XML 29 R13.htm IDEA: XBRL DOCUMENT
v3.20.2

Commitments and Contingencies | 12 Months Ended
--- | ---
Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | NOTE 7 - COMMITMENTS AND CONTINGENCIES LEGAL MATTERS On or about February 4, 2020 Singing Machine was named in a product liability complaint alongside Target and Energizer Brands in the state of Missouri. It is alleged by the Plaintiff, an individual, that one of Singing Machine’s karaoke products injured the plaintiff while she was operating the product from battery power. Plaintiff alleges her injury occurred when battery acid leaked from the karaoke product. The plaintiff purchased the karaoke machine at Target and operated the karaoke machine with Energizer batteries. Plaintiff is suing both Singing Machine and Energizer because she is unsure whether the karaoke product or the batteries caused the battery acid leak. The plaintiff alleges four counts of action against Singing Machine including strict product liability, negligence, breach of warranty, and failure to warn. Singing Machine has product liability insurance and the matter has been turned over the matter to insurance company’s counsel in defending the matter. The Company does not believe that the resolution of this matter is likely to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. As of August 12, 2020 management is not aware of any other legal proceedings other than matters that arise in the ordinary course of business. LEASES The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date. The liability is equal to the present value of the remaining minimum lease payments. The asset is based on the liability, subject to certain adjustments. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). As the interest rate implicit in the Company’s operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease payments. The Company utilizes the implicit rate for its finance leases. Operating Leases We have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through 2024. We entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida where we lease approximately 6,500 square feet of office space. The lease expires on March 31, 2024. The base rent payment is approximately $8,800 per month, subject to annual adjustments. We entered into an operating lease agreement, effective June 1, 2013, for 86,000 square feet of warehouse space in Ontario, California for our logistics operations. The lease expires on August 31, 2020 (original lease term of 87 months). The base rent payment is approximately $43,700 per month for the remaining term of the lease. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. We entered into an operating lease agreement, effective May 1, 2018, for 424 square feet of office space in Macau. The rent is fixed at approximately $1,600 per month for the duration of the lease which expires on April 30, 2021. The lease provides for a renewal option to extend the lease. Lease expense for our operating leases is recognized on a straight-line basis over the lease terms. Finance Leases On May 25, 2018 and June 4, 2018, we entered into two long-term capital leasing arrangements with Wells Fargo Equipment Finance (“Wells Fargo”) to finance the leasing of two used forklift vehicles in the amount of approximately $44,000. The leases require monthly payments in the amount of $1,279 per month over a total lease term of 36 months which commenced on June 1, 2018. The agreement has an effective interest rate of 4.5% and the Company has the option to purchase the equipment at the end of the lease term for one dollar. As of March 31, 2020 and 2019 the remaining amounts due on these capital leasing arrangements was $18,000 and $32,000, respectively. For the fiscal years ended March 31, 2020 and 2019 the Company incurred interest expense of $894 and $1,155, respectively. Supplemental balance sheet information related to leases as of March 31, 2020 is as follows:
Assets: |  |  |  |
Operating lease - right-of-use assets |  | $ | 573,874 |
Finance leases as a component of property and equipment, net of accumulated depreciation of $11,918 |  |  | 31,608 |
Liabilities |  |  |  |
Current |  |  |  |
Current portion of operating leases |  | $ | 321,389 |
Current portion of finance leases |  |  | 14,953 |
Noncurrent |  |  |  |
Operating lease liabilities, net of current portion |  | $ | 322,263 |
Finance leases, net of current portion |  |  | 2,550 |
Supplemental statement of operations information related to leases for the fiscal year ended March 31, 2020 is as follows:
|  | Fiscal Year Ended |
|  | March 31, 2020 |
Operating lease expense as a component of general and administrative expenses |  | $ | 534,456 |
Finance lease cost |  |  |  |
Depreciation of leased assets as a component of depreciation |  | $ | 6,218 |
Interest on lease liabilities as a component of interest expense |  | $ | 894 |
Supplemental cash flow information related to leases for the nine months ended March 31, 2020 is as follows: |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flow paid for operating leases |  | $ | 651,158 |
Financing cash flow paid for finance leases |  | $ | 14,410 |
Lease term and Discount Rate |  |  |  |
Weighted average remaining lease term (months) |  |  | 29.6 |
Operating leases |  |  | 14.0 |
Finance leases |  |  |  |
Weighted average discount rate |  |  |  |
Operating leases |  |  | 6.25 | %
Finance leases |  |  | 3.68 | %
Scheduled maturities of operating and finance lease liabilities outstanding as of March 31, 2020 are as follows:
Fiscal Year |  | Operating Leases |  |  | Finance Leases |
2021 |  | $ | 479,599 |  |  | $ | 15,347 |
2022 |  |  | 180,300 |  |  |  | 2,558 |
2023 |  |  | 179,117 |  |  |  | - |
Total Minimum Future Payments |  |  | 839,016 |  |  |  | 17,905 |
Less: Imputed Interest |  |  | 195,364 |  |  |  | 402 |
Present Value of Lease Liabilities |  | $ | 643,652 |  |  | $ | 17,503 |

X
- References No definition available. + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI http://asc.fasb.org/topic&trid=2127136 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 4 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121559207&loc=d3e25336-109308 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 4 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121559207&loc=d3e25336-109308 + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration