2,940,938 |
Cash at beginning of year | 2,290,483 | 396,579 |
Cash at end of period | 2,978,683 | 3,337,517 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 331,225 | 249,734 |
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 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Mar. 31, 2021 | $ 13,013 | $ 20,150,716 | $ (12,254,191) | $ 7,909,538 | |
Beginning balance, shares at Mar. 31, 2021 | 1,301,358 | ||||
Net income | 573,760 | 573,760 | |||
Issuance of common stock - non-employee | $ 17 | 16,983 | 17,000 | ||
Issuance of common stock - non-employee, shares | 1,667 | ||||
Employee compensation-stock option | 12,727 | 12,727 | |||
Issuance of stock | $ 5,500 | 4,944,500 | 4,950,000 | ||
Issuance of stock, shares | 550,000 | ||||
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 | $ 190 | (190) | |||
Issuance of stock for stock issuance expenses, shares | 19,047 | ||||
Redemption and retirement of treasury shares | $ (6,541) | (4,301,149) | (2,854,762) | (7,162,452) | |
Redemption and retirement of treasury shares, shares | (654,105) | ||||
Issuance of common stock - directors | $ 6 | 4,994 | 5,000 | ||
Issuance of common stock - directors, shares | 575 | ||||
Exercise of stock options | $ 7 | 4,793 | 4,800 | ||
Exercise of stock options, shares | 667 | ||||
Ending balance, value at Sep. 30, 2021 | $ 12,192 | 24,883,954 | (14,535,193) | 10,360,953 | |
Ending balance, shares at Sep. 30, 2021 | 1,219,209 | ||||
Beginning balance, value at Jun. 30, 2021 | $ 13,020 | 20,160,613 | (12,372,804) | 7,800,829 | |
Beginning balance, shares at Jun. 30, 2021 | 1,302,025 | ||||
Net income | 692,373 | 692,373 | |||
Issuance of common stock - non-employee | $ 17 | 16,983 | 17,000 | ||
Issuance of common stock - non-employee, shares | 1,667 | ||||
Employee compensation-stock option | 7,623 | 7,623 | |||
Issuance of stock | $ 5,500 | 4,944,500 | 4,950,000 | ||
Issuance of stock, shares | 550,000 | ||||
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 | $ 190 | (190) | |||
Issuance of stock for stock issuance expenses, shares | 19,047 | ||||
Redemption and retirement of treasury shares | $ (6,541) | (4,301,149) | (2,854,762) | (7,162,452) | |
Redemption and retirement of treasury shares, shares | (654,105) | ||||
Issuance of common stock - directors | $ 6 | 4,994 | 5,000 | ||
Issuance of common stock - directors, shares | 575 | ||||
Ending balance, value at Sep. 30, 2021 | $ 12,192 | 24,883,954 | (14,535,193) | 10,360,953 | |
Ending balance, shares at Sep. 30, 2021 | 1,219,209 | ||||
Beginning balance, value at Mar. 31, 2022 | $ 12,212 | 24,902,694 | (14,878,482) | 10,036,424 | |
Beginning balance, shares at Mar. 31, 2022 | 1,221,209 | ||||
Net income | 280,464 | 280,464 | |||
Exercise of common stock warrants | $ 3,090 | 862,113 | 865,203 | ||
Exercise of common stock warrants, shares | 309,001 | ||||
Issuance of common stock - officers | $ 33 | 31,216 | 31,249 | ||
Issuance of common stock - officers, shares | 3,335 | ||||
Issuance of common stock - non-employee | $ 100 | 93,600 | 93,700 | ||
Issuance of common stock - non-employee, shares | 10,000 | ||||
Employee compensation-stock option | 86,248 | 86,248 | |||
Issuance of stock | $ 10,000 | 3,990,000 | 4,000,000 | ||
Issuance of stock, shares | 1,000,000 | ||||
Payment of stock issuance expenses | (637,250) | (637,250) | |||
Issuance of common stock - directors | $ 25 | 19,991 | 20,016 | ||
Issuance of common stock - directors, shares | 2,468 | ||||
Exercise of pre-funded warrants | $ 5,611 | 162,723 | 168,334 | ||
Exercise of pre-funded warrants, shares | 561,113 | ||||
Rounding of common stock issued due to reverse split | $ 17 | (17) | |||
Rounding of common stock issued due to reverse split, shares | 1,688 | ||||
Ending balance, value at Sep. 30, 2022 | $ 31,088 | 29,511,318 | (14,598,018) | 14,944,388 | |
Ending balance, shares at Sep. 30, 2022 | 3,108,814 | ||||
Beginning balance, value at Jun. 30, 2022 | $ 30,177 | 29,098,800 | (14,894,485) | 14,234,492 | |
Beginning balance, shares at Jun. 30, 2022 | 3,017,700 | ||||
Net income | 296,467 | 296,467 | |||
Exercise of common stock warrants | $ 778 | 217,003 | 217,781 | ||
Exercise of common stock warrants, shares | 77,779 | ||||
Issuance of common stock - officers | $ 33 | 31,216 | 31,249 | ||
Issuance of common stock - officers, shares | 3,335 | ||||
Issuance of common stock - non-employee | $ 100 | 93,600 | 93,700 | ||
Issuance of common stock - non-employee, shares | 10,000 | ||||
Employee compensation-stock option | 70,699 | 70,699 | |||
Ending balance, value at Sep. 30, 2022 | $ 31,088 | $ 29,511,318 | $ (14,598,018) | $ 14,944,388 | |
Ending balance, shares at Sep. 30, 2022 | 3,108,814 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION OVERVIEW The Singing Machine Company, Inc., a Delaware corporation (the “Company”, “SMC”, “The Singing Machine”) and wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (“Macau Subsidiary”), SMC Logistics, Inc. (“SMCL”) and SMC-Music, Inc.(“SMCM”) and SMC (HK) Limited (“SMH”), 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. |
RECENT DEVELOPMENTS
RECENT DEVELOPMENTS | 6 Months Ended |
Sep. 30, 2022 | |
Recent Developments | |
RECENT DEVELOPMENTS | NOTE 2 – RECENT DEVELOPMENTS Controlled Company On June 13, 2022, BitNile Holdings, Inc. (“BitNile Holdings”), a Delaware corporation, Ault Lending, LLC (“Ault Lending”), a California limited liability company and subsidiary of BitNile Holdings, and Milton C. Ault, III (“Ault”), Founder and Executive Chairman of BitNile Holdings (collectively the “Reporting Persons”) filed a joint Schedule 13D filing (the “Schedule 13D”) reporting that the Reporting Persons acquired, in the aggregate, 52.8 0.01 Pursuant to the Schedule 13D and subsequent amended Schedule 13D filings and Section 16 filings, Ault Lending beneficially owns and BitNile Holdings and Ault may be deemed to beneficially own an aggregate of 1,787,200 57.4 As these purchases were made in the open market, control of the Company was not assumed from a particular person or group of persons. Reverse Stock Split and Nasdaq Listing On May 23, 2022, the Company effected a reverse stock split of its shares of common stock in a ratio of 1:30. The reverse stock split was effected to meet The Nasdaq Capital Market’s minimum bid price requirement. All information in these consolidated financial statements have been retroactively adjusted to give effect to this 1-for-30 reverse stock split Our common stock was approved for listing on the Nasdaq Capital Market under the symbol “MICS” and began trading on the Nasdaq Capital Market on May 24, 2022. Public Offering On May 23, 2022, the “Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp., who acted as the sole underwriter (the “Underwriter”), in a firm commitment underwritten public offering pursuant to which the Company sold to the Underwriter 1,000,000 4,000,000 637,000 4.00 3,363,000 Pursuant to the terms of the Underwriting Agreement, the Company agreed to issue to the Underwriter warrants to purchase up to 100,000 10 5.00 five years 244,000 2.90 3 176 0 2.63 Stock Redemption Agreement On August 5, 2021, the Company entered into a stock redemption agreement (the “Redemption Agreement”) with koncepts International Limited (“koncepts”) and Treasure Green Holdings Ltd. (“Treasure Green”) (entities that owned approximately 51 654,105 7,162,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) |
LIQUIDITY
LIQUIDITY | 6 Months Ended |
Sep. 30, 2022 | |
Liquidity | |
LIQUIDITY | NOTE 3 – LIQUIDITY The Company reported net income of approximately $ 280,000 3,580,000 On October 14, 2022 the Company entered into a Credit and Security Agreement (the “Credit Agreement”) with Fifth Third Bank, National Association, as Lender (“Fifth Third”) replacing the Company’s credit facilities . The Credit Agreement provides for a three-year secured revolving credit facility in an aggregate principal amount of up to $ 15,000,000 7,500,000 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMH, SMCL, and SMCM. All inter-company accounts and transactions have been eliminated in consolidation for all periods presented. The accompanying unaudited financial statements for the three and six months ended September 30, 2022 and 2021 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 8 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 condensed consolidated balance sheet information as of March 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022. 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 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 statements of income 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 more than the Federal Deposit Insurance Corporation insured amounts. The Company also maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at September 30, 2022 and March 31, 2022 are approximately $ 595,000 172,000 Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected future inventory returns due to warranty and allowance programs. As of September 30, 2022 and March 31, 2022 the estimated amounts for these future inventory returns were approximately $ 1,112,000 683,000 271,000 364,000 LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” No impairment was recorded as of September 30, 2022 and 2021. 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 8– 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, and refunds due to customers 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 SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) The Company selectively participates in a retailer’s co-op promotion incentives to maximize sales of the Company’s products on the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. For the three months ended September 30, 2022 and 2021 co-op promotion incentives were approximately $ 724,000 738,000 1,020,000 1,010,000 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 condensed consolidated statements of income as our underlying customer agreements are less than one year. While the Company has no overstock return privileges in its vendor agreements with its customers, 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 as of September 30, 2022 and March 31, 2022, were approximately $ 1,691,000 990,000 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 13 – SEGMENT INFORMATION). Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2022 and 2021 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Product Line September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Three Months Ended Six Months Ended Product Line September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Classic Karaoke Machines $ 9,132,000 $ 13,336,000 $ 14,343,000 $ 17,810,000 Licensed Product 4,000 94,000 48,000 873,000 SMC Kids Toys 622,000 1,021,000 1,557,000 1,091,000 Microphones and Accessories 2,558,000 1,210,000 5,110,000 1,994,000 Streaming * 4,798,000 1,708,000 7,748,000 1,667,000 Total Net Sales $ 17,114,000 $ 17,369,000 $ 28,806,000 $ 23,435,000 * Streaming—The streaming karaoke product line is defined by the ability to stream karaoke content directly via WiFi to our karaoke machine without requiring any 3rd party devices. SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For the three months ended September 30, 2022 and 2021 shipping and handling expenses were approximately $ 115,000 134,000 161,000 285,000 STOCK BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense for the three and six months ended September 30, 2022 and 2021 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the three months ended September 30, 2022 and 2021, the stock option expense was approximately $ 70,000 8,000 86,000 13,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) RESEARCH AND DEVELOPMENT COSTS Research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the condensed consolidated statements of income. For the three months ended September 30, 2022 and 2021, these amounts totaled approximately $ 41,000 19,000 58,000 50,000 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. As of both September 30, 2022 and March 31, 2022 the Company recorded a valuation allowance of approximately $ 78,000 The Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management’s best estimate of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. For the six months ended September 30, 2022 and 2021 we estimated our effective U.S federal tax rate to be approximately 21 20 812,000 893,000 102,000 174,000 97,000 146,000 The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% COMPUTATION OF EARNINGS PER SHARE Computation of dilutive shares for the three and six months ended September 30, 2022 and 2021 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three For the three For the six For the six Basic weighted average common shares outstanding 3,071,131 1,593,929 2,484,660 1,448,603 Effect of dilutive stock options and warrants 539,057 11,205 476,971 12,364 Diluted weighted average common shares outstanding 3,610,188 1,605,134 2,961,631 1,460,967 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 the Company’s common stock at the average market price during the period using the treasury stock method. For the three and six months ended September 30, 2022, options to purchase 49,781 1,181,889 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) 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. |
INVENTORIES, NET
INVENTORIES, NET | 6 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | NOTE 5 - INVENTORIES, NET Inventories are comprised of the following components: SCHEDULE OF INVENTORY September 30, March 31, 2022 2022 Finished Goods $ 13,937,000 $ 10,537,000 Inventory in Transit 1,244,000 3,306,000 Estimated Amount of Future Returns 1,112,000 683,000 Subtotal 16,293,000 14,526,000 Less:Inventory Reserve 271,000 364,000 Inventories, net $ 16,022,000 $ 14,162,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: SUMMARY OF PROPERTY AND EQUIPMENT USEFUL September 30, March 31, LIFE 2022 2022 Computer and office equipment 5 7 $ 468,000 $ 440,000 Furniture and fixtures 7 98,000 98,000 Warehouse equipment 7 210,000 210,000 Molds and tooling 3 5 2,046,000 1,986,000 2,822,000 2,734,000 Less: Accumulated depreciation 2,289,000 2,169,000 $ 533,000 $ 565,000 Depreciation expense for the three months ended September 30, 2022 and 2021 was approximately $ 62,000 67,000 Depreciation expense for the six months ended September 30, 2022 and 2021 was approximately $ 120,000 135,000 |
FINANCING
FINANCING | 6 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
FINANCING | NOTE 7 – FINANCING Intercreditor Revolving Credit Facility Crestmark Bank and Iron Horse Credit: On June 16, 2020, the Company entered into a two-year Credit and Security Agreement for a $ 2.5 with IronHorse Credit LLC (the “IHC Facility”) on eligible accounts receivable and inventory. Also, on June 16, 2020, the Company entered into a two-year Loan and Security Agreement for a $ 10.0 Facility”) on eligible accounts receivable. Under the terms of the Crestmark Facility, the outstanding loan balance cannot exceed $ 10.0 5.0 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 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) The Crestmark Facility was secured by a perfected security interest in all assets including a first security interest in accounts receivable and inventory. Notwithstanding the foregoing, Crestmark subordinated 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 79,000 51,000 132,000 96,000 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 May 31, 2022; however, a waiver from default was obtained from IHC for this month. As of September 30, 2022, the Company was in compliance with this covenant. The IHC Facility was secured by a perfected security interest in the Company’s inventory. The IHC Facility bears interest at 1.292 15.51 1,000,000 100,000 48,000 198,000 86,000 2,500,000 Simultaneously with the Company’s entry into the IHC Facility and the Crestmark Facility, the Company entered into an Intercreditor Agreement with IronHorse and Crestmark which sets forth the respective rights of each of IronHorse and Crestmark as secured parties. Credit and Security Agreement with Fifth Third Bank, National Association: On October 14, 2022 the Company entered into the Credit Agreement with Fifth Third, as Lender (the “Credit Agreement”) replacing the Company’s credit facilities with Crestmark Bank and Iron Horse Credit that were terminated by the Company on October 13, 2022 . The Credit Agreement provides for a three-year secured revolving credit facility in an aggregate principal amount of up to $ 15,000,000 7,500,000 October 14, 2025 The revolving credit facility bears interest of (a) the Prime Rate plus 0.50 0.50 0.35 Under the Credit Agreement: ● Accounts Receivable advance rate up to an 85% against eligible Accounts Receivable assuming dilution is under 5% of sales, plus ● Inventory advance of up to 85% of the Net Orderly Liquidation Value of eligible inventory as determined by an appraiser satisfactory to Fifth Third, with a sublimit to be determined based on Fifth Third’ s continuing due diligence. The inventory advance rate will increase to 95% of the Net Orderly Liquidation Value of eligible inventory from April through June (or another 3-month time frame to be determined based on Fifth Third’s continuing due diligence) each year to support seasonal working capital needs. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) ● The Company must maintain a Minimum Fixed Charge Coverage of 1.05 to 1. ● Covenants may also include reasonable limitations on dividends, distributions, and management fees. ● The first Fixed Charge Coverage test will be the period from close to September 30, 2022, building to a trailing twelve months. Through September 30, 2022, the Company incurred $ 70,000 4,000,000 Note Payable Payroll Protection Plan On May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $ 444,000 0 448,000 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 9.25 177,000 213,000 4,000 5,000 8,000 11,000 Subordinated Debt/Note Payable to Related Party In conjunction with the Crestmark Facility and IHC Facility, the parties entered into a subordination agreement on related party debt due to Starlight Marketing Development, Ltd. of approximately $ 803,000 803,000 6 6 3,000 5,000 6,000 14,000 In connection with the Intercreditor Agreement, 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 both September 30, 2022 and March 31, 2022, the remaining amount due on the note payable was approximately $ 353,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES COVID-19 The COVID-19 pandemic has significantly affected U.S. consumer shopping patterns and caused the health of the U.S. and world economy to deteriorate in fiscal year 2022. While many of the restrictions and measures initially implemented in response to the pandemic have since been softened or lifted in varying degrees in different locations around the world, the uncertainty regarding existing and new potential variants of COVID-19 and the success of any vaccines in respect thereof, may in the future cause a reduction in global economic activity or prompt, the re-imposition of certain restrictions and measures. 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. Additionally, in late calendar 2021, the increased demand for consumer electronics products and current economic recovery continued to increase worldwide demand for products using semiconductor “chip” components in the production of most consumer electronics which has resulted in an international shortage of chips available to fulfill demand. As a result, the Company has experienced longer delivery lead times and some unavailability of these components which have delayed delivery of some of our products. The Company has also experienced delays in delivery schedules due to new outbreaks of COVID-19 in Southern China that have forced temporary closures of some key shipping ports. The port closures have also led to a temporary shortage of shipping containers which have resulted in significant price increases due to increased demand. While we have seen the easing of COVID-19 restrictions and the impact on our business, we cannot predict the impact of the resurgence of variants of COVID-19 and other factors affecting local and global economies, specifically China. LEGAL MATTERS On September 11, 2020, a complaint was filed against the Company’s SMCL subsidiary and various staffing agencies used by SMCL in the Superior Court of San Bernardino County. The complaint alleges an employee of the Company committed employment practice violations against a former temporary employee not employed by the Company. Management investigated the allegation and has engaged an employment attorney to defend the lawsuit. The case is still in discovery and no trial date has been set. Management does not believe the claims have merit and does not believe the lawsuit will have a material adverse effect on the Company’s financial results. Other than as disclosed above, we are not a party to, and our property is not the subject of, any material legal proceedings. LEASES Operating Leases We have operating lease agreements for offices and a warehouse facility in Florida and California 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. The lease expires on March 31, 2024 9,700 We entered into an operating lease agreement, effective June 1, 2013 in Ontario, California for our logistics operations. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. The renewal base rent payment is approximately $ 69,277 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 15,000 18,000 389 0 828 376 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) Supplemental balance sheet information related to leases as of September 30, 2022 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES Assets: Operating lease - right-of-use assets $ 862,279 Finance leases as a component of Property and equipment, net of accumulated depreciation of $ 4,859 9,657 Liabilities Current Current portion of operating leases $ 848,723 Current portion of finance leases 7,988 Noncurrent Operating lease liabilities, net of current portion $ 60,374 Finance leases, net of current portion 6,528 Supplemental statement of operations information related to leases for the three and six months ended September 30, 2022 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Three Months Ended Six Months Ended September 30 2022 September 30 2022 Operating lease expense as a component of general and administrative expenses $ 227,839 $ 457,088 Finance lease cost Depreciation of leased assets as a component of depreciation $ 1,041 $ 4,859 Interest on lease liabilities as a component of interest expense $ 389 $ 828 Supplemental cash flow information related to leases for the six months ended September 30, 2022 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 $ 463,521 Financing cash flow paid for finance leases $ 3,709 Lease term and Discount Rate Weighted average remaining lease term (months) Operating leases 12.3 Finance leases 21.0 Weighted average discount rate Operating leases 6.25 % Finance leases 9.86 % Scheduled maturities of operating and finance lease liabilities outstanding as of September 30, 2022 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Year Operating Leases Finance Leases 2022, for the remaining 3 months $ 237,675 $ 2,266 2023 674,488 9,065 2024 30,739 4,533 Total Minimum Future Payments 942,902 15,864 Less: Imputed Interest 33,805 1,348 Present Value of Lease Liabilities $ 909,097 $ 14,516 |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 6 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK OPTIONS AND WARRANTS | NOTE 9 - STOCK OPTIONS AND WARRANTS EQUITY INCENTIVE PLAN On April 12, 2022, our Board of Directors approved The Singing Machine Company, Inc. 2022 Equity Incentive Plan, or the (“2022 Plan”). The 2022 Plan provides for the issuance of equity incentive awards, such as stock options, stock appreciation rights, stock awards, restricted stock, stock units, performance awards and other stock or cash-based awards collectively, the “Awards.” Awards may be granted under the 2022 Plan to the Company’s employees, officers, directors, consultants, agents, advisors, and independent contractors. The maximum number of shares of common stock initially available for issuance under the 2022 Plan is 233,333 shares of common stock and thereafter an annual increase shall be added as of the first day of the Company’s fiscal year beginning in 2023, equal to the least of (i) 5% of the outstanding common stock on a fully diluted basis as of the end of the Company’s immediately preceding fiscal year, (ii) 333,334 shares, and (iii) a lesser amount as determined by the Board of Directors. The shares of common stock subject to stock awards granted under the 2022 Plan that lapse, terminate, expire prior to exercise, are canceled, or are forfeited, shall again become available for issuance under the 2022 Plan As of September 30, 2022 we had issued 137,426 15,803 80,104 COMMON STOCK OPTIONS During six months ended September 30, 2022 the Company issued 667 4,000 1,334 2.35 8.11 7.40 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) During the six months ended September 30, 2022 the Company issued 33,334 3,667 4.00 8.65 On June 28, 2022 and August 16, 2022 the Company issued 61,750 3,000 8.11 8.65 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 six months ended September 30, 2022: expected dividend yield of 0 2.63 3.21 166.1 176.3 three years A summary of stock option activity for the six months ended September 30, 2022 is summarized below: SUMMARY OF STOCK OPTION ACTIVITY September 30, 2022 Number of Weighted Average Stock Options: Balance at beginning of period 56,343 $ 9.90 Granted 107,752 $ 6.83 Forfeited (2,668 ) $ 5.63 Balance at end of period 161,427 $ 7.90 Options exercisable at end of period 51,341 $ 10.19 The following table summarizes information about employee stock options outstanding at September 30, 2022: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Number Outstanding at Weighted Weighted Average Number Weighted Average $ 2.35 7.20 58,669 4.4 $ 4.95 21,667 $ 6.82 $ 8.10 9.60 81,086 9.2 $ 8.25 8,002 $ 7.62 $ 11.40 16.50 21,672 4.5 $ 14.42 21,672 $ 14.42 * 161,427 51,341 * Total number of options outstanding as of September 30, 2022 includes 23,343 73,334 64,750 As of September 30, 2022, there was unrecognized expense of approximately $ 531,000 The intrinsic value of vested options as of September 30, 2022 was approximately $ 1,000 WARRANTS In connection with the August 2021 Private Placement disclosed in Note 2 and Note 11, common warrants and pre-funded warrants issued and outstanding as of September 30, 2022 are as follows: THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING September 30, 2022 Number of Common Warrants Weighted Average Exercise Price Number of Pre-Funded Warrants Weighted Average Exercise Price Warrants: Warrants outstanding at April 1, 2022 1,155,557 $ 2.80 561,113 $ 0.30 Warrants issued 100,000 $ 5.00 - N/A Warrants exercised (309,001 ) $ 2.80 (561,113 ) $ 0.30 Warrants outstanding at September 30, 2022 946,556 $ 3.03 - N/A Warrants exercisable at September 30, 2022 846,556 $ 2.80 - N/A As of September 30, 2022, the Company’s outstanding warrants by expiration date were as follows: SCHEDULE OF WARRANTS EXPIRATION Number of Common Warrants Exercise Price Expiration Date 846,556 $ 2.80 September 15, 2026 100,000 $ 5.00 May 23, 2027 946,556 |
AUGUST 2021 STOCK REDEMPTION
AUGUST 2021 STOCK REDEMPTION | 6 Months Ended |
Sep. 30, 2022 | |
August 2021 Stock Redemption | |
AUGUST 2021 STOCK REDEMPTION | NOTE 10 – AUGUST 2021 STOCK REDEMPTION On August 5, 2021, the Company entered into the Redemption Agreement with Koncepts and Treasure Green, pursuant to which the Company redeemed 654,105 7,162,000 |
AUGUST 2021 PRIVATE PLACEMENT
AUGUST 2021 PRIVATE PLACEMENT | 6 Months Ended |
Sep. 30, 2022 | |
August 2021 Private Placement | |
AUGUST 2021 PRIVATE PLACEMENT | NOTE 11 – AUGUST 2021 PRIVATE PLACEMENT On August 5, 2021, the Company entered into a securities purchase agreement with large institutional investors and a strategic investor for a private placement offering of (i) 550,000 550,000 2.80 561,111 0.30 561,111 2.80 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 was 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 indicated, the Common Stock was approved to list on the Nasdaq Capital Market under the symbol “MICS” and began trading on the Nasdaq Capital Market on May 24, 2022. 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”), a leading music, media and technology company participated in the Private Placement and 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 14 - Related Party Transactions). THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) 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 44,445 5 2.80 359,000 9.90 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 1,905 189,000 100,000 831,000 |
PUBLIC OFFERING AND NASDAQ UPLI
PUBLIC OFFERING AND NASDAQ UPLISTING | 6 Months Ended |
Sep. 30, 2022 | |
Public Offering And Nasdaq Uplisting | |
PUBLIC OFFERING AND NASDAQ UPLISTING | NOTE 12 – PUBLIC OFFERING AND NASDAQ UPLISTING On May 23, 2022, the Company effected a reverse stock split of its shares of common stock in a ratio of 1:30. The reverse stock split was effected to meet The Nasdaq Capital Market’s minimum bid price requirement. All information in these consolidated financial statements have been retroactively adjusted to give effect to this 1-for-30 reverse stock split On May 23, 2022, the Company entered into the Underwriting Agreement with Aegis Capital Corp., who acted as the sole Underwriter, in a firm commitment underwritten public offering pursuant to which the Company sold to the Underwriter 1,000,000 0.01 4,000,000 637,000 4.00 3,363,000 Pursuant to the terms of the Underwriting Agreement, the Company agreed to issue to the Underwriter warrants to purchase up to 100,000 10.0 5.00 five years 244,000 2.90 3 176 0 2.63 On May 24, 2022, the Company’s common stock was approved to list on the Nasdaq Capital Market under the symbol “MICS” and began trading on the Nasdaq Capital Market on May 24, 2022. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 13 - SEGMENT INFORMATION Sales to customers outside of the United States for the three and six months ended September 30, 2022 and 2021 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 2022 2021 2022 2021 FOR THE THREE FOR THE SIX September 30, September 30, 2022 2021 2022 2021 North America $ 16,138,000 $ 16,729,000 $ 27,830,000 $ 22,695,000 Europe 306,000 156,000 306,000 156,000 Australia 670,000 484,000 670,000 584,000 Net sales $ 17,114,000 $ 17,369,000 $ 28,806,000 $ 23,435,000 The geographic area of sales was based on the location where the product is delivered. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 14 – RELATED PARTY TRANSACTIONS Stingray is part of the group of investors who participated in the August 2021 Private Placement and have acquired a minority interest in the Company and has one Director on the Company’s Board (see Note 11 – August 2021 Private Placement ). DUE TO/FROM RELATED PARTIES On September 30, 2022 and March 31, 2022, the Company had amounts due from Stingray of approximately $ 242,000 152,000 TRADE The Company has a music subscription sharing agreement with Stingray. For the three months ended September 30, 2022 and 2021 the Company received music subscription revenue of approximately $ 123,000 110,000 255,000 224,000 |
RESERVE FOR SALES RETURNS
RESERVE FOR SALES RETURNS | 6 Months Ended |
Sep. 30, 2022 | |
Reserve For Sales Returns | |
RESERVE FOR SALES RETURNS | NOTE 15 – RESERVE FOR SALES RETURNS A return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are allowed to return defective goods within a specified period of time after shipment (between 6 and 9 months). The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates. The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets. Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Six Months Ended September 30, September 30, 2022 2021 Reserve for sales returns at beginning of the year $ 990,000 $ 960,000 Provision for estimated sales returns 1,964,000 2,110,000 Sales returns received (1,263,000 ) (1,206,000 ) Reserve for sales returns at end of the period $ 1,691,000 $ 1,864,000 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | NOTE 16 - EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee’s contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged to operations for contributions to this plan and administrative costs during the three months ended September 30, 2022 and 2021 totaled approximately $ 20,000 17,000 35,000 |
CONCENTRATIONS OF CREDIT AND SA
CONCENTRATIONS OF CREDIT AND SALES RISK | 6 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF CREDIT AND SALES RISK | NOTE 17 - CONCENTRATIONS OF CREDIT AND SALES RISK The Company derives a majority of its revenues from retailers of products in the United States. The Company’s allowance for doubtful accounts is based upon management’s estimates and historical experience and reflects the fact that accounts receivable are concentrated with several large customers. At September 30, 2022, approximately 81 53 The Company generates most of its revenue from retailers of products in the United States with a significant amount of sales concentrated with several large customers, the loss of which could have an adverse impact on the financial position of the Company. For the three months ended September 30, 2022, there were three customers who individually accounted for 10% or more of the Company’s net sales. Revenue derived from these customers as a percentage of net sales were 43 29 10 49 16 12 For the six months ended September 30, 2022, there were two 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 46 32 48 16 14 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION | PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMH, SMCL, and SMCM. All inter-company accounts and transactions have been eliminated in consolidation for all periods presented. The accompanying unaudited financial statements for the three and six months ended September 30, 2022 and 2021 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 8 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 condensed consolidated balance sheet information as of March 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022. The interim condensed consolidated financial statements should be read in conjunction with that report. |
USE OF ESTIMATES | USE OF ESTIMATES The Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company’s financial condition. However, circumstances could change which may alter future expectations. |
COLLECTABILITY OF ACCOUNTS RECEIVABLE | COLLECTABILITY OF ACCOUNTS RECEIVABLE The Singing Machine’s allowance for doubtful accounts is based on management’s estimates of the creditworthiness of its customers, current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient to respond to normal business conditions. Management sets 100 |
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 statements of income 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 September 30, 2022 and March 31, 2022 are approximately $ 595,000 172,000 Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) |
INVENTORY | INVENTORY Inventories are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected future inventory returns due to warranty and allowance programs. As of September 30, 2022 and March 31, 2022 the estimated amounts for these future inventory returns were approximately $ 1,112,000 683,000 271,000 364,000 |
LONG-LIVED ASSETS | LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” No impairment was recorded as of September 30, 2022 and 2021. |
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 8– 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. |
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, and refunds due to customers 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 SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) The Company selectively participates in a retailer’s co-op promotion incentives to maximize sales of the Company’s products on the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. For the three months ended September 30, 2022 and 2021 co-op promotion incentives were approximately $ 724,000 738,000 1,020,000 1,010,000 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 condensed consolidated statements of income as our underlying customer agreements are less than one year. While the Company has no overstock return privileges in its vendor agreements with its customers, 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 as of September 30, 2022 and March 31, 2022, were approximately $ 1,691,000 990,000 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 13 – SEGMENT INFORMATION). Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2022 and 2021 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Product Line September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Three Months Ended Six Months Ended Product Line September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Classic Karaoke Machines $ 9,132,000 $ 13,336,000 $ 14,343,000 $ 17,810,000 Licensed Product 4,000 94,000 48,000 873,000 SMC Kids Toys 622,000 1,021,000 1,557,000 1,091,000 Microphones and Accessories 2,558,000 1,210,000 5,110,000 1,994,000 Streaming * 4,798,000 1,708,000 7,748,000 1,667,000 Total Net Sales $ 17,114,000 $ 17,369,000 $ 28,806,000 $ 23,435,000 * Streaming—The streaming karaoke product line is defined by the ability to stream karaoke content directly via WiFi to our karaoke machine without requiring any 3rd party devices. |
SHIPPING AND HANDLING COSTS | SHIPPING AND HANDLING COSTS Shipping and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to fulfill the Company’s promise to transfer the goods. For the three months ended September 30, 2022 and 2021 shipping and handling expenses were approximately $ 115,000 134,000 161,000 285,000 |
STOCK BASED COMPENSATION | STOCK BASED COMPENSATION The Company follows the provisions of the FASB ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity”. ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes option valuation model to value stock options. Employee stock option compensation expense for the three and six months ended September 30, 2022 and 2021 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the three months ended September 30, 2022 and 2021, the stock option expense was approximately $ 70,000 8,000 86,000 13,000 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) |
RESEARCH AND DEVELOPMENT COSTS | RESEARCH AND DEVELOPMENT COSTS Research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative expenses in the condensed consolidated statements of income. For the three months ended September 30, 2022 and 2021, these amounts totaled approximately $ 41,000 19,000 58,000 50,000 |
INCOME TAXES | INCOME TAXES The Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. As of both September 30, 2022 and March 31, 2022 the Company recorded a valuation allowance of approximately $ 78,000 The Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management’s best estimate of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. For the six months ended September 30, 2022 and 2021 we estimated our effective U.S federal tax rate to be approximately 21 20 812,000 893,000 102,000 174,000 97,000 146,000 The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% |
COMPUTATION OF EARNINGS PER SHARE | COMPUTATION OF EARNINGS PER SHARE Computation of dilutive shares for the three and six months ended September 30, 2022 and 2021 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three For the three For the six For the six Basic weighted average common shares outstanding 3,071,131 1,593,929 2,484,660 1,448,603 Effect of dilutive stock options and warrants 539,057 11,205 476,971 12,364 Diluted weighted average common shares outstanding 3,610,188 1,605,134 2,961,631 1,460,967 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 the Company’s common stock at the average market price during the period using the treasury stock method. For the three and six months ended September 30, 2022, options to purchase 49,781 1,181,889 THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) |
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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SCHEDULE OF DISAGGREGATION OF REVENUE | Revenue is derived from five different major product lines. Disaggregated revenue from these product lines for the three and six months ended September 30, 2022 and 2021 consisted of the following: SCHEDULE OF DISAGGREGATION OF REVENUE Product Line September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Three Months Ended Six Months Ended Product Line September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Classic Karaoke Machines $ 9,132,000 $ 13,336,000 $ 14,343,000 $ 17,810,000 Licensed Product 4,000 94,000 48,000 873,000 SMC Kids Toys 622,000 1,021,000 1,557,000 1,091,000 Microphones and Accessories 2,558,000 1,210,000 5,110,000 1,994,000 Streaming * 4,798,000 1,708,000 7,748,000 1,667,000 Total Net Sales $ 17,114,000 $ 17,369,000 $ 28,806,000 $ 23,435,000 * Streaming—The streaming karaoke product line is defined by the ability to stream karaoke content directly via WiFi to our karaoke machine without requiring any 3rd party devices. |
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE | Computation of dilutive shares for the three and six months ended September 30, 2022 and 2021 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE For the three For the three For the six For the six Basic weighted average common shares outstanding 3,071,131 1,593,929 2,484,660 1,448,603 Effect of dilutive stock options and warrants 539,057 11,205 476,971 12,364 Diluted weighted average common shares outstanding 3,610,188 1,605,134 2,961,631 1,460,967 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORY | Inventories are comprised of the following components: SCHEDULE OF INVENTORY September 30, March 31, 2022 2022 Finished Goods $ 13,937,000 $ 10,537,000 Inventory in Transit 1,244,000 3,306,000 Estimated Amount of Future Returns 1,112,000 683,000 Subtotal 16,293,000 14,526,000 Less:Inventory Reserve 271,000 364,000 Inventories, net $ 16,022,000 $ 14,162,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
SUMMARY OF PROPERTY AND EQUIPMENT | A summary of property and equipment is as follows: SUMMARY OF PROPERTY AND EQUIPMENT USEFUL September 30, March 31, LIFE 2022 2022 Computer and office equipment 5 7 $ 468,000 $ 440,000 Furniture and fixtures 7 98,000 98,000 Warehouse equipment 7 210,000 210,000 Molds and tooling 3 5 2,046,000 1,986,000 2,822,000 2,734,000 Less: Accumulated depreciation 2,289,000 2,169,000 $ 533,000 $ 565,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES | Supplemental balance sheet information related to leases as of September 30, 2022 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES Assets: Operating lease - right-of-use assets $ 862,279 Finance leases as a component of Property and equipment, net of accumulated depreciation of $ 4,859 9,657 Liabilities Current Current portion of operating leases $ 848,723 Current portion of finance leases 7,988 Noncurrent Operating lease liabilities, net of current portion $ 60,374 Finance leases, net of current portion 6,528 |
SCHEDULE OF LEASE TERM AND DISCOUNT RATE | Supplemental statement of operations information related to leases for the three and six months ended September 30, 2022 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE Three Months Ended Six Months Ended September 30 2022 September 30 2022 Operating lease expense as a component of general and administrative expenses $ 227,839 $ 457,088 Finance lease cost Depreciation of leased assets as a component of depreciation $ 1,041 $ 4,859 Interest on lease liabilities as a component of interest expense $ 389 $ 828 |
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION | Supplemental cash flow information related to leases for the six months ended September 30, 2022 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 $ 463,521 Financing cash flow paid for finance leases $ 3,709 Lease term and Discount Rate Weighted average remaining lease term (months) Operating leases 12.3 Finance leases 21.0 Weighted average discount rate Operating leases 6.25 % Finance leases 9.86 % |
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES | Scheduled maturities of operating and finance lease liabilities outstanding as of September 30, 2022 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES Year Operating Leases Finance Leases 2022, for the remaining 3 months $ 237,675 $ 2,266 2023 674,488 9,065 2024 30,739 4,533 Total Minimum Future Payments 942,902 15,864 Less: Imputed Interest 33,805 1,348 Present Value of Lease Liabilities $ 909,097 $ 14,516 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SUMMARY OF STOCK OPTION ACTIVITY | A summary of stock option activity for the six months ended September 30, 2022 is summarized below: SUMMARY OF STOCK OPTION ACTIVITY September 30, 2022 Number of Weighted Average Stock Options: Balance at beginning of period 56,343 $ 9.90 Granted 107,752 $ 6.83 Forfeited (2,668 ) $ 5.63 Balance at end of period 161,427 $ 7.90 Options exercisable at end of period 51,341 $ 10.19 |
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING | The following table summarizes information about employee stock options outstanding at September 30, 2022: SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING Range of Number Outstanding at Weighted Weighted Average Number Weighted Average $ 2.35 7.20 58,669 4.4 $ 4.95 21,667 $ 6.82 $ 8.10 9.60 81,086 9.2 $ 8.25 8,002 $ 7.62 $ 11.40 16.50 21,672 4.5 $ 14.42 21,672 $ 14.42 * 161,427 51,341 * Total number of options outstanding as of September 30, 2022 includes 23,343 73,334 64,750 |
SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING | In connection with the August 2021 Private Placement disclosed in Note 2 and Note 11, common warrants and pre-funded warrants issued and outstanding as of September 30, 2022 are as follows: THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 and 2021 (Unaudited) SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING September 30, 2022 Number of Common Warrants Weighted Average Exercise Price Number of Pre-Funded Warrants Weighted Average Exercise Price Warrants: Warrants outstanding at April 1, 2022 1,155,557 $ 2.80 561,113 $ 0.30 Warrants issued 100,000 $ 5.00 - N/A Warrants exercised (309,001 ) $ 2.80 (561,113 ) $ 0.30 Warrants outstanding at September 30, 2022 946,556 $ 3.03 - N/A Warrants exercisable at September 30, 2022 846,556 $ 2.80 - N/A |
SCHEDULE OF WARRANTS EXPIRATION | As of September 30, 2022, the Company’s outstanding warrants by expiration date were as follows: SCHEDULE OF WARRANTS EXPIRATION Number of Common Warrants Exercise Price Expiration Date 846,556 $ 2.80 September 15, 2026 100,000 $ 5.00 May 23, 2027 946,556 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION | Sales to customers outside of the United States for the three and six months ended September 30, 2022 and 2021 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 2022 2021 2022 2021 FOR THE THREE FOR THE SIX September 30, September 30, 2022 2021 2022 2021 North America $ 16,138,000 $ 16,729,000 $ 27,830,000 $ 22,695,000 Europe 306,000 156,000 306,000 156,000 Australia 670,000 484,000 670,000 584,000 Net sales $ 17,114,000 $ 17,369,000 $ 28,806,000 $ 23,435,000 |
RESERVE FOR SALES RETURNS (Tabl
RESERVE FOR SALES RETURNS (Tables) | 6 Months Ended |
Sep. 30, 2022 | |
Reserve For Sales Returns | |
SCHEDULE OF RESERVE FOR SALES RETURNS | Changes in the Company’s reserve for sales returns are presented in the following table: SCHEDULE OF RESERVE FOR SALES RETURNS Six Months Ended September 30, September 30, 2022 2021 Reserve for sales returns at beginning of the year $ 990,000 $ 960,000 Provision for estimated sales returns 1,964,000 2,110,000 Sales returns received (1,263,000 ) (1,206,000 ) Reserve for sales returns at end of the period $ 1,691,000 $ 1,864,000 |
RECENT DEVELOPMENTS (Details Na
RECENT DEVELOPMENTS (Details Narrative) | 6 Months Ended | |||||||
Jun. 13, 2022 $ / shares shares | May 23, 2022 USD ($) $ / shares shares | Aug. 10, 2021 USD ($) | Aug. 05, 2021 shares | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2021 USD ($) | Mar. 31, 2022 $ / shares | Jul. 06, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||||||
Common stock, par or stated value per share | $ / shares | $ 0.01 | $ 0.01 | ||||||
Reverse stock split | 1-for-30 reverse stock split | |||||||
Gross proceeds from issuance of stock | $ 3,362,751 | $ 9,000,580 | ||||||
Warrants term | 2 years 6 months | |||||||
Underwriting Agreement [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Common stock, par or stated value per share | $ / shares | $ 0.01 | |||||||
Sale of stock, number of shares issued in transaction | shares | 1,000,000 | |||||||
Gross proceeds from issuance of stock | $ 4,000,000 | |||||||
Underwriting discounts and commissions and other estimated offering expenses | $ 637,000 | |||||||
Sale of stock, price per share | $ / shares | $ 4 | |||||||
Net proceeds from issuance of stock | $ 3,363,000 | |||||||
Underwriter warrants to purchase | shares | 100,000 | |||||||
Sale of stock, percentage | 10% | |||||||
Exercise price per share | $ / shares | $ 5 | |||||||
Warrants term | 5 years | |||||||
Fair Value Adjustment of Warrants | $ 244,000 | |||||||
Underwriting Agreement [Member] | Measurement Input, Exercise Price [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Common stock price | 2.90 | |||||||
Underwriting Agreement [Member] | Measurement Input, Expected Term [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Warrants term | 3 years | |||||||
Underwriting Agreement [Member] | Measurement Input, Price Volatility [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Common stock price | 176 | |||||||
Underwriting Agreement [Member] | Measurement Input, Expected Dividend Rate [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Common stock price | 0 | |||||||
Underwriting Agreement [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Common stock price | 2.63 | |||||||
Redemption Agreement [Member] | Koncepts and Treasure Green [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Equity method investment, ownership percentage | 51% | |||||||
Shares redeemed | shares | 654,105 | |||||||
Conversion of stock, amount issued | $ 7,162,000 | |||||||
BitNile Holdings, Inc [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Ownership Percentage | 52.80% | |||||||
Common stock, par or stated value per share | $ / shares | $ 0.01 | |||||||
BitNile and MiltonCAult [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Ownership Percentage | 57.40% | |||||||
Number of shares beneficially owns | shares | 1,787,200 |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net income | $ 296,467 | $ 692,373 | $ 280,464 | $ 573,760 |
Cash used in (provided by) operating activities | 3,580,205 | $ 576,005 | ||
Maximum [Member] | ||||
Debt instrument aggregate principal amount | 15,000,000 | 15,000,000 | ||
Minimum [Member] | ||||
Debt instrument aggregate principal amount | $ 7,500,000 | $ 7,500,000 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Product Information [Line Items] | |||||
Total Net Sales | $ 17,114,000 | $ 17,369,000 | $ 28,806,000 | $ 23,435,000 | |
Classic Karaoke Machines [Member] | |||||
Product Information [Line Items] | |||||
Total Net Sales | 9,132,000 | 13,336,000 | 14,343,000 | 17,810,000 | |
License [Member] | |||||
Product Information [Line Items] | |||||
Total Net Sales | 4,000 | 94,000 | 48,000 | 873,000 | |
SMC Kids Toys [Member] | |||||
Product Information [Line Items] | |||||
Total Net Sales | 622,000 | 1,021,000 | 1,557,000 | 1,091,000 | |
Microphones and Accessories [Member] | |||||
Product Information [Line Items] | |||||
Total Net Sales | 2,558,000 | 1,210,000 | 5,110,000 | 1,994,000 | |
Streaming [Member] | |||||
Product Information [Line Items] | |||||
Total Net Sales | [1] | $ 4,798,000 | $ 1,708,000 | $ 7,748,000 | $ 1,667,000 |
[1]Streaming—The streaming karaoke product line is defined by the ability to stream karaoke content directly via WiFi to our karaoke machine without requiring any 3rd party devices. |
SCHEDULE OF ANTIDILUTIVE SECURI
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||||
Basic weighted average common shares outstanding | 3,071,131 | 1,593,929 | 2,484,660 | 1,448,603 |
Effect of dilutive stock options and warrants | 539,057 | 11,205 | 476,971 | 12,364 |
Diluted weighted average common shares outstanding | 3,610,188 | 1,605,134 | 2,961,631 | 1,460,967 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Percentage of reserves for customers | 100% | ||||
Foreign financial institutions actual deposits | $ 595,000 | $ 595,000 | $ 172,000 | ||
Future inventory returns | 1,112,000 | 1,112,000 | 683,000 | ||
Inventory reserves | 271,000 | 271,000 | 364,000 | ||
Co-op promotion incentives | 724,000 | $ 738,000 | 1,020,000 | $ 1,010,000 | |
Reserve for sales returns | 1,691,000 | 1,691,000 | 990,000 | ||
Shipping and handling expenses | 115,000 | 134,000 | 161,000 | 285,000 | |
Stock option expense | 70,000 | 8,000 | 86,000 | 13,000 | |
Research and development costs | 41,000 | 19,000 | 58,000 | $ 50,000 | |
Deferred tax assets valuation allowance | 78,000 | $ 78,000 | 78,000 | ||
Effective income tax rate, percentage | 21% | 20% | |||
Deferred tax assets net | 812,000 | $ 812,000 | $ 893,000 | ||
Income tax provision | $ 102,357 | $ 173,873 | $ 97,276 | $ 145,778 | |
Percentage of tax benefits recognized likelihood of being realized | greater than 50% | ||||
Options [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Potentially dilutive securities | 49,781 | 49,781 | |||
Options [Member] | Warrant [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Potentially dilutive securities | 1,181,889 | 1,181,889 |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) | Sep. 30, 2022 | Mar. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 13,937,000 | $ 10,537,000 |
Inventory in Transit | 1,244,000 | 3,306,000 |
Estimated Amount of Future Returns | 1,112,000 | 683,000 |
Subtotal | 16,293,000 | 14,526,000 |
Less:Inventory Reserve | 271,000 | 364,000 |
Inventories, net | $ 16,022,436 | $ 14,161,636 |
SUMMARY OF PROPERTY AND EQUIPME
SUMMARY OF PROPERTY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | |
Sep. 30, 2022 | Mar. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,822,000 | $ 2,734,000 |
Less: Accumulated depreciation | 2,289,000 | 2,169,000 |
Property and equipment, net | 532,505 | 565,094 |
Computer and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 468,000 | 440,000 |
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] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in 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 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 7 years | |
Property and equipment, gross | $ 210,000 | 210,000 |
Molds and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,046,000 | $ 1,986,000 |
Molds and tooling [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 3 years | |
Molds and tooling [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Average useful life (in years) | 5 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 62,000 | $ 67,000 | $ 120,000 | $ 135,000 |
FINANCING (Details Narrative)
FINANCING (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||||
Oct. 14, 2022 | Jun. 16, 2020 | Jun. 01, 2020 | May 05, 2020 | Jun. 18, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | ||||||||||
Other non-current assets | $ 193,841 | $ 193,841 | $ 86,441 | |||||||
Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt face amount | 15,000,000 | 15,000,000 | ||||||||
Minimum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt face amount | 7,500,000 | 7,500,000 | ||||||||
Crestmark Bank [Member] | Paycheck Protection Program [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from loan | $ 444,000 | |||||||||
Debt forgiveness | 0 | $ 448,000 | ||||||||
IHC Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest expenses | 100,000 | $ 48,000 | 198,000 | 86,000 | ||||||
Other non-current assets | 70,000 | 70,000 | ||||||||
Borrowings | 4,000,000 | 4,000,000 | ||||||||
Two Year Credit and Security Agreement [Member] | Revolving Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, maximum borrowing amount | $ 2,500,000 | |||||||||
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] | Revolving Credit Facility [Member] | July 1 and December 31 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, maximum amount outstanding during period | 10,000,000 | |||||||||
Two-Year Loan and Security Agreement [Member] | Revolving Credit Facility [Member] | January 1 and July 31 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, maximum amount outstanding during period | 5,000,000 | |||||||||
Two-Year Loan and Security Agreement [Member] | IHC Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest expenses | $ 1,000,000 | |||||||||
Loan balance | 2,500,000 | 2,500,000 | 2,500,000 | |||||||
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% | |||||||||
Revolving Credit Facility [Member] | Crestmark Bank [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, interest rate during period | 8.75% | |||||||||
Average loan balance | $ 2,000,000 | |||||||||
Interest expenses | 79,000 | 51,000 | 132,000 | 96,000 | ||||||
Revolving Credit Facility [Member] | Crestmark Bank [Member] | Subsequent Event [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, interest rate during period | 0.50% | |||||||||
Line of credit facility, unused line fee | 0.35% | |||||||||
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] | Prime Rate [Member] | Subsequent Event [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, interest rate during period | 50% | |||||||||
Credit Agreement [Member] | Subsequent Event [Member] | Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt face amount | $ 15,000,000 | |||||||||
Credit Agreement [Member] | Subsequent Event [Member] | Minimum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt face amount | $ 7,500,000 | |||||||||
Debt instrument maturity date | Oct. 14, 2025 | |||||||||
Financing Agreement [Member] | Dimension Funding LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest expenses | 4,000 | 5,000 | 8,000 | 11,000 | ||||||
Debt face amount | $ 365,000 | |||||||||
Debt instrument, term | 60 months | |||||||||
Notes payable | 177,000 | 177,000 | 213,000 | |||||||
Financing Agreement [Member] | Three Installment Notes [Member] | Dimension Funding LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt principal payments | $ 365,000 | |||||||||
Financing Agreement [Member] | Installment Note One [Member] | Dimension Funding LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, interest rate | 7.58% | |||||||||
Financing Agreement [Member] | Installment Note Two [Member] | Dimension Funding LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, interest rate | 8.55% | |||||||||
Financing Agreement [Member] | Installment Note Three [Member] | Dimension Funding LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, interest rate | 9.25% | |||||||||
Subordination Agreement [Member] | Starlight Marketing Development, Ltd [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable | 353,000 | 353,000 | $ 353,000 | |||||||
Conversion of debt | $ 803,000 | |||||||||
Conversion of debt percentage | 6% | |||||||||
Interest expense, related party | $ 3,000 | $ 5,000 | $ 6,000 | $ 14,000 | ||||||
Subordination Agreement [Member] | Subordinated Notes Payable [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Conversion of debt percentage | 6% |
SCHEDULE OF SUPPLEMENTAL INFORM
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details) - USD ($) | Sep. 30, 2022 | Mar. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease - right-of-use assets | $ 862,279 | $ 1,279,347 |
Finance leases as a component of Property and equipment, net of accumulated depreciation of $4,859 | 9,657 | |
Current portion of operating leases | 848,723 | 876,259 |
Current portion of finance leases | 7,988 | 7,605 |
Operating lease liabilities, net of current portion | 60,374 | 457,750 |
Finance leases, net of current portion | $ 6,528 | $ 10,620 |
SCHEDULE OF SUPPLEMENTAL INFO_2
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES (Details) (Parenthetical) | Sep. 30, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Property, plant and equipment and finance lease right-of-use asset | $ 4,859 |
SCHEDULE OF LEASE TERM AND DISC
SCHEDULE OF LEASE TERM AND DISCOUNT RATE (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease expense as a component of general and administrative expenses | $ 227,839 | $ 457,088 |
Depreciation of leased assets as a component of depreciation | 1,041 | 4,859 |
Interest on lease liabilities as a component of interest expense | $ 389 | $ 828 |
SCHEDULE OF SUPPLEMENTAL CASH F
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION (Details) | 6 Months Ended |
Sep. 30, 2022 USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating cash flow paid for operating leases | $ 463,521 |
Financing cash flow paid for finance leases | $ 3,709 |
Operating lease term | 12 months 9 days |
Finance lease term | 21 months |
Operating lease discount rate | 6.25% |
Finance lease discount rate | 9.86% |
SCHEDULE OF FUTURE MINIMUM RENT
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES (Details) | Sep. 30, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases 2022 | $ 237,675 |
Finance Leases 2022 | 2,266 |
Operating Leases 2023 | 674,488 |
Finance Leases 2023 | 9,065 |
Operating Leases 2024 | 30,739 |
Finance Leases 2024 | 4,533 |
Operating Leases Total Minimum Future Payments | 942,902 |
Finance Leases Total Minimum Future Payments | 15,864 |
Operating Leases Less: Imputed Interest | 33,805 |
Finance Leases Less: Imputed Interest | 1,348 |
Operating Leases Present Value of Lease Liabilities | 909,097 |
Finance Leases Present Value of Lease Liabilities | $ 14,516 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jul. 02, 2021 | Jun. 15, 2020 | Oct. 01, 2017 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Finance lease interest expense | $ 14,516 | $ 14,516 | ||||||
Lease term | 21 months | 21 months | ||||||
Interest expense | $ 389 | $ 828 | ||||||
Operating Lease Agreement [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Lease expiration date | Mar. 31, 2024 | |||||||
Rent expense | $ 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 approximately $69,277 with a 3% increase every 12 months for the remaining term of the extension | |||||||
Three Year Lease Extension Agreement [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Rent expense | $ 69,277 | |||||||
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 | 15,000 | 15,000 | $ 18,000 | |||||
Interest expense | $ 389 | $ 0 | $ 828 | $ 376 |
SUMMARY OF STOCK OPTION ACTIVIT
SUMMARY OF STOCK OPTION ACTIVITY (Details) - Equity Option [Member] | 6 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
Number of Options, Balance at beginning of period | shares | 56,343 |
Weighted Average Exercise Price, Balance at beginning of period | $ / shares | $ 9.90 |
Number of Options, Granted | shares | 107,752 |
Weighted Average Exercise Price, Granted | $ / shares | $ 6.83 |
Number of Options, Forfeited | shares | (2,668) |
Weighted Average Exercise Price, Forfeited | $ / shares | $ 5.63 |
Number of Options, Balance at end of period | shares | 161,427 |
Weighted Average Exercise Price, Balance at end of period | $ / shares | $ 7.90 |
Number of Options, exercisable at end of period | shares | 51,341 |
Weighted Average Exercise Price, Options exercisable at end of period | $ / shares | $ 10.19 |
SCHEDULE OF EMPLOYEE STOCK OPTI
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING (Details) | 6 Months Ended | |
Sep. 30, 2022 $ / shares shares | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options number outstanding | shares | 161,427 | [1] |
Stock option number exercisable | shares | 51,341 | [1] |
Exercise Price Range One [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options outstanding exercise price | $ 2.35 | |
Stock options outstanding exercise price | $ 7.20 | |
Stock options number outstanding | shares | 58,669 | |
Stock option outstanding weighted average remaining contractual life | 4 years 4 months 24 days | |
Stock option outstanding weighted average exercise price | $ 4.95 | |
Stock option number exercisable | shares | 21,667 | |
Stock Option Exercisable Weighted Average Exercise Price | $ 6.82 | |
Exercise Price Range Two [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options outstanding exercise price | 8.10 | |
Stock options outstanding exercise price | $ 9.60 | |
Stock options number outstanding | shares | 81,086 | |
Stock option outstanding weighted average remaining contractual life | 9 years 2 months 12 days | |
Stock option outstanding weighted average exercise price | $ 8.25 | |
Stock option number exercisable | shares | 8,002 | |
Stock Option Exercisable Weighted Average Exercise Price | $ 7.62 | |
Exercise Price Range Three [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Stock options outstanding exercise price | 11.40 | |
Stock options outstanding exercise price | $ 16.50 | |
Stock options number outstanding | shares | 21,672 | |
Stock option outstanding weighted average remaining contractual life | 4 years 6 months | |
Stock option outstanding weighted average exercise price | $ 14.42 | |
Stock option number exercisable | shares | 21,672 | |
Stock Option Exercisable Weighted Average Exercise Price | $ 14.42 | |
[1]Total number of options outstanding as of September 30, 2022 includes 23,343 73,334 64,750 |
SCHEDULE OF EMPLOYEE STOCK OP_2
SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING (Details) (Parenthetical) | Sep. 30, 2022 shares |
Three Current and Four Former Directors [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
Option issued | 23,343 |
Officer [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
Option issued | 73,334 |
Employees [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
Option issued | 64,750 |
SCHEDULE OF COMMON STOCK WARRAN
SCHEDULE OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING (Details) | 6 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Share-Based Payment Arrangement [Abstract] | |
Number of common warrants outstanding beginning balance | 1,155,557 |
Weighted average exercise price outstanding beginning balance | $ / shares | $ 2.80 |
Number of pre-funded warrants outstanding beginning | 561,113 |
Weighted average exercise price outstanding beginning balance | $ / shares | $ 0.30 |
Number of common warrants issued | 100,000 |
Weighted average exercise price warrants issued | $ / shares | $ 5 |
Number of pre-funded warrants issued | |
Number of common warrants exercised | (309,001) |
Weighted average exercise price warrants exercised | $ / shares | $ 2.80 |
Number of pre-funded warrants outstanding exercised | (561,113) |
Weighted average exercise price warrants exercised | $ / shares | $ 0.30 |
Number of common warrants outstanding ending balance | 946,556 |
Weighted average exercise price outstanding ending balance | $ / shares | $ 3.03 |
Number of pre-funded warrants outstanding ending | |
Number of common warrants exercisable | 846,556 |
Weighted average exercise price warrants exercisable | $ / shares | $ 2.80 |
Number of pre-funded warrants exercisable |
SCHEDULE OF WARRANTS EXPIRATION
SCHEDULE OF WARRANTS EXPIRATION (Details) - $ / shares | Sep. 30, 2022 | Mar. 31, 2022 |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of common warrants | 946,556 | 1,155,557 |
Exercise Price Range One [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of common warrants | 846,556 | |
Warrant Exercise Price | $ 2.80 | |
Expiration Date | Sep. 15, 2026 | |
Exercise Price Range Two [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of common warrants | 100,000 | |
Warrant Exercise Price | $ 5 | |
Expiration Date | May 23, 2027 |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 6 Months Ended | |||
Jun. 28, 2022 | Apr. 12, 2022 | Jul. 06, 2021 | Sep. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Stock option, expected dividend yield | 0% | 0% | ||
Stock option, risk free interest rate | 2.65% | |||
Stock option, volatility | 168% | |||
Stock option, expected term | 3 years | |||
Unrecognised expense | $ 531,000 | |||
Vested options | $ 1,000 | |||
Minimum [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Stock option, risk free interest rate | 2.63% | |||
Stock option, volatility | 166.10% | |||
Maximum [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Stock option, risk free interest rate | 3.21% | |||
Stock option, volatility | 176.30% | |||
2022 Plan [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Sale of stock description | The maximum number of shares of common stock initially available for issuance under the 2022 Plan is 233,333 shares of common stock and thereafter an annual increase shall be added as of the first day of the Company’s fiscal year beginning in 2023, equal to the least of (i) 5% of the outstanding common stock on a fully diluted basis as of the end of the Company’s immediately preceding fiscal year, (ii) 333,334 shares, and (iii) a lesser amount as determined by the Board of Directors. The shares of common stock subject to stock awards granted under the 2022 Plan that lapse, terminate, expire prior to exercise, are canceled, or are forfeited, shall again become available for issuance under the 2022 Plan | |||
Employee stock ownership plan | 137,426 | |||
Issued | 15,803 | |||
Number of shares available for issuance | 80,104 | |||
2022 Plan [Member] | Director [Member] | Stock Option One [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 667 | |||
Exercise price | $ 2.35 | |||
2022 Plan [Member] | Director [Member] | Stock Option Two [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 4,000 | |||
Exercise price | $ 8.11 | |||
2022 Plan [Member] | Director [Member] | Stock Option Three [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 1,334 | |||
Exercise price | $ 7.40 | |||
2022 Plan [Member] | Officers [Member] | Stock Option One [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 33,334 | |||
Exercise price | $ 4 | |||
2022 Plan [Member] | Officers [Member] | Stock Option Two [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 3,667 | |||
Exercise price | $ 8.65 | |||
2022 Plan [Member] | Employee [Member] | Stock Option Two [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 3,000 | |||
Exercise price | $ 8.65 | |||
2022 Plan [Member] | Employee [Member] | Equity Option [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Issued | 61,750 | |||
Exercise price | $ 8.11 |
AUGUST 2021 STOCK REDEMPTION (D
AUGUST 2021 STOCK REDEMPTION (Details Narrative) - Redemption Agreement [Member] - Koncepts and Treasure Green [Member] - USD ($) | Aug. 10, 2021 | Aug. 05, 2021 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Shares redeemed | 654,105 | |
Conversion of stock, amount issued | $ 7,162,000 |
AUGUST 2021 PRIVATE PLACEMENT (
AUGUST 2021 PRIVATE PLACEMENT (Details Narrative) - USD ($) | 5 Months Ended | 6 Months Ended | |||||
Aug. 10, 2021 | Jul. 06, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | Aug. 05, 2021 | |
Common stock, shares, issued | 3,108,814 | 3,108,814 | 1,221,209 | ||||
Proceeds from warrant exercises | $ 168,334 | ||||||
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% | ||||||
Share price | $ 2.80 | ||||||
Equity fair value disclosure | $ 359,000 | ||||||
Common stock price | $ 9.90 | ||||||
Expected life of the warrants | 2 years 6 months | ||||||
Stock option, volatility | 168% | ||||||
Expected dividend rate | 0% | 0% | |||||
Stock option, risk free interest rate | 2.65% | ||||||
AGP Warrants [Member] | |||||||
Warrants purchase | 44,445 | ||||||
Private Placement [Member] | |||||||
Warrants purchase | 561,111 | ||||||
Exercise price of warrants | $ 2.80 | ||||||
Cash payment for private placement | $ 630,000 | $ 100,000 | |||||
Legal fees | $ 390,000 | ||||||
Stock issued for restricted shares | 1,905 | ||||||
Stock issued for restricted shares, value | $ 189,000 | ||||||
Payment of stock issuance expenses | $ 831,000 | ||||||
Pre-Funded Warrants [Member] | |||||||
Exercise price of warrants | $ 0.30 | ||||||
Class of warrant or right, number of securities called by each warrant or right | 561,111 | ||||||
Purchase Agreement [Member] | |||||||
Common stock, shares, issued | 550,000 | ||||||
Warrants purchase | 550,000 | ||||||
Exercise price of warrants | $ 2.80 | ||||||
Redemption Agreement [Member] | Koncepts and Treasure Green [Member] | |||||||
Proceeds from warrant exercises | $ 9,832,000 | ||||||
Conversion of stock, amount issued | $ 7,162,000 |
PUBLIC OFFERING AND NASDAQ UP_2
PUBLIC OFFERING AND NASDAQ UPLISTING (Details Narrative) | 6 Months Ended | ||||
May 23, 2022 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2021 USD ($) | Mar. 31, 2022 $ / shares | Jul. 06, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Reverse stock split | 1-for-30 reverse stock split | ||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |||
Gross proceeds from issuance of stock | $ 3,362,751 | $ 9,000,580 | |||
Warrant term | 2 years 6 months | ||||
Underwriting Agreement [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Sale of stock, number of shares issued in transaction | shares | 1,000,000 | ||||
Common stock, par value | $ / shares | $ 0.01 | ||||
Gross proceeds from issuance of stock | $ 4,000,000 | ||||
Underwriting discounts and commissions and other estimated offering expenses | $ 637,000 | ||||
Sale of stock, price per share | $ / shares | $ 4 | ||||
Net proceeds from issuance of stock | $ 3,363,000 | ||||
Underwriter warrants to purchase | shares | 100,000 | ||||
Sale of stock, percentage | 10% | ||||
Exercise price per share | $ / shares | $ 5 | ||||
Warrant term | 5 years | ||||
Fair Value Adjustment of Warrants | $ 244,000 | ||||
Underwriting Agreement [Member] | Measurement Input, Exercise Price [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Warrant measurement input | 2.90 | ||||
Underwriting Agreement [Member] | Measurement Input, Expected Term [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Warrant term | 3 years | ||||
Underwriting Agreement [Member] | Measurement Input, Price Volatility [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Warrant measurement input | 176 | ||||
Underwriting Agreement [Member] | Measurement Input, Expected Dividend Rate [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Warrant measurement input | 0 | ||||
Underwriting Agreement [Member] | Measurement Input, Risk Free Interest Rate [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Warrant measurement input | 2.63 |
SCHEDULE OF REVENUE BY GEOGRAPH
SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 17,114,000 | $ 17,369,000 | $ 28,806,000 | $ 23,435,000 |
North America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 16,138,000 | 16,729,000 | 27,830,000 | 22,695,000 |
Europe [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 306,000 | 156,000 | 306,000 | 156,000 |
AUSTRALIA | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 670,000 | $ 484,000 | $ 670,000 | $ 584,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - Stingray [Member] - USD ($) | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | |
Related Party Transaction [Line Items] | |||||
Due from related parties | $ 242,000 | $ 242,000 | $ 152,000 | ||
Revenue from related parties | $ 123,000 | $ 110,000 | $ 255,000 | $ 224,000 |
SCHEDULE OF RESERVE FOR SALES R
SCHEDULE OF RESERVE FOR SALES RETURNS (Details) - USD ($) | 6 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Reserve For Sales Returns | ||
Reserve for sales returns at beginning of the year | $ 990,000 | $ 960,000 |
Provision for estimated sales returns | 1,964,000 | 2,110,000 |
Sales returns received | (1,263,000) | (1,206,000) |
Reserve for sales returns at end of the period | $ 1,690,606 | $ 1,864,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Retirement Benefits [Abstract] | ||||
Defined contribution plan, administrative expenses | $ 20,000 | $ 17,000 | $ 35,000 | $ 35,000 |
CONCENTRATIONS OF CREDIT AND _2
CONCENTRATIONS OF CREDIT AND SALES RISK (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2022 | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Customers [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration of sales risk, percentage | 81% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Customers [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration of sales risk, percentage | 53% | ||||
Sales Revenue [Member] | Customers Concentration Risk [Member] | Customers One [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration of sales risk, percentage | 43% | 49% | 46% | 48% | |
Sales Revenue [Member] | Customers Concentration Risk [Member] | Customers Two [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration of sales risk, percentage | 29% | 16% | 32% | 16% | |
Sales Revenue [Member] | Customers Concentration Risk [Member] | Customers Three [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration of sales risk, percentage | 10% | 12% | 14% |