The Singing Machine Company, Inc.
Q4 2022 Earnings Call Transcript

Published: 15 Jul 2022

[Operator:]

Good day, everyone, and welcome to The Singing Machine Fiscal 2022 Earnings Report. [Operator Instructions] Please note, this call may be recorded, and I will be standing by if you need any assistance. It is now my pleasure to turn the conference over to Brendan Hopkins. Please go ahead.

[Brendan Hopkins:]

Thank you, everyone, for joining us today. We have a brief safe harbor, and then we'll get started. Except for historical information contained herein, the statements in this conference call are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results.

[With that said, I would like to turn the call over to Gary Atkinson, CEO of The Singing Machine.:]

[Gary Atkinson:]

Thank you, Brendan. Good morning, everyone. My name is Gary Atkinson, The Singing Machine CEO. I'm joined as well this morning by -- with Lionel Marquis, company's CFO; and Bernardo Melo, our Chief Revenue Officer. I want to start off the call by thanking everyone for taking the time to listen in and participate in our fiscal year 2022 earnings call.

[The 12 months ended March 31, 2022, was a unique period in the company's history. We faced a number of very significant challenges and headwinds to our business, but I'm proud to say that our entire global team executed very well. We overcame a series of daily obstacles related to global supply chain and found a way to ensure our critical retail channel partners have the products they needed to support strong consumer demand for our karaoke products. Our CFO, Lionel Marquis, will provide additional details into the results of operations, but I wanted to celebrate some key accomplishments.:]

[First, despite all of the challenging supply chain obstacles from last year, we still managed to deliver over 1 million Karaoke products to the worldwide market generating over $47.5 million in net sales. This represents approximately $1.7 million or 4% growth versus the $45.8 million we generated in the last fiscal year. Secondly, we cemented a critical technology relationship with our most important strategic partner, Stingray. Stingray is one of the leading digital content licensing providers throughout the world. And they play a key role in our shareholder reconstitution, our NASDAQ up-list and a number of key technology initiatives that we launched during fiscal year 2022. And finally, we've completed a critical new step in expanding our relationship with Walmart through their consumer electronics division. This has the potential to drive incremental revenue growth for the next several years, and Bernardo will unpack more of this later in our call.:]

[Lionel is going to walk you through the details of the results of operations for the last fiscal year. But before he does that, I wanted to set the stage for his part of the call by emphasizing the success of our team during the supply chain disruptions of last year. In terms of supply chain, we have spent decades cultivating some of the best manufacturing relationships in Southern China. As a result, we were able to secure product on time and on budget to meet the U.S. holiday retail season.:]

[Our Hong Kong operations' team leveraged our extensive knowledge and network of shipping and logistics relationships to get our product from the docks in China to the ports of Long Beach and L.A. in time to hit the holidays. It is noteworthy that during that time, ocean containers and vessels suffered an unprecedented disruption causing container prices to skyrocket from roughly 4,000 per container to over 20,000 per 40-foot container. In all, we estimate approximately $2.4 million hit to our bottom line caused by the unexpected surge in container pricing.:]

[The good news is that so far this year, container prices have stabilized, and they've come way down from the peak where they were last year. However, that being said, prices still remain elevated above normal.:]

[With this brief summary, I would like to turn the call over to Lionel Marquis, company's CFO.:]

[Lionel Marquis:]

Thank you, Gary. I also wanted to thank all of the participants in today's earnings call. I believe we delivered some very solid results for fiscal year 2022, particularly when you consider the operational and economic headwinds that we faced during the year, as Gary alluded to.

[First, I'd like to discuss our sales growth for 2022. Our revenues for the 12 months ended March 31, 2022, were $47.5 million. That represents a 4% growth when compared to our sales of $45.8 million for the prior fiscal year. I think it's worth noting that the strength and resiliency of our sales growth. In fiscal 2021, we enjoyed a very strong year-over-year sales growth, primarily due to 2 factors. First, we benefited from the emphasis on consumers finding safe and home-centric forms of entertainment during the bulk of the global pandemic. Secondly, Singing Machine successfully launched its Carpool Karaoke device, which proved to be very well received.:]

[These 2 factors led to almost 19% revenue growth in fiscal 2021. Now when you consider 2021 is a banner year and then you factor in all of the supply chain headwinds, it can be hard to imagine the fiscal '22 outperforming such a banner year. However, without the benefit of any new major product launches to stimulate demand overall, consumer demand remained very strong and we delivered steady growth. This is a testament to our strong brand recognition and consumer reach to virtually every meaningful retailer in The United States.:]

[As for the cost of goods sold and their inherent impact on gross margins, we generated $10.8 million in gross income for the fiscal year. This represents approximately 12% decrease from the $12.8 million generated in fiscal year 2021 in gross profit. The decrease was driven heavily by margin compressions as we experienced significant increases in shipping and logistics costs, getting product from China to various end markets in The United States. The overall impact to the margins was a reduction of approximately 400 basis points. Overall, these price increases have largely stabilized, and in some cases, shipping costs has come down moderately.:]

[Provided conditions do not change, currently don't expect any shipping logistics environment to have an outsized impact on our financial performance for the rest of the calendar year. From a cost control perspective, we placed a heavy emphasis on minimizing discretionary spending during the fiscal year. As a result, our selling expenses decreased almost 10% for the fiscal year ended March 31, 2022, from $4.0 million to $3.6 million. Our cost control efforts in part benefited from the limitations on an in-person sales and marketing, which reduced travel and other related expenses.:]

[Partly offsetting these reductions in costs were legal, accounting and other professional services expenses in advance -- that we incurred in advance for preparation in both the private placement in August 2021 and the planning of the NASDAQ up-listing undertaken in 2022. We believe much of these professional services were allowed onetime in nature, and we anticipate seeing these expensive base to some degree going forward. The net effect of these results of operations generated a net gain of approximately $200,000, which represents a $0.02 earnings per share.:]

[Turning to our balance sheet. We held approximately $2.3 million in cash as of March 31, 2022, which is significantly higher than the $300,000 we had on hand at the end of fiscal '21. We coupled with cash proceeds from our recent $4.4 million capital raise in conjunction with our up-listing to NASDAQ. The company has taken meaningful steps to enhance its overall financial flexibility and strength during the overall period of the economic uncertainty.:]

[So at this point, that is my report, and I'd like to turn the call back over to Gary to discuss recent developments and provide additional color on how we see the remainder of the calendar year unfolding.:]

[Gary Atkinson:]

Thank you, Lionel. At this point of the call, I would like to turn it over to Bernardo Melo, who will give us a bit of a recap on fiscal '22 sales. Go ahead, Bernardo.

[Bernardo Melo:]

Good morning, everyone. I would also like to thank you for taking interest in our company and listening today. I'm sure we have some new listeners. So I just want to recap a little bit of what we are doing in the retail landscape. Singing Machine has been dominant, especially in North America with all the big-box retailers throughout representing the home Karaoke segment, doing business with big box retailers like Walmart and Target; warehouse clubs like Costco, Sam's Club and BJ's; e-commerce like Amazon and all the drop ship that we do with those major retailers that I mentioned before. And we're also doing a lot of business with regional retailers like BrandsMart and P.C. Richard for those that know those retailers. So we usually dominate somewhere around 2 to 6 feet of space of the home karaoke network segment, and we've been doing so for many years.

[With that being said, like Gary highlighted 2022, and I'll talk about fiscal year, but also reference calendar year as well. 2022 was definitely a big challenge all around for everyone doing business in the retail level with container prices increasing from -- anywhere from $4,200 all the way upwards to $20,000 a container. And we set a lot of our business almost 1 year, 1.5 years in advance. So we have programs in place before we incurred these costs. Fortunately, we were able to pass some costs, but not fast enough as a lot of retailers have 90-day window before they could accept price increases.:]

[With that being said, we did have good sell-through for the product that we did get in. We had good sell-through at retail. The holidays were still very strong for us with Black Friday and promotional sales going well and a lot of the retailers coming out clean with some of those holiday sales now. Some did get shipments very late in December as there were delays at the port. And those carried over to our fourth quarter calendar year first quarter, so the ordering in the fourth quarter was not as relevant as 2021 during the fourth quarter, and that's just because of inventory coming in and also a lot of retailers have an inventory in stock that were non-karaoke but that did restrict to open to buy dollars across the board. So we were caught in that, and we're no different than anyone else as many companies have reported that in their earnings.:]

[We also were able to introduce -- we're able to upgrade our WiFi machine at Costco that did very well that has a lot of back-end potential, increased our business in Australia. We cleaned our business up in Canada by finishing our partnership with a distributor and going direct there. We also signed a new partnership in the U.K. with a much larger distributor that's better positioned to handle our product throughout those key retailers in the U.K.:]

[So those things are good. Looking forward a little bit, we secured key business with Walmart CE. We gained 4 feet of space there. And it's a very key business for us because it allowed us to introduce a brand-new technology that we're calling Sing Cast, which allows the consumer to stream our app through the machine and in conjunction with the TV, the cell phone, the app and the machine. So we're taking the advantage of that technology. We've introduced 2 new -- I mean, 2 new items at Walmart CE, and they already seen to be also a good start. Another thing that we're focusing on is signing on some key licensing deals that will help us expand distribution within our key retail partnerships, not only through the singing department, but also through toys and some other departments like celebrations and things like that.:]

[We've also started doing some heavy analysis on A/B testing for direct-to-consumer. So we have 2 top leaders in the industry currently testing all these metrics to see how we could expand on it. And it's just for us to be not as reliant on retail and expanding our distribution to direct-to-consumer, which seems to be a very strong point for Karaoke as well. And then we're working on some other key partnerships as well that are going to be outside of our normal business structure. So I'm sure we'll be announcing some of those in future earnings calls.:]

[With that being said, I'll turn it back to Gary, and I'll stick around for additional questions on the back end.:]

[Gary Atkinson:]

Perfect. Thank you, Bernardo. I'm mindful of time, I want to make sure I save some time for Q&A. But before that, I just quickly want to take a few minutes to shift gears and highlight some key nonfinancial accomplishments that our team completed during fiscal '22 that we believe have established strong growth and innovation momentum for the company as we move forward.

[So firstly, during fiscal '22, we successfully completed a $10 million private placement back in August of 2021. The primary purpose of this transaction was to basically reinvigorate our shareholder base and buy out our legacy majority shareholder of more than 20 years. And the rationale for this was pretty simple. We had -- we, management team, had identified certain growth and innovation opportunities that we believe the company is ideally situated to take advantage of. However, our former majority shareholder had a very traditional hardware-only view for the company, and we felt it was critical that we expand it into the music content and other verticals in order to successfully continue to keep growing.:]

[As part of this process to transform the company, we also started back in fiscal '22 of pursuing an up-list to a national exchange and NASDAQ made a lot of sense for us at the time. Ultimately, the hard work that we put in last summer led to a successful up-listing to the NASDAQ this spring. We believe that this new platform will serve our investors well as we execute and share our growth story moving forward.:]

[Secondly, we have expanded our most important strategic relationship with Stingray. They are a leading global digital music content company, and their technology plays a key role in our emerging subscription-based growth model. The capability was also central to our new WiFi streaming and our new casting enabled products that were very well received by the Walmart consumer electronics team. We believe we can leverage these technology-driven capabilities to capture more incremental opportunities in terms of average sales price per machine, improve margins and drive follow-on subscription services to keep the customer coming back for more.:]

[And finally, before we jump into Q&A, we are also in the process of thinking bigger. We are underway in shifting our overall thinking from being the #1 market leader in home karaoke to being the #1 market leader in all aspects of karaoke. We intend to continue to dominate the in-home market as we already have done, but we also want to improve our penetration into the car and into connected devices and smart TVs.:]

[Overall, we seek to leverage our well-known brand to expand our reach into larger, more lucrative markets. We look forward to providing additional updates on these efforts as we continue to execute on our business strategy in the coming future.:]

[So at this time, I would like to open it up now for any questions that anyone might have.:]

[Operator:]

[Operator Instructions] And our first question comes from Rommel Dionisio with Aegis Capital.

[Rommel Dionisio:]

I saw a press release in early June about a full line of assortment of products being available in Walmart and on the electronics side, more importantly. Just -- I know it's been just a few weeks and it's not peak season. But I just wonder if you could relate some sort of initial feedback from the placement there? Obviously, a significant win in terms of expansion of shelf space in the key retailer like Walmart. And just wondering how that's gone so far and outlook going into the next several months more of a peak season?

[Bernardo Melo:]

I'll take that one. Although it's set in mid-May of this year, which is not normally traditional setting for karaoke, usually karaoke sets some times in September or October. Numbers are off to a good start. A couple of the really encouraging points on it. Number one, people are really -- are understanding the Sing Cast. They're buying it. Numbers are promising right off the bat. And we partnered with a Stingray company called Chatter that allows us to put a QR code right outside the box and we're able to see what sort of engagement people are doing when they're accessing this QR code. And we've seen that people are using that QR code to determine which is the right model for them.

[Originally, we thought that, that QR code is mostly going to be used on how to set up the machine. But we're actually seeing that people are engaging in trying to find out what model is right for them. So we're able to introduce the [ 2 ] Sing Cast model. We also introduced a brand-new product category for us, which is more of a professional mic for [indiscernible] and podcasting and things like that, which is -- could be a new area of products for us. That's also been encouraging. And then still our traditional karaoke, although there's new technology there, our traditional karaoke technology is still holding up as well. So we're excited about it. We already had conversations for 2023, believe it or not, on that section and the feedback from the buyer was that she wants to expand even in 2022. So we're off to a good start, and we're really happy about it.:]

[Gary Atkinson:]

One other point just to add to what Bernardo said. The other key takeaway from the sales so far, is the higher price points are actually performing well. And that was a concern of mine. Typically, anytime you deal with Walmart, their customers are so price-sensitive and there were concerns whether the higher price points in the assortment would perform and they have. They've performed really well so far. So that's a promising sign as well.

[Rommel Dionisio:]

Gary, just on the -- could you just clarify specifically that you're referring to, like, what, $99 million to $149. And what was the previous high price point at Walmart before this -- you got the electronics out? Thank you.

[Bernardo Melo:]

The previous high point was $59, which was in the toy department. We've done some features here and there, but in line product, the previous high was $59. Now we're carrying 3 items above $99. So we're carrying 3 items, a $99, a $129 and a $149. And initially, the $129 met all items in sales, which was very encouraging for us. And the $149 item has been steady all along. And we have a really cool promotion beginning in October for a rollback, which we think is even going to elevate that item even more.

[Operator:]

And our next question comes from Corey Deutsch with Paradigm Opportunities Fund.

[Corey Deutsch:]

Gary, Lionel and Bernardo, first and foremost, congrats on a fantastic year and significant milestones, including taking autonomy back to the business and focusing on very attractive high-growth arena. So I wanted to congratulate you first.

[Gary Atkinson:]

Thank you, Corey.

[Corey Deutsch:]

Second, I was wondering if you guys could double-click on subscription revenue and the Stingray partnership. In the context of the company's margins last year, which, from my understanding, just given the macroeconomics combined with the supply chain issues, obviously, hurt margins a bit. But how do you see that going forward when you think about the Stingray partnership, the subscription revenue and how a lot of that goes straight to the bottom line?

[Gary Atkinson:]

Sure, I can address that. And thank you for the question, Corey. So when I -- I think the way we think broadly about the subscription-based business is it's working. When we see it, when we tightly integrate the music and the hardware of the machine, we've seen that, that's had a significant impact on just how sticky that service can be. So for instance, we launched a new high price point WiFi pedestal at Costco and Sam's Club, and that has the WiFi and the music content services built directly into the machine. And we saw that the rate of retention on those customers that converted to paying subs was astronomically higher than anything else we've seen before.

[And a similar situation with the new Walmart consumer electronics program. We introduced this new technology called Sing Cast, which enables people to cast their karaoke videos from their mobile phone up to their TV. And again, we're seeing very strong numbers just initially right off the bat through the Sing Cast technology line. So I think the overall broader point is that when we take the effort to integrate the machines with the music, the success is much more apparent.:]

[Corey Deutsch:]

Yes. That's very helpful. I really appreciate that color, Gary. I guess to follow up with that commentary, Stingray partnership, which is a great partnership and has recently shown more and more traction. How do you think about product focus in the go forward? If you look at your catalog, obviously, the company offers a number of SKUs. And if you look at the bottom line blended, clearly, there are some SKUs that just don't achieve the margin that is as attractive or, quite frankly, any margin relative to the subscription revenues. How do you think about where you focus on the go forward and how you could see those margins changing due to product shift?

[Gary Atkinson:]

Sure. So I mean I think you're referring to -- we certainly have a large percentage of our overall hardware portfolio that are lower margin drivers, so mainly promotionally driven products. And for us, those are key in terms of just maintaining a lot of those retail relationships. Those are sort of the [indiscernible]. We know it doesn't necessarily deliver a lot of margin and profits to the bottom line, but it's -- they're essential to just continue to sort of hold on to our retail shelf space because if we don't have it, we know one of our competitors will. So we're not going to walk away from that.

[But I think the takeaway from your question is good. We're definitely going to be focusing a lot more of our energy in terms of developing new karaoke products that work well with the sort of the integrated Stingray music content offerings, right? So the more it's just been proven. The more that we do with music content built in, the better the experience is for the consumer and for the subscription service itself.:]

[Bernardo Melo:]

Yes. And Corey, one of the things that we're looking at heavily, and this has been great that Stingray has certainly been a strong partner with us in helping us -- introduce us to new partnerships such as like [ local TV ] or the in-car entertainment. And we see that as a huge opportunity for us to deliver product that has a bit higher margin, but also works well with Stingray ecosystem. And they've been good enough to include us in a lot of those conversations. So therefore, we're going to be trying to focus also our product development on addressing those segments.

[Corey Deutsch:]

That makes a lot of sense. So if I'm understanding it correctly, essentially what you're saying is what you acknowledge the margin on some of your products may not be as attractive. The consumer generally is attracted to that product and helps with this brand awareness and continues to keep that shelf space, which therefore allows you to penetrate with new innovative technology and products that have the subscription integrated. I guess that and I just again wanted to say congratulations. And I think something that's become evidently clear to me over the past couple of quarters is the experience, knowledge and relationships that you guys as a management team have developed with big box retail as well as online marketplaces like [indiscernible] truly invaluable and indispensable. So I really thank you guys for your efforts and everything you're doing to drive a really great company.

[Gary Atkinson:]

Thank you, Corey. We certainly appreciate those kind words.

[Operator:]

[Operator Instructions] We will take our next question from [ Eric Nickerson ] with Third Century Partners.

[Unknown Analyst:]

On the subscription business, let me ask a little bit more on that. What were the subscription revenue sales in '22 -- fiscal '22?

[Gary Atkinson:]

Yes. So we didn't -- we don't break out the revenue in our -- obviously in our earnings statement. So there's not a sort of material enough number just yet for us to be breaking out as a different segment for that revenue. But I can tell you that it's -- it was well north of $1 million and growing pretty significantly. So hopefully, that addresses your question.

[Unknown Analyst:]

Yes. I guess that's good enough. I mean, I felt like something north of $0.5 million or 1% of sales somewhere, I forget where. So I guess you're presuming triple-digit growth rates on that over the next couple 2 or 3 years. Would that be correct? I