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Restatement of Previously Issued Consolidated Financial Statements | 6 Months Ended
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Sep. 30, 2020
Accounting Changes and Error Corrections [Abstract] |
Restatement of Previously Issued Consolidated Financial Statements | NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS The Company has determined that in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, the Company incorrectly accounted for the cost of its co-op promotion allowances (previously referred to as “cooperative advertising”) with its customers as selling expenses instead of a reduction in net sales for each of the three and six months ended September 30, 2020 and 2019, as these co-op promotion allowances 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 effects of this accounting error do not impact the condensed consolidated balance sheets, statements of cash flows and statements of shareholders’ equity. The effects are confined to the condensed consolidated statements of operations, and these notes to condensed consolidated financial statements. The tables below set forth the condensed consolidated statements of operations, including the balances as originally reported, adjustments and the as restated balances for each of the periods affected:
|  | Originally Reported For the Three Months Ended September 30, 2020 |  |  | Adjustment |  |  | As Restated For the Three Months Ended September, 30, 2020 |  |  | Originally Reported For the Six Months Ended September 30, 2020 |  |  | Adjustment |  |  | As Restated For the Six Months Ended September, 30, 2020 |
Net Sales |  | $ | 23,187,519 |  |  | $ | (902,280 | ) |  | $ | 22,285,239 |  |  | $ | 26,511,062 |  |  | $ | (1,173,840 | ) |  | $ | 25,337,222 |
Cost of Goods Sold |  |  | 16,462,235 |  |  |  | - |  |  |  | 16,462,235 |  |  |  | 18,551,766 |  |  |  | - |  |  |  | 18,551,766 |
Gross Profit |  |  | 6,725,284 |  |  |  | (902,280 | ) |  |  | 5,823,004 |  |  |  | 7,959,296 |  |  |  | (1,173,840 | ) |  |  | 6,785,456 |
Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling expenses |  |  | 2,377,091 |  |  |  | (902,280 | ) |  |  | 1,474,811 |  |  |  | 2,947,644 |  |  |  | (1,173,840 | ) |  |  | 1,773,804 |
General and administrative expenses |  |  | 1,841,873 |  |  |  | - |  |  |  | 1,841,873 |  |  |  | 3,205,163 |  |  |  | - |  |  |  | 3,205,163 |
Depreciation |  |  | 67,781 |  |  |  | - |  |  |  | 67,781 |  |  |  | 138,888 |  |  |  | - |  |  |  | 138,888 |
Total Operating Expenses |  |  | 4,286,745 |  |  |  | (902,280 | ) |  |  | 3,384,465 |  |  |  | 6,291,695 |  |  |  | (1,173,840 | ) |  |  | 5,117,855 |
Income from Operations |  |  | 2,438,539 |  |  |  | - |  |  |  | 2,438,539 |  |  |  | 1,667,601 |  |  |  | - |  |  |  | 1,667,601 |
Other Income (Expenses) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gain from damaged goods insurance claim |  |  | 936,537 |  |  |  | - |  |  |  | 936,537 |  |  |  | 1,067,829 |  |  |  | - |  |  |  | 1,067,829 |
Gain from extinguishment of accounts payable |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 390,000 |  |  |  | - |  |  |  | 390,000 |
Interest Expense |  |  | (127,731 | ) |  |  | - |  |  |  | (127,731 | ) |  |  | (157,321 | ) |  |  | - |  |  |  | (157,321 | )
Finance Costs |  |  | (18,431 | ) |  |  | - |  |  |  | (18,431 | ) |  |  | (24,836 | ) |  |  | - |  |  |  | (24,836 | )
Total Other Income (Expenses), net |  |  | 790,375 |  |  |  | - |  |  |  | 790,375 |  |  |  | 1,275,672 |  |  |  | - |  |  |  | 1,275,672 |
Income Before Income Tax Provision |  |  | 3,228,914 |  |  |  | - |  |  |  | 3,228,914 |  |  |  | 2,943,273 |  |  |  | - |  |  |  | 2,943,273 |
Income Tax Provision |  |  | (821,040 | ) |  |  | - |  |  |  | (821,040 | ) |  |  | (742,203 | ) |  |  | - |  |  |  | (742,203 | )
Net Income |  | $ | 2,407,874 |  |  | $ | - |  |  | $ | 2,407,874 |  |  | $ | 2,201,070 |  |  | $ | - |  |  | $ | 2,201,070 |
THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2020 and 2019 (Unaudited)
|  | Originally Reported For the Three Months Ended September 30, 2019 |  |  | Adjustment |  |  | As Restated For the Three Months Ended September, 30, 2019 |  |  | Originally Reported For the Six Months Ended September 30, 2019 |  |  | Adjustment |  |  | As Restated For the Six Months Ended September, 30, 2019 |
Net Sales |  | $ | 20,081,842 |  |  | $ | (1,027,327 | ) |  | $ | 19,054,515 |  |  | $ | 24,890,882 |  |  | $ | (1,196,129 | ) |  | $ | 23,694,753 |
Cost of Goods Sold |  |  | 14,439,522 |  |  |  | - |  |  |  | 14,439,522 |  |  |  | 18,260,856 |  |  |  | - |  |  |  | 18,260,856 |
Gross Profit |  |  | 5,642,320 |  |  |  | (1,027,327 | ) |  |  | 4,614,993 |  |  |  | 6,630,026 |  |  |  | (1,196,129 | ) |  |  | 5,433,897 |
Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling expenses |  |  | 2,488,129 |  |  |  | (1,027,327 | ) |  |  | 1,460,802 |  |  |  | 3,147,422 |  |  |  | (1,196,129 | ) |  |  | 1,951,293 |
General and administrative expenses |  |  | 2,235,269 |  |  |  | - |  |  |  | 2,235,269 |  |  |  | 3,606,325 |  |  |  | - |  |  |  | 3,606,325 |
Depreciation |  |  | 59,588 |  |  |  | - |  |  |  | 59,588 |  |  |  | 119,049 |  |  |  | - |  |  |  | 119,049 |
Total Operating Expenses |  |  | 4,782,986 |  |  |  | (1,027,327 | ) |  |  | 3,755,659 |  |  |  | 6,872,796 |  |  |  | (1,196,129 | ) |  |  | 5,676,667 |
Income (Loss) from Operations |  |  | 859,334 |  |  |  | - |  |  |  | 859,334 |  |  |  | (242,770 | ) |  |  | - |  |  |  | (242,770 | )
Other Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Expense |  |  | (47,639 | ) |  |  | - |  |  |  | (47,639 | ) |  |  | (50,514 | ) |  |  | - |  |  |  | (50,514 | )
Finance Costs |  |  | (3,333 | ) |  |  | - |  |  |  | (3,333 | ) |  |  | (6,666 | ) |  |  | - |  |  |  | (6,666 | )
Total Other Expenses |  |  | (50,972 | ) |  |  | - |  |  |  | (50,972 | ) |  |  | (57,180 | ) |  |  | - |  |  |  | (57,180 | )
Income (Loss) Before Income Tax (Provision) Benefit |  |  | 808,362 |  |  |  | - |  |  |  | 808,362 |  |  |  | (299,950 | ) |  |  | - |  |  |  | (299,950 | )
Income Tax (Provision) Benefit |  |  | (184,140 | ) |  |  | - |  |  |  | (184,140 | ) |  |  | 54,591 |  |  |  | - |  |  |  | 54,591 |
Net Income (Loss) |  | $ | 624,222 |  |  | $ | - |  |  | $ | 624,222 |  |  | $ | (245,359 | ) |  | $ | - |  |  | $ | (245,359 | )

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