XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.23.2

COMMITMENTS AND CONTINGENCIES | 12 Months Ended
--- | ---
Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 7 - COMMITMENTS AND CONTINGENCIES LEGAL MATTERS We are not a party to, and our property is not the subject of, any material legal proceedings. 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 Hong Kong expiring in various years through 2025. We entered into an operating lease agreement, effective October 1, 2017, for our 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 $9,950 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. On June 15, 2020, we executed a three-year lease extension which will expire on August 31, 2023. The Company does not intend to renew the lease agreement and has signed a service agreement with a third-party logistics company to provide domestic and Canadian warehousing services effective September 1, 2023. The base rent payment is approximately $69,300 per month for the remaining term of the lease. We entered into an operating lease agreement, effective October 15, 2022, for our administrative office located in Hong Kong where we lease approximately 1,890 square feet of office space. The lease expires on October 14, 2025. The base rent payment is approximately $4,900 per month for the entire term of the lease. Lease expense for our operating leases is recognized on a straight-line basis over the lease terms. Finance Leases In February 2023, we entered into a financing leasing arrangement with Wells Fargo Equipment Finance to finance the leasing of two used forklifts in the amount of approximately $55,000. The lease requires monthly payments in the amount of approximately $1,075 per month over a total lease term of 60 months which commenced on February 1, 2023. The agreement has an effective interest rate of 6.5% and the Company has the option to purchase the equipment at the end of the lease term for one dollar. As of March 31, 2023 and March 31, 2022, the remaining amounts due on this financing leasing arrangement was approximately $53,000 and $0, respectively. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2023 and 2022 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. 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 March 31, 2023 and March 31, 2022, the remaining amounts due on this capital leasing arrangement was approximately $11,000 and $18,000, respectively. For the fiscal years ended March 31, 2023 and 2022, the Company incurred interest expense of $2,055 and $1,160, respectively, on these finance leases. Supplemental balance sheet information related to leases as of March 31, 2023 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES
Assets: |  |  |  |
Operating lease - right-of-use assets |  | $ | 561,185 |
Finance leases as a component of property and equipment, net of accumulated depreciation of $8,798 |  |  | 75,306 |
Liabilities |  |  |  |
Current |  |  |  |
Current portion of operating leases |  | $ | 508,515 |
Current portion of finance leases |  |  | 18,162 |
Noncurrent |  |  |  |
Operating lease liabilities, net of current portion |  | $ | 87,988 |
Finance leases, net of current portion |  |  | 46,142 |
Supplemental statement of operations information related to leases for the fiscal year ended March 31, 2023 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE
|  | Fiscal Year Ended |
|  | March 31, 2023 |
Operating lease expense as a component of general and administrative expenses |  | $ | 1,057,798 |
Finance lease cost |  |  |  |
Depreciation of leased assets as a component of depreciation |  | $ | 8,798 |
Interest on finance lease liabilities as a component of interest expense |  | $ | 2,055 |
Supplemental cash flow information related to leases for the fiscal year ended March 31, 2023 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 |  | $ | 959,790 |
Financing cash flow paid for finance leases |  | $ | 9,165 |
Lease term and Discount Rate |  |  |  |
Weighted average remaining lease term (months) |  |  |  |
Operating leases |  |  | 12.4 |
Finance leases |  |  | 31.8 |
Weighted average discount rate |  |  |  |
Operating leases |  |  | 6.50 | %
Finance leases |  |  | 9.86 | %
Scheduled maturities of operating and finance lease liabilities outstanding as of March 31, 2023 are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES
Year |  | Operating Leases |  |  | Finance Leases |
2023 |  | $ | 480,709 |  |  | $ | 16,476 |
2024 |  |  | 89,268 |  |  |  | 17,434 |
2025 |  |  | 48,774 |  |  |  | 12,902 |
2026 |  |  | - |  |  |  | 12,902 |
2027 and beyond |  |  | - |  |  |  | 13,978 |
Total Minimum Future Payments |  |  | 618,751 |  |  |  | 73,692 |
Less: Imputed Interest |  |  | 22,248 |  |  |  | 9,388 |
Present Value of Lease Liabilities |  | $ | 596,503 |  |  | $ | 64,304 |
THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2023 and 2022

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://www.xbrl.org/2003/role/disclosureRef -Topic 440 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482648/440-10-50-4 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 450 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//450/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 954 -SubTopic 440 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480327/954-440-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 440 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482648/440-10-50-4 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 440 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//440/tableOfContent + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration