What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-02-14 compared with 2021-11-22 · 436 added, 370 removed, 592 unchanged (58% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

receivable, net of allowances of $ 256,901 and $ 138,580 , respectively

from Crestmark Bank

receivable related party - Stingray Group, Inc.

expenses and other current assets

Current Assets

Accounts receivable, net

of allowances of $ 306,975 and $ 138,580 , respectively

Due from Crestmark Bank

Accounts receivable related

party - Stingray Group, Inc.

Inventories, net

Prepaid expenses and other

current assets

financing costs

Current Assets

and equipment, net

Leases - right of use assets

Property and equipment,

Deferred tax assets

Operating Leases - right

of use assets

non-current assets

and Shareholders’ Equity

to related party - Starlight Consumer Electronics Co., Ltd.

to related party - Starlight R&D, Ltd.

lines of credit

due to customers

for sales returns

portion of finance leases

portion of installment notes

portion of note payable - Paycheck Protection Program

portion of operating lease liabilities

portion of subordinated related party debt - Starlight Marketing Development, Ltd.

Liabilities and Shareholders’

Current Liabilities

leases, net of current portion

notes, net of current portion

payable - Payroll Protection Program, net of current portion

Accounts payable

Accrued expenses

Due to related party -

Starlight Consumer Electronics Co., Ltd.

Due to related party -

Starlight R&D, Ltd.

Revolving lines of credit

Customer deposits

Refunds due to customers

Reserve for sales returns

Current portion of finance

Current portion of installment

Current portion of note

payable - Paycheck Protection Program

Current portion of operating

lease liabilities

related party debt - Starlight Marketing Development, Ltd.

Current Liabilities

Finance leases, net of current

Installment notes, net of

current portion

Note payable - Payroll Protection

Program, net of current portion

lease liabilities, net of current portion

and Contingencies

Shareholders’

stock, $ 1.00 par value;

Commitments and Contingencies

Shareholders’ Equity

Preferred stock, $ 1.00

1,000,000 shares authorized;

no shares issued and outstanding

stock, Class A, $ 0.01 par value;

Common stock, Class A,

$ 0.01 par value;

100,000 shares authorized;

no shares issued and outstanding

stock, Class B, $ 0.01

and 39,040,748

shares issued and outstanding, respectively

paid-in capital

Common stock, Class B,

$ 0.01 par value;

100,000,000 shares authorized;

36,636,264 and 39,040,748 shares issued and outstanding, respectively

Additional paid-in capital

( 13,109,298 )

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the Three Months Ended

the Six Months Ended

the Nine Months Ended

of Goods Sold

and administrative expenses

Operating Expenses

From Operations

Income (Expenses)

from Paycheck Protection Plan loan forgiveness

- related party

from damaged goods insurance claim

from extinguishment of accounts payable

Selling expenses

General and administrative

Operating Expenses

Income From Operations

Other Income (Expenses)

Gain from Paycheck Protection

Plan loan forgiveness

Gain - related party

Gain from damaged goods

insurance claim

Gain from extinguishment

of accounts payable

Interest expense

Other (Expenses) Income, net

Before Income Tax Provision

Income Before Income Tax

Tax Provision

Income per Common Share

Weighted Average Common and Common Equivalent Shares:

( 1,006,135 )

Net Income per Common Share

Weighted Average Common and Common Equivalent

notes to the condensed consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

the Six Months Ended

flows from operating activities

to reconcile net income to net cash used in operating activities:

of deferred financing costs

in inventory reserve

in allowance for bad debts

from disposal of property and equipment

based compensation

in net deferred tax assets

from Paycheck Protection Plan loan forgiveness

- related party

from extinguishment of accounts payable

in operating assets and liabilities:

the Nine Months Ended

Cash flows from operating

Adjustments to reconcile

net income to net cash (used in) provided by operating activities:

Amortization of deferred

financing costs

Change in inventory reserve

Change in allowance for

Loss from disposal of property

and equipment

Stock based compensation

Change in net deferred

Gain from Paycheck Protection

Plan loan forgiveness

Gain - related party

Gain from extinguishment

of accounts payable

Changes in operating assets

and liabilities:

Accounts receivable

( 10,123,571 )

( 7,055,589 )

from Crestmark Bank

receivable - related parties

Due from banks

( 1,172,374 )

Accounts receivable - related

Insurance receivable

( 5,933,704 )

expenses and other current assets

non-current assets

to related parties

due to customers

for sales returns

Prepaid expenses and other

current assets

Other non-current assets

Accounts payable

Accrued expenses

Due to related parties

Customer deposits

Refunds due to customers

Reserve for sales returns

lease liabilities, net of operating leases - right of use assets

cash used in operating activities

flows from investing activities

cash (used in) provided by operating activities

( 3,113,334 )

Cash flows from investing

of property and equipment

cash used in investing activities

flows from financing activities

from issuance of stock - net of transaction expenses

of redemption and retirement of treasury stock

Cash flows from financing

Proceeds from Issuance

of stock - net of transaction expenses

Payment of redemption and

retirement of treasury stock

( 7,162,452 )

proceeds from revolving lines of credit

from note payable - Paycheck Protection Program

of deferred financing charges

on installment notes

from exercise of stock options

on subordinated debt - related party

Net proceeds from revolving

lines of credit

Proceeds from note payable

- Paycheck Protection Program

Payment of deferred financing

Payments on installment

Proceeds from exercise

of stock options

Payment on subordinated

debt - related party

on finance leases

cash provided by financing activities

change in cash

Net change in cash

at beginning of year

at end of period

disclosures of cash flow information:

Cash at end of period

Supplemental disclosures

of cash flow information:

paid for interest

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

the three months ended September 30, 2021 and 2020

at June 30, 2021

the three months ended December 31, 2021 and 2020

Balance at September 30, 2021

$ ( 14,535,193 )

Issuance of stock

of pre-funded warrants

of stock issuance expenses

of stock for stock issuance expenses

and retirement of treasury shares

( 19,623,155 )

( 4,111,459 )

( 2,854,762 )

( 7,162,452 )

of common stock - directors

of common stock - non-employee

compensation-stock option

of stock options

of stock options , shares

at September 30, 2021

Issuance of stock , shares

Issuance of pre-funded warrants

Payment of stock issuance expenses

Issuance of stock for stock issuance expenses

Issuance of stock for stock issuance expenses, shares

Redemption and retirement of treasury shares

Redemption and retirement of treasury

shares , shares

Issuance of common stock - directors

Issuance of common stock - directors , shares

Issuance of common stock - non-employee

Issuance of common stock -

non-employee , shares

Employee compensation-stock option

Issuance of common stock - directors

Issuance of common stock - directors, shares

Exercise of stock options

at December 31, 2021

$ ( 13,109,298 )

at June 30, 2020

Balance at September 30, 2020

$ ( 12,225,486 )

at September 30, 2020

Employee compensation-stock option

Issuance of common stock - directors

Exercise of stock options

Balance at December

$ ( 11,058,191 )

2 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

the six months ended September 30, 2021 and 2020

at March 31, 2021

the nine months ended December 31, 2021 and 2020

Balance at March 31, 2021

$ ( 12,254,191 )

Issuance of stock

of pre-funded warrants

of stock issuance expenses

of stock for stock issuance expenses

and retirement of treasury shares

Issuance of pre-funded warrants

Payment of stock issuance expenses

Issuance of stock for stock issuance expenses

Redemption and retirement of treasury shares

( 19,623,155 )

2 unchanged sentences

( 7,162,452 )

of common stock - directors

of common stock - non-employee

compensation-stock option

of stock options

at September 30, 2021

Issuance of common stock - directors

Issuance of common stock - non-employee

Employee compensation-stock option

Exercise of stock options

Balance at December

$ ( 13,109,298 )

at March 31, 2020

Balance at March 31, 2020

$ ( 14,426,556 )

at September 30, 2020

Beginning balance

$ ( 14,426,556 )

Employee compensation-stock option

Issuance of common stock directors

Exercise of stock options

Balance at December

$ ( 11,058,191 )

Ending balance

$ ( 11,058,191 )

notes to the condensed consolidated financial statements

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2 – LIQUIDITY AND RECENT EQUITY EVENTS

Company for the six months ended September 30, 2021 reported net income of approximately $ 574,000 and used cash in operating activities

of approximately $ 576,000 as compared to net income of approximately $ 2,201,000 and used cash in operating activities of approximately

$ 674,000 for the six months ended September 30, 2020.

In May, 2020 the Company received loan proceeds from Crestmark Bank in the amount

of approximately $ 444,000 under the Paycheck Protection Program (“PPP”) established by the government to assist companies

with financial relief due to COVID-19.

The Company used the loan proceeds for loan forgiveness eligible purposes, including payroll,

benefits, rent and utilities, and maintained its existing payroll levels during the forgiveness eligible period.

In June 2021 the Company

received notification from the SBA that the loan had been forgiven in its entirety.

For the six months ended September 30, 2021, a gain

of approximately $ 448,000 (including principal and interest) from the forgiveness of the loan was included in other income and expenses

in the accompanying condensed consolidated statements of income.

Company for the nine months ended December 31, 2021 reported net income of approximately $ 2,000,000 and used cash in operating activities

of approximately $ 3,113,000 .

In May, 2020 the Company received loan proceeds from Crestmark Bank in the amount of approximately $ 444,000

under the Paycheck Protection Program (“PPP”) established by the government to assist companies with financial relief due

The Company used the loan proceeds for loan forgiveness eligible purposes, including payroll, benefits, rent and utilities,

and maintained its existing payroll levels during the forgiveness eligible period.

In June 2021 the Company received notification from

the SBA that the loan had been forgiven in its entirety.

For the nine months ended December 31, 2021, a gain of approximately $ 448,000

(including principal and interest) from the forgiveness of the loan was included in other income and expenses in the accompanying condensed

consolidated statements of income.

August 2021, the Company entered into a stock redemption agreement (the “Redemption Agreement”) with its majority shareholders,

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reissuance in the future.

believe that current working capital, including the net cash obtained from the Purchase and Redemption Agreements along with the availability

of cash from our Intercreditor Revolving Credit Facility (See Note 6 – Bank Financing), and cash expected to be generated from

our operating forecast will be adequate to meet the Company’s liquidity requirements for at least the next twelve months.

the Intercreditor Revolving Credit Facility will be adequate to maintain and grow our business during the remaining term of the agreement.

As both the Crestmark Bank (“Crestmark Facility”) and the Iron Horse Credit (“IHC”) Facility (“IHC Facility”)

are set to expire on June 15, 2022, the Company expects to negotiate a revision or extension of these debt facilities upon their maturity,

however, there can be no assurance that such revision or extension will occur or at what terms.

believe that current working capital, cash expected to be generated from our operating forecast, along with the availability of cash

from our credit facilities (See Note 6 – BANK FINANCING) assuming that they are revised and or extended, will be adequate to meet

the Company’s liquidity requirements for at least twelve months from the filing of this report.

As both the Crestmark Bank (“Crestmark

Facility”) and the Iron Horse Credit (“IHC”) Facility (“IHC Facility”) are set to expire on June 15, 2022,

the Company expects to negotiate a revision or extension of these debt facilities upon their maturity, however, there can be no assurance

that such revision or extension will occur or at what terms.

3 - SUMMARY OF ACCOUNTING POLICIES

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The accompanying unaudited financial

statements for the three months and six months ended September 30, 2021 and 2020 have been prepared in accordance with accounting principles

statements for the three months and nine months ended December 31, 2021 and 2020 have been prepared in accordance with accounting principles

generally accepted in the United States of America (“US GAAP”) applicable to interim financial information and the requirements

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the periods presented.

CONCENTRATION OF CREDIT RISK

CONCENTRATION

OF CREDIT RISK

times, the Company maintains cash in United States bank accounts that are more than the Federal Deposit Insurance Corporation insured

1 unchanged sentence

The amounts at foreign financial institutions at

September 30, 2021 and March 31, 2021 are approximately $ 748,000 and $ 225,000 , respectively.

December 31, 2021 and March 31, 2021 are approximately $ 125,000 and $ 225,000 , respectively.

instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable.

3 unchanged sentences

future inventory returns due to warranty and allowance programs.

As of September 30, 2021 and March 31, 2021 the estimated amounts for

As of December 31, 2021 and March 31, 2021 the estimated amounts for

these future inventory returns were approximately $ 1,978,000 and $ 528,000 , respectively.

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Management regularly reviews the Company’s investment in inventories for such declines in value.

As of September 30, 2021

As of December 31, 2021

and March 31, 2021 the Company had inventory reserves of approximately $ 934,000 and $ 636,000 , respectively for estimated excess and obsolete

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If the undiscounted future cash flows attributable to the related assets are less than the carrying

amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards

Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-05, “Accounting for the Impairment or Disposal

of Long-Lived Assets.” No impairment was recorded as of September 30, 2021 and 2020.

amount, the carrying amounts are reduced to fair value and an impairment

loss is recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” No impairment

was recorded as of December 31, 2021 and 2020.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

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Company’s operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease

The Company utilizes the implicit rate for its finance leases.

The Company utilizes the financing interest rate for its finance leases.

AND EQUIPMENT

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are recorded as a reduction to net sales.

For the three months ended September 30, 2021 and 2020 co-op promotion incentives were approximately

For the three months ended December 31, 2021 and 2020 co-op promotion incentives were approximately

$ 796,000 and $ 858,000 , respectively.

For the six months ended September 30, 2021 and 2020 co-op promotion incentives were approximately

For the nine months ended December 31, 2021 and 2020 co-op promotion incentives were approximately

$ 1,805,000 and $ 2,032,000 , respectively.

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reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

The Company estimates variable consideration under our return allowance programs for goods returned to the customer for various reasons,

The Company estimates variable consideration under our return allowance programs for goods returned from our customers for various reasons,

whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.

Company’s reserve for sales returns were approximately $ 1,864,000 and $ 960,000 as of September 30, 2021 and March 31, 2021, respectively.

Company’s reserve for sales returns were approximately $ 2,922,000 and $ 960,000 as of December 31, 2021 and March 31, 2021, respectively.

is derived from five different major product lines.

Disaggregated revenue from these product lines for the three and six months ended

September 30, 2021 and 2020 consisted of the following:

SCHEDULE OF DISAGGREGATION OF REVENUE

Karaoke Machines

and Accessories

Subscriptions

Disaggregated revenue from these product lines for the three and nine months ended

December 31, 2021 and 2020 consisted of the following:

OF DISAGGREGATION OF REVENUE

by Product Line

Classic Karaoke Machines

Licensed Product

SMC Kids Toys

Microphones and Accessories

Music Subscriptions

AND HANDLING COSTS

1 unchanged sentence

fulfill the Company’s promise to transfer the goods.

For the three months ended September 30, 2021 and 2020 shipping and handling

For the three months ended December 31, 2021 and 2020 shipping and handling

expenses were approximately $ 369,000 and $ 512,000 , respectively.

For the six months ended September 30, 2021 and 2020 shipping and handling

For the nine months ended December 31, 2021 and 2020 shipping and handling

expenses were approximately $ 654,000 and $ 900,000 , respectively.

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option valuation model to value stock options.

Employee stock option compensation expense for the three and six months ended September

Employee stock option compensation expense for the three and nine months ended December

31, 2021 and 2020 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service

period for the entire portion of the award.

For the three months ended September 30, 2021 and 2020, the stock option expense was approximately

For the three months ended December 31, 2021 and 2020, the stock option expense was approximately

$ 3,000 and $ 5,000 , respectively.

For the six months ended September 30, 2021 and 2020, the stock option expense was approximately $ 13,000

For the nine months ended December 31, 2021 and 2020, the stock option expense was approximately $ 16,000

and $ 5,000 , respectively.

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expenses in the condensed consolidated statements of income.

For the three months ended September 30, 2021 and 2020, these amounts totaled

For the three months ended December 31, 2021 and 2020, these amounts totaled

approximately $ 11,000 and $ 33,000 , respectively.

For the six months ended September 30, 2021 and 2020, these amounts totaled $ 50,000 and

$ 15,000 respectively.

For the nine months ended December 31, 2021 and 2020, these amounts totaled $ 61,000

and $ 48,000 respectively.

Company follows the provisions of FASB ASC 740 “Accounting for Income Taxes.” Under the asset and liability method of ASC

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of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities.

For the six months

ended September 30, 2021 and 2020 we estimated our effective tax rate to be approximately 20 % and 25 % , respectively.

As of September

For the nine months

ended December 31, 2021 and 2020 we estimated our effective tax rate to be approximately 11 % and 23 %, respectively.

As of December 31,

2021 and March 31, 2021 the Singing Machine had net deferred tax assets of approximately $ 638,000 and $ 887,000 , respectively.

Company recorded an income tax provision of approximately $ 174,000 and $ 821,000 for the three months ended September 30, 2021 and 2020,

recorded an income tax provision of approximately $ 103,000 and $ 264,000 for the three months ended December 31, 2021 and 2020, respectively.

The Company recorded an income tax provision of approximately $ 249,000 and $ 1,006,000 for the nine months ended December 31, 2021 and

2020, respectively.

The Company recorded an income tax provision of approximately $ 146,000 and $ 742,000 for the six months ended September

30, 2021 and 2020, respectively.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

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largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

As of September 30, 2021, there were

As of December 31, 2021, there were

no uncertain tax positions that resulted in any adjustment to the Company’s provision for income taxes.

4 unchanged sentences

OF EARNINGS PER SHARE

of dilutive shares for the three and six months ended September 30, 2021 and 2020 are as follows:

of dilutive shares for the three and nine months ended December 31, 2021 and 2020 are as follows:

OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE

the three months ended September 30, 2021

the three months ended September 30, 2020

the six months ended September 30, 2021

the six months ended September 30, 2020

ended December 31, 2020

ended December 31, 2021

ended December 31, 2020

weighted average common shares outstanding

7 unchanged sentences

the period using the treasury stock method.

For the three and six months ended September 30, 2021, options to purchase approximately

For the three and nine months ended December 31, 2021, options to purchase approximately

225,000 and 322,000 shares of common stock, respectively, have been included in the calculation of diluted net income per share as compared

to approximately 550,000 and 425,000 shares that were included in the calculation of diluted net income per share for the three and six

months ended September 30, 2020.

For the three and six months ended September 30, 2021, options and warrants to purchase approximately

35,456,667 shares of common stock, have been excluded in the calculation of diluted net income per share as compared to approximately

780,000 shares that were excluded in the calculation of diluted net income per share for the three and six months ended September 30,

2020 as the result would have been anti-dilutive.

to approximately 271,000 and 374,000 shares of common stock, respectively, that were included in the calculation of diluted net income

per share for the three and nine months ended December 31, 2020.

For the three and nine months ended December 31, 2021, options and warrants

to purchase approximately 35,416,667 shares of common stock, have been excluded in the calculation of diluted net income per share as

compared to approximately 730,000 shares that were excluded in the calculation of diluted net income per share for the three and nine

months ended December 31, 2020 as the result would have been anti-dilutive.

ACCOUNTING PRONOUNCEMENTS

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that might not yet have met the threshold of being probable.

amendments in ASU 2016-03 for smaller reporting companies are effective for fiscal years beginning after April 1, 2023 including interim

periods within that fiscal year.

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.

OF NEW ACCOUNTING STANDARDS

August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts

in Entity’s Own Equity (Subtopic 815-40),” to address the complexity in accounting for certain financial instruments with

characteristics of liabilities and equity.

Amongst other provisions, the amendments in this ASU significantly changed the guidance on

the derivative scope exception for contracts in an entity’s own equity such that fewer freestanding instruments, like warrants,

will require liability treatment.

ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2021.

However, early adoption is permitted as early as fiscal years, and interim periods within those fiscal years,

beginning after December 15, 2020.

The Company adopted the new standard on April 1, 2021.

adoption of ASU 2020-06 did not have a material effect on the Company’s condensed consolidated financial statements.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2021 and 2020

We are currently evaluating the potential effects of this updated guidance on our

condensed consolidated financial statements and related disclosures.

4 - INVENTORIES, NET

are comprised of the following components:

Amount of Future Returns

Finished Goods

Inventory in Transit

Estimated Amount of

Future Returns

Less:Inventory

Inventories, net

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2021 and 2020

5 – PROPERTY AND EQUIPMENT

1 unchanged sentence

SUMMARY OF PROPERTY AND EQUIPMENT

and office equipment

Computer and office equipment

Furniture and fixtures

Warehouse equipment

Molds and tooling

Accumulated depreciation

expense for the three months ended September 30, 2021 and 2020 was approximately $ 67,000 and $ 68,000 , respectively.

expense for the three months ended December 31, 2021 and 2020 was approximately $ 55,000 and $ 65,000 , respectively.

Depreciation expense

for the six months ended September 30, 2021 and 2020 was approximately $ 135,000 and $ 139,000 , respectively.

for the nine months ended December 31, 2021 and 2020 was approximately $ 190,000 and $ 204,000 , respectively.

6 – BANK FINANCING

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outstanding loan balance cannot exceed $ 10.0 million during peak selling season between July 1 and December 31and is reduced to a maximum

of $ 5.0 million between January 1 and July 31.

Costs associated with closing of the Intercreditor Revolving Credit Facility of approximately

$ 74,000 were deferred and were amortized over one year.

During the three months ended September 30, 2021 and 2020 the Company incurred

amortization expense of approximately $ 9,000 and $ 18,000 , respectively associated with the amortization of deferred financing costs from

the Intercreditor Revolving Credit Facility.

During the six months ended September 30, 2021 and 2020 the Company incurred amortization

expense of approximately $ 26,000 and $ 18,000 , respectively associated with the amortization of deferred financing costs from the Intercreditor

Revolving Credit Facility.

of $ 5.0 million between January 1 and July 31 with the ability to exceed when required.

Costs associated with closing of the Intercreditor

Revolving Credit Facility of approximately $ 74,000 were deferred and were amortized over one year.

During the three months ended December

31, 2021 and 2020 the Company incurred amortization expense of approximately $ 10,000 and $ 19,000 , respectively associated with the amortization

of deferred financing costs from the Intercreditor Revolving Credit Facility.

During the nine months ended December 31, 2021 and 2020

the Company incurred amortization expense of approximately $ 36,000 and $ 40,000 , respectively associated with the amortization of deferred

financing costs from the Intercreditor Revolving Credit Facility.

the Crestmark Facility:

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will implement an availability block of 20% of amounts due on Iron Horse Credit Intercreditor Revolving Credit Facility.

pay-down of the loan to zero in January and February each year.

Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable

4 unchanged sentences

loan balance of $ 2,000,000 .

For the three months ended September 30, 2021 and 2020 the Company recorded interest expense of approximately

For the six months ended September 30, 2021 and 2020 the Company recorded interest expense of approximately $ 96,000 and $ 51,000 ,

respectively.

