XML 39 R24.htm IDEA: XBRL DOCUMENT
v3.24.1.u1

INCOME TAXES | 9 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 16 - INCOME TAXES The Company’s loss before income taxes for the nine months ended December 31, 2023, and fiscal years ended March 31, 2023, and 2022 is as follows: SCHEDULE OF LOSS BEFORE INCOME TAXES
|  | December 31, 2023 |  |  | March 31, 2023 |  |  | March 31, 2023 |
|  | Nine months ended |  |  | Fiscal years ended |
|  | December 31, 2023 |  |  | March 31, 2023 |  |  | March 31, 2023 |
United States |  | $ | (6,173,000 | ) |  | $ | (3,526,000 | ) |  | $ | (261,000 | )
Foreign |  |  | (225,000 | ) |  |  | (82,000 | ) |  |  | 548,000 |
Loss before income taxes |  | $ | (6,398,000 | ) |  | $ | (3,608,000 | ) |  |  | 287,000 |
The provision for income taxes for the nine months ended December 31, 2023, and fiscal years ended March 31, 2023, and 2022 is as follows: SCHEDULE OF PROVISION FOR INCOME TAXES
|  | December 31, 2023 |  |  | March 31, 2023 |  |  | March 31, 2023 |
|  | Nine months ended |  |  | Fiscal years ended |
|  | December 31, 2023 |  |  | March 31, 2023 |  |  | March 31, 2022 |
Income tax provision: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | 109,000 |  |  | $ | 63,000 |
State |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | (5,000 | ) |  |  | - |
Hong Kong |  |  | - |  |  |  | 34,000 |  |  |  | - |
Total current Federal and State |  | $ | - |  |  | $ | 138,000 |  |  | $ | 63,000 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | 686,000 |  |  | $ | (60,000 | )
State |  |  | - |  |  |  | 206,000 |  |  |  | 54,000 |
Total Deferred Federal and State |  |  | - |  |  |  | 892,000 |  |  |  | (6,000 | )
Total income tax provision |  | $ | - |  |  | $ | 1,030,000 |  |  | $ | 57,000 |
THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023, and March 31, 2023 and 2022 The Company’s net deferred tax assets as of December 31, 2023, and ended March 31, 2023 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
|  | December 31, |  |  | March 31, |
|  | 2023 |  |  | 2023 |
NOL Federal Carryforward |  | $ | 1,291,000 |  |  | $ | 868,000 |
State NOL Carryforward |  |  | 470,000 |  |  |  | 341,000 |
Inventory differences to inventory valuation |  |  | 1,173,000 |  |  |  | 623,000 |
Stock option compensation expense |  |  | 159,000 |  |  |  | 184,000 |
Right of use liability |  |  | 1,022,000 |  |  |  | 118,000 |
Business interest limitation |  |  | 151,000 |  |  |  | 138,000 |
Allowance for doubtful accounts |  |  | 45,000 |  |  |  | 43,000 |
Reserve for estimated returns |  |  | 384,000 |  |  |  | 89,000 |
Accrued vacation |  |  | 7,000 |  |  |  | 14,000 |
Total |  |  | 4,702,000 |  |  |  | 2,418,000 |
Less: valuation allowance |  |  | (3,600,000 | ) |  |  | (2,104,000 | )
Net deferred tax asset |  |  | 1,102,000 |  |  |  | 314,000 |
Depreciable and amortizable assets |  |  | (67,000 | ) |  |  | (134,000 | )
ROU Asset |  |  | (1,000,000 | ) |  |  | (111,000 | )
Prepaid expenses |  |  | (35,000 | ) |  |  | (69,000 | )
Net deferred tax liability |  |  | (1,102,000 | ) |  |  | (314,000 | )
Total |  | $ | - |  |  | $ | - |
The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company’s estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. The Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences and the length of carryback and carryforward periods available under the applicable federal, state and foreign laws; and the amount and timing of future taxable income. The Company evaluated the realizability of its deferred tax assets as of December 31, 2023 and March 31, 2023 in accordance with accounting principles generally accepted in the United States of America and concluded that valuation allowance against all of our deferred tax assets was necessary based upon the Company’s conclusions regarding, among other considerations, the Company’s recent history of losses and projected earnings for fiscal year 2024 and in the future. The actual tax provision differs from the “expected” tax for the nine-month transition period ended December 31, 2023, and the years ended March 31, 2023, and 2022 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows: SCHEDULE OF TAX PROVISION
|  | December 31, 2023 |  |  | March 31, 2023 |  |  | March 31, 2022 |
Statutory federal tax rate |  | $ | (1,344,000 | ) |  | $ | (758,000 | ) |  | $ | 60,000 |
Stater tax rate |  |  | (326,000 | ) |  |  | (174,000 | ) |  |  | 14,000 |
Permanent differences |  |  | 15,000 |  |  |  | 13,000 |  |  |  | 10,000 |
Permanent difference in ERC income |  |  | - |  |  |  | (99,000 | ) |  |  | - |
Tax rate differential on foreign earnings |  |  | 59,000 |  |  |  | 21,000 |  |  |  | (84,000 | )
Expiration of net opretaing loss carryforward |  |  | 89,000 |  |  |  | - |  |  |  | - |
Change in valuation allowance |  |  | 1,495,000 |  |  |  | 2,026,000 |  |  |  | 55,000 |
Other |  |  | 12,000 |  |  |  | 1,000 |  |  |  | 2,000 |
Tax provision |  | $ | - |  |  | $ | 1,030,000 |  |  | $ | 57,000 |
THE SINGING MACHINE COMPANY, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023, and March 31, 2023 and 2022 At December 31, 2023, and March 31, 2023, the Company had federal tax net operating loss carryforwards in the amount of approximately $6,149,000 and $4,131,000, respectively that begin to expire in the year 2025. The net operating loss carryforward is subject to an IRS Section 382 limitation that limited the amount available to use beginning in Fiscal 2020 to approximately $150,000 per year. In addition, the Company had state tax net operating loss carryforwards of approximately $2,453,000 and $2,238,000, respectively that will begin to expire beginning in 2024. These tax net operating loss carryforwards may be subject to adjustment based on future changes in ownership. At December 31, 2023, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP and concluded that a valuation allowance of approximately $3,600,000 million against deferred tax assets is necessary. The recognition of the remaining net deferred tax asset and corresponding tax benefit is based upon the Company’s conclusions regarding, among other considerations, the Company’s current and anticipated customers, contracts and product introductions, and recent operating results.

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

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration