XML 24 R14.htm IDEA: XBRL DOCUMENT
v3.23.2

COMMITMENTS AND CONTINGENCIES | 3 Months Ended
--- | ---
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 8 – COMMITMENTS AND CONTINGENCIES LEGAL MATTERS 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, California and Hong Kong expiring in various years through 2025. We entered into a operating lease agreement, effective October 15, 2022, for our administrative office located in Hong Kong. The office is approximately 1,900 square feet and oversees our regional contract manufacturing, logistics, and select marketing functions. The lease expires October 14, 2025, and the monthly base rent is approximately $4,900 for the entire term of the lease. 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. The base rent payment is approximately $9,700 per month, subject to annual adjustments. 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. We have elected not to renew this lease and are in the process of migrating our North American logistics operations to an outsourced business partner specializing in these matters. 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. 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 June 30, 2023 and March 31, 2023, the remaining amounts due on this capital leasing arrangement was approximately $8,600 and $11,000, respectively. 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 June 30, 2023 and March 31, 2023, the remaining amounts due on this financing leasing arrangement was approximately $51,300 and $53,300 respectively. THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 and 2022 (Unaudited) Supplemental balance sheet information related to leases as of June 30, 2023 is as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES
Assets: |  |  |  |
Operating lease – right-of-use assets |  | $ | 331,878 |
Finance leases as a component of property and equipment |  |  | 59,900 |
Liabilities |  |  |  |
Current |  |  |  |
Current portion of operating leases |  | $ | 277,733 |
Current portion of finance leases |  |  | 18,531 |
Noncurrent |  |  |  |
Operating lease liabilities, net of current portion |  | $ | 78,809 |
Finance leases, net of current portion |  |  | 41,369 |
Supplemental statement of operations information related to leases for the three months ended June 30, 2023 is as follows: SCHEDULE OF LEASE TERM AND DISCOUNT RATE
Operating lease expense as a component of general and administrative expenses |  | $ | 237,007 |
Finance lease cost |  |  |  |
Depreciation of leased assets as a component of depreciation |  | $ | 58,765 |
Interest on finance lease liabilities as a component of interest expense |  | $ | 1,093 |
Supplemental cash flow information related to leases for the three months ended June 30, 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 |  | $ | 252,313 |
Financing cash flow paid for finance leases |  | $ | 4,404 |
Scheduled maturities of operating and finance lease liabilities outstanding as of June 30, 2023 are as follows:
Lease term and Discount Rate |  |  |  |
Weighted average remaining lease term (months) |  |  |  |
Operating leases |  |  | 13.2 |
Finance leases |  |  | 48.8 |
Weighted average discount rate |  |  |  |
Operating leases |  |  | 6.50 | %
Finance leases |  |  | 9.86 | %
THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 and 2022 (Unaudited) The following table summarizes information regarding lease maturities and balance due as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES
Year |  | Operating Leases |  |  | Finance Leases |
2023 (remaining six months) |  | $ | 227,507 |  |  | $ | 10,984 |
2024 |  |  | 120,008 |  |  |  | 17,435 |
2025 |  |  | 48,774 |  |  |  | 12,903 |
2026 |  |  | - |  |  |  | 12,903 |
2027 and beyond |  |  | - |  |  |  | 13,978 |
Total Minimum Future Payments |  |  | 396,289 |  |  |  | 68,203 |
Less: Imputed Interest |  |  | 39,747 |  |  |  | 8,303 |
Present Value of Lease Liabilities |  | $ | 356,542 |  |  | $ | 59,900 |

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