For the three months ended December 31, 2021 and 2020 the Company recorded interest expense of approximately

$ 106,000 and $ 100,000 , respectively.

For the nine months ended December 31, 2021 and 2020 the Company recorded interest expense of approximately

$ 202,000 and $ 151,000 , respectively.

The Crestmark Facility expires on June 15, 2022 .

As of September 30, 2021, the Company had an outstanding balance of approximately

$ 1,052,000 on the Crestmark Facility.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2021 and 2020

As of December 31, 2021, the Company had an outstanding

balance of approximately $ 6,637,000 on the Crestmark Facility.

addition, the Company executed a two-year Loan and Security Agreement with Iron Horse Credit for up to $ 2,500,000 in inventory financing.

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distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness.

This financial covenant

was waived for the first six months of the IHC Facility.

As of September 30, 2021, the Company was in compliance with this covenant.

The Company was not in

compliance with this covenant as of October 31, 2021 and November 30, 2021;

however, waivers from default were obtained from IHC

for these months.

As of December 31, 2021, the Company was in compliance with this covenant.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2021 and 2020

IHC Facility is secured by a perfected security interest in the Company’s inventory.

5 unchanged sentences

deferred and are being amortized over one year.

Interest expense for the three months ended September 30, 2021 and 2020 were approximately

Interest expense for the three months ended December 31, 2021 and 2020 were approximately

$ 34,000 and $ 41,000 , respectively.

Interest expense for the six months ended September 30, 2021 and 2020 were approximately $ 86,000 and

$ 54,000 , respectively.

Interest expense for the nine months ended December 31, 2021 and 2020 were approximately $ 120,000

and $ 103,000 , respectively.

The IHC Facility expires on June 15, 2022 .

As of September 30, 2021 and March 31, 2021, there was an outstanding

As of December 31, 2021 and March 31, 2021, there was an outstanding

balance of approximately $ 1,990,000 and $ 65,000 , respectively.

of September 30, 2021 there was approximately $ 1,448,000 of available borrowings under these facilities.

of December 31, 2021 there was approximately $ 510,000 of available borrowings under these facilities.

both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a revision or extension

2 unchanged sentences

May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $ 444,000 under the Paycheck Protection

The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which provides

for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.

loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including payroll,

benefits, rent and utilities, and maintains its payroll levels.

The amount of loan forgiveness may be reduced if the borrower terminates

employees or reduces salaries during the eligible period.

The unforgiven portion of the PPP loan was payable over two years at an interest

rate of 1%, with a deferral of payments until a forgiveness application was accepted and reviewed by the Small Business Administration

(“SBA”), and the SBA provided Crestmark with the loan forgiveness amount.

In June 2021 the Company received notification

from the SBA that the loan had been forgiven in its entirety and we were notified by Crestmark that the debt was discharged.

six months ended September 30, 2021, a gain of approximately $ 448,000 (including principal and interest) from the forgiveness of the

loan was included in other income and expenses in the accompanying condensed consolidated statements of income.

Program (the “PPP”).

The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES

Act”), which provided for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of

the qualifying business.

The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible

purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.

The amount of loan forgiveness may be reduced

if the borrower terminates employees or reduces salaries during the eligible period.

The unforgiven portion of the PPP loan was payable

over two years at an interest rate of 1%, with a deferral of payments until a forgiveness application was accepted and reviewed by the

Small Business Administration (“SBA”), and the SBA provided Crestmark with the loan forgiveness amount.

In June 2021 the

Company received notification from the SBA that the loan had been forgiven in its entirety and we were notified by Crestmark that the

debt was discharged.

For the nine months ended December 31, 2021, a gain of approximately $ 448,000 (including principal and interest)

from the forgiveness of the loan was included in other income and expenses in the accompanying condensed consolidated statements of income.

Notes Payable

1 unchanged sentence

ERP System project over a term of 60 months at a cost of approximately $ 365,000 .

As of September 30, 2020, the Company executed three

As of December 31, 2021, the Company had executed three

installment notes totaling approximately $ 365,000 for payments issued to the project vendor.

3 unchanged sentences

include principal and interest.

As of September 30, 2021, and March 31, 2021 there was an outstanding balance on the installment notes

As of December 31, 2021, and March 31, 2021 there was an outstanding balance on the installment notes

of approximately $ 231,000 and $ 281,000 , respectively.

For the three months ended September 30, 2021 and 2020 the Company incurred interest

For the three months ended December 31, 2021 and 2020 the Company incurred interest

expense of approximately $ 5,000 and $ 6,000 , respectively.

For the six months ended September 30, 2021 and 2020 the Company incurred interest

For the nine months ended December 31, 2021 and 2020 the Company incurred interest

expense of approximately $ 16,000 and $ 20,000 , respectively.

8 unchanged sentences

principal retroactively from the date that previously scheduled payments had been missed.

During the three months ended September 30,

During the three months ended December 31,

2021 and 2020 interest expense was approximately $ 3,000 and $ 12,000 , respectively on the subordinated note payable and the related party

subordinated debt.

During the six months ended September 30, 2021 and 2020 interest expense was approximately $ 14,000 and $ 24,000 , respectively

During the nine months ended December 31, 2021 and 2020 interest expense was approximately $ 17,000 and $ 36,000 , respectively

on the subordinated note payable and the related party subordinated debt.

connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the subordinated note payable.

the Crestmark Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any amounts borrowed

against these credit facilities are paid in full, the Company maintains a 1 :

1 debt coverage ratio and exhibits sufficient cash liquidity

to support on-going operations.

As of September 30, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit

Facility to make principal payments totaling $ 450,000 .

connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the note payable.

Both the Crestmark

Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any amounts borrowed against these

credit facilities are paid in full, the Company maintains a 1 :

1 debt coverage ratio and exhibits sufficient cash liquidity to support

on-going operations.

As of December 31, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility and

has made cumulative principal payments totaling $ 450,000 .

During the next twelve months the Company intends on making additional payments

1 unchanged sentence

Facility agreements.

of December 31, 2021 and March 31, 2021, the remaining amount due on the note payable was approximately $ 353,000 and $ 503,000 respectively.

The remaining amount due on the subordinated note payable was classified as a current liability as of December 31, 2021 and March 31,

2021 on the condensed consolidated balance sheets.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2021 and 2020

of September 30, 2021 and March 31, 2021, the remaining amount due on the note payable was approximately $ 353,000 and $ 503,000 respectively.

The remaining amount due on the subordinated note payable was classified as a current liability as of September 30, 2021 and March 31,

2021 on the condensed consolidated balance sheets.

7 - COMMITMENTS AND CONTINGENCIES

13 unchanged sentences

Although we regularly monitor the financial health

and operations of companies in our supply chain, and use alternative suppliers when necessary and available, financial hardship or government

restrictions on our suppliers or sub-suppliers caused by the COVID-19 pandemic could cause a disruption in our ability to obtain raw

materials or components required to manufacture our products and adversely affect our operations.

September 11, 2020 a Complaint was filed against the Company’s SMCL subsidiary and various staffing agencies used by SMCL in a

Superior Court of San Bernadino County.

The complaint alleges an employee of SMCL committed employment practice violations against a

former temporary employee not employed by SMC Logistics.

Management has investigated the allegation and has engaged with an employment

attorney to defend the lawsuit.

Management does not believe the claims have merit and does not believe the lawsuit will have a material

adverse effect on our financial results.

is not aware of any other legal proceedings other than matters that arise in the ordinary course of business.

and operations of companies in our supply chain, and use alternative suppliers when necessary and available, any financial hardship or

government restrictions on our suppliers or sub-suppliers caused by the COVID-19 pandemic could cause a disruption in our ability to

obtain raw materials or components required to manufacture our products and adversely affect our operations.

is not aware of any legal proceedings other than matters that arise in the ordinary course of business.

have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through

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expense for our operating leases is recognized on a straight-line basis over the lease terms.

July 1, 2021 we entered into a long-term capital leasing arrangement with Union Credit Corporation to finance the leasing of a used reach

truck vehicle in the amount of approximately $ 24,000 .

The leases require monthly payments in the amount of approximately $ 755 per month

over a total lease term of 36 months which commenced on July 1, 2021.

The agreement has an effective interest rate of 9.9 % and the Company

has the option to purchase the equipment at the end of the lease term for one dollar.

As of September 30, 2021 and March 31, 2021, the

remaining amounts due on this capital leasing arrangement was approximately $ 22,000 and $ 0 , respectively.

For the three and six months

ended September 30, 2021 and 2020 the Company incurred interest expense of $ 376 and $ 0 , respectively.

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 .

The lease require monthly payments in the amount of approximately $ 755 per month over a total

lease term of 36 months which commenced on July 1, 2021.

The agreement has an effective interest rate of 9.9 % and the Company has the

option to purchase the equipment at the end of the lease term for one dollar.

As of December 30, 2021 and March 31, 2021, the remaining

amounts due on this capital leasing arrangement was approximately $ 20,000 and $ 0 , respectively.

For the three and nine months ended December

31, 2021 and 2020 the Company incurred interest expense of $ 696 and $ 1,072 , respectively.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

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31, 2021 and 2020

balance sheet information related to leases as of September 30, 2021 is as follows:

balance sheet information related to leases as of December 31, 2021 is as follows:

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

lease - right-of-use assets

leases as a component of Property and equipment, net of accumulated depreciation of $ 694

Operating lease

- right-of-use assets

Finance leases as a component

of Property and equipment, net of accumulated depreciation of $ 1,735

portion of operating leases

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leases, net of current portion

statement of operations information related to leases for the three and six months ended September 30, 2021 is as follows:

Supplemental statement

of operations information related to leases for the three and nine months ended December 31, 2021 is as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

lease expense as a component of general and administrative expenses

Operating lease

expense as a component of general and administrative expenses

Finance lease cost

of leased assets as a component of depreciation

on lease liabilities as a component of interest expense

cash flow information related to leases for the six months ended September 30, 2021 is as follows:

cash flow information related to leases for the nine months ended December 31, 2021 is as follows:

OF SUPPLEMENTAL CASH FLOW INFORMATION

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term and Discount Rate

Weighted average

remaining lease term (months)

Weighted average

discount rate

maturities of operating and finance lease liabilities outstanding as of September 30, 2021 are as follows:

average remaining lease term (months)

average discount rate

maturities of operating and finance lease liabilities outstanding as of December 31, 2021 are as follows:

SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES

for the remaining 3 months

Minimum Future Payments

Total Minimum Future Payments

Imputed Interest

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8 - STOCK OPTIONS AND WARRANTS

the six months ended September 30, 2021 and 2020 the Company issued 40,000 and 0 stock options, respectively at an exercise price of

$ .29 to directors as compensation for their service.

the nine months ended December 31, 2021 the Company issued 40,000 and 20,000 stock options, respectively, at an exercise price of $ .29

and $ .27 , respectively to directors as compensation for their service.

the three and nine months ended December 31, 2021 the Company issued 50,000 stock options at an exercise price of $ .22 to the Vice President

of Sales and Marketing as compensation due under his fiscal 2021 incentive bonus plan.

the three and nine months ended December 31, 2020 the Company issued 100,000 stock options at an exercise price of $ .29 to directors

as compensation for their service.

fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions

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inputs were used to value each option grant:

six months ended September 30, 2021:

expected dividend yield of 0 %, risk-free interest rate

of 0.43 %, volatility of 149.5 % and an expected term of three years .

the nine months ended December 31, 2021:

expected dividend yield of 0 %, risk-free interest rate between 0.43 % and 0.96 %, respectively

with volatility between 149.5 % and 157.0 % respectively with an expected term of three years .

the nine months ended December 31, 2020:

expected dividend yield of 0 %, risk-free interest rate of 0.18 %, volatility of 146.7 % and

an expected term of three years .

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

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31, 2021 and 2020

summary of stock option activity for the six months ended September 30, 2021 is summarized below:

SUMMARY OF STOCK OPTION ACTIVITY

Average Exercise Price

at beginning of period

at end of period

summary of stock option activity for the nine months ended December 31, 2021 is summarized below:

OF STOCK OPTION ACTIVITY

Stock Options:

Balance at beginning of period

Balance at end of period

exercisable at end of period

following table summarizes information about employee stock options outstanding at September 30, 2021:

following table summarizes information about employee stock options outstanding at December 31, 2021:

SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING

of Exercise Price

Outstanding at September 30, 2021

Outstanding at December 31, 2021

Average Remaining Contractural Life

Average Exercise Price

Exercisable at September 30, 2021

Exercisable at December 31, 2021

Average Exercise Price

Total number of options outstanding

as of September 30, 2021 includes 660,000

options issued to two current and four former

directors as compensation, 1,040,000

options issued to key employees.

* Total number of

options outstanding as of December 31, 2021 includes 650,000 options issued to three current and four former directors as compensation,

and 1,090,000 options issued to key employees.

of December 31, 2021, there was unrecognized expense of approximately $ 17,000 remaining on options currently vesting over time with approximately

nine months remaining until these options are fully vested.

intrinsic value of vested options as of December 31, 2021 was approximately $ 40,000 .

per the execution of the August 2021 private placement as disclosed in Note 2 and Note 10, common warrants and pre-funded warrants issued

and outstanding as of September 30, 2021 as follows:

and outstanding as of December 31, 2021 are as follows:

OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING

Warrants outstanding

at March 31, 2021

warrants issued

outstanding at September 30, 2021

of September 30, 2021, the Company’s warrants by expiration date were as follows:

Warrants outstanding at March 31, 2021

Common warrants issued

Pre-funded warrants

Warrants outstanding at December 31, 2021

of December 31, 2021, the Company’s warrants by expiration date were as follows:

OF WARRANTS EXPIRATION

Common Warrants

of Pre-funded Warrants

Pre-funded warrants expire on the dates they are exercised.

of CommonWarrants

* Pre-funded warrants

expire on the dates they are exercised.

outstanding warrants are fully vested.

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Shares were retired and are available for reissuance in the future.

to the Redemption Agreement, neither Koncepts nor Treasure Green remained shareholders of the Company.

10 – AUGUST 2021 PRIVATE PLACEMENT

August 5, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with large institutional

investors and the strategic investor for private placement of (i) 16,500,001 shares of its common stock (the “Shares”)

together with Common Warrants to purchase up to 16,500,000 shares of common stock with an exercise price of $ 0.35 per share, and (ii)

16,833,333 pre-funded warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant exercisable for one share of common stock

at an exercise price of $ 0.01 per share, together with Common Warrants to purchase up to 16,833,333 shares of common stock at an exercise

price of $ 0.35 per share (the “Private Placement”).

Pursuant to the Redemption Agreement, neither Koncepts nor Treasure

Green remained shareholders of the Company.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2021 and 2020

10 – AUGUST 2021 PRIVATE PLACEMENT

August 5, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with large institutional

investors and the strategic investor for private placement of (i) 16,500,001 shares of its common stock (the “Shares”) together

with Common Warrants to purchase up to 16,500,000 shares of common stock with an exercise price of $ 0.35 per share, and (ii) 16,833,333

pre-funded warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant exercisable for one share of common stock at an

exercise price of $ 0.01 per share, together with Common Warrants to purchase up to 16,833,333 shares of common stock at an exercise price

of $ 0.35 per share (the “Private Placement”).

Common Warrants and Pre-Funded Warrants are collectively referred to as (the “Warrants”).

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such application.

As of December 31, 2021 an application with NASDAQ has been submitted and is pending approval.

Should the NASDAQ application

be approved, the shareholders of the Company have approved a reverse stock split simultaneous with the up-listing.

closing of the Private Placement took place on August 10, 2021, when the Shares and Warrants were delivered to the purchasers and funds,

30 unchanged sentences

the accompanying condensed consolidated statements of stockholders’ equity.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2021 and 2020

11 - GEOGRAPHICAL INFORMATION

to customers outside of the United States for the three and six months ended September 30, 2021 and 2020 were primarily made by the Macau

to customers outside of the United States for the three and nine months ended December 31, 2021 and 2020 were primarily made by the Macau

Subsidiary in US dollars.

1 unchanged sentence

SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION

THREE MONTHS ENDED

SIX MONTHS ENDED

THE THREE MONTHS ENDED

THE NINE MONTHS ENDED

North America

geographic area of sales was based on the location where the product is delivered.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2021 and 2020

12 – RELATED PARTY TRANSACTIONS

5 unchanged sentences

TO/FROM RELATED PARTIES

September 30, 2021 and March 31, 2021, the Company had amounts due to related parties in the amounts of approximately $ 63,000 respectively

for services provided by these companies and licensing fees for use of pedestal model molds and tools owned by the parent company.

September 30, 2021 and March 31, 2021, the Company had amounts due from Stingray in the amounts of approximately $ 71,000 and $ 88,000 ,

respectively for shared revenue from music content provided to our customers from their library of produced and licensed karaoke content.

December 31, 2021 and March 31, 2021, the Company had amounts due to related parties in the amounts of approximately $ 63,000 respectively

for services provided by these companies and licensing fees for use of pedestal model molds and tools owned by the former parent company.

December 31, 2021 and March 31, 2021, the Company had amounts due from Stingray of approximately $ 159,000 and $ 88,000 , respectively for

shared revenue from music content provided to our customers from their library of produced and licensed karaoke content.

Company has a music subscription sharing agreement with Stingray.

For the three months ended September 30, 2021 and 2020 the Company

received music subscription revenue of approximately $ 110,000 and $ 13,000 , respectively.

For the six months ended September 30, 2021

and 2020 the Company received music subscription revenue of approximately $ 224,000 and $ 102,000 , respectively.

These amounts were included

as a component of net sales in the accompanying condensed consolidated statements of income.

For the three months ended December 31, 2021 and 2020 the Company received

music subscription revenue of approximately $ 160,000 and $ 188,000 , respectively.

For the nine months ended December 31, 2021 and 2020

the Company received music subscription revenue of approximately $ 384,000 and $ 290,000 , respectively.

These amounts were included as

a component of net sales in the accompanying condensed consolidated statements of income.

July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company’s Canadian distributor and the

2 unchanged sentences

executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo’s karaoke inventory for approximately $ 685,000 .

During the three and six months ended September 30, 2021, there was a gain of approximately $ 11,000 from Cosmo related to payments received

During the three and nine months ended December 31, 2021, there was a gain of approximately $ 11,000 from Cosmo related to payments received

in Fiscal 2022 on prior year sales and the related receivable previously reversed and written off as initially deemed uncollectible.

Company incurred service expenses from SLE.

The services from SLE were approximately $ 90,000 for the three months ended September

The services from SLE were approximately $ 91,000 for the three months ended December 31,

2021 and 2020.

The services from SLE for the six months ended September 30, 2021 and 2020 were approximately $ 181,000 and $ 191,000

respectively.

These amounts were included as a component of general and administrative expenses in the accompanying condensed consolidated

statements of income.

The services from SLE for the nine months ended December 31, 2021 and 2020 were approximately $ 272,000 .

These amounts

were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.

13 – RESERVE FOR SALES RETURNS

8 unchanged sentences

for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets.

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2021 and 2020

in the Company’s reserve for sales returns are presented in the following table:

SCHEDULE OF RESERVE FOR SALES RETURNS

September 30,

Reserve for sales returns at beginning

3 unchanged sentences

( 2,445,000 )

Reserve for sales returns at end of the period

SINGING MACHINE COMPANY, INC AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2021 and 2020

Reserve for sales returns

at end of the period

14 – REFUNDS DUE TO CUSTOMERS

of September 30, 2021 and March 31, 2021 the amount of refunds due to customers was approximately $ 99,000 and $ 145,000 , respectively,

of December 31, 2021 and March 31, 2021 the amount of refunds due to customers was approximately $ 90,000 and $ 145,000 , respectively,

primarily due to one customer for overstock returns.

4 unchanged sentences

The amounts charged

to operations for contributions to this plan and administrative costs during the three months ended September 30, 2021 and 2020 totaled

approximately $ 17,000 and $ 20,000 , respectively.

The amounts charged to operations for contributions to this plan and administrative

costs during the six months ended September 30, 2021 and 2020 totaled approximately $ 35,000 and $ 34,000 , respectively.

The amounts are

included as a component of general and administrative expense in the accompanying condensed consolidated statements of income.

does not provide any post-employment benefits to retirees.

to operations for contributions to this plan and administrative costs during the three months ended both December 31, 2021 and 2020 totaled

approximately $ 20,000 .

The amounts charged to operations for contributions to this plan and administrative costs during the nine months

ended December 31, 2021 and 2020 totaled approximately $ 55,000 and $ 54,000 , respectively.

The amounts are included as a component of

general and administrative expense in the accompanying condensed consolidated statements of income.

The Company does not provide any

post-employment benefits to retirees.

16 - CONCENTRATIONS OF CREDIT AND SALES RISK

2 unchanged sentences

accounts is based upon management’s estimates and historical experience and reflects the fact that accounts receivable are concentrated

with several large customers.

At September 30, 2021, 69 % of accounts

receivable were due from three customers in North America that individually owed over 10% of total accounts receivable.

2021, 70 % of accounts receivable were due from three customers in North America that individually owed over 10 % of total accounts receivable.

with several large

At December 31, 2021, approximately 75 % of accounts receivable were due from four customers in North America that individually owed over

10% of total accounts receivable.

At March 31, 2021, 70 % of accounts receivable were due from three customers in North America that individually

owed over 10% of total accounts receivable.

Company generates most of its revenue from retailers of products in the United States with a significant amount of sales concentrated

1 unchanged sentence

For the three months

ended September 30, 2021, there were three customers who individually accounted for 10% or more of the Company’s net sales.

ended December 31, 2021, there were five customers who individually accounted for 10% or more of the Company’s net sales.

derived from these customers as a percentage of net sales were 25 %, 24 %, 17 %, 17 % and 10 % respectively.

For the three months ended September 30,

2020, 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 46 %, 20 % and 10 %, respectively.

the six months ended September 30, 2021, there were three customers who individually accounted for 10% or more of the Company’s

For the three months ended December

31, 2020, there were five customers who individually accounted for 10% or more of the Company’s net sales.

Revenue derived from

these customers as a percentage of net sales were 22 %, 22 %, 19 %, 12 % and 12 %, respectively.

the nine months ended December 31, 2021, there were four customers who individually accounted for 10% or more of the Company’s

Revenue derived from these customers as a percentage of net sales were 37 %, 19 %, 16 % and 11 %, respectively.

For the six months

ended September 30, 2020, there were three customers who individually accounted for 10% or more of the Company’s net sales.

For the nine months

ended December 31, 2020, there were four customers who individually accounted for 10% or more of the Company’s net sales.

derived from these customers as a percentage of net sales were 34 %, 19 %, 13 % and 13 %, respectively.

1 unchanged sentence

during fiscal 2020 which is reflected as gain from extinguishment of accounts payable in the condensed consolidated statement of income

for the three and six months ended September 30, 2021.

for the nine months ended December 31, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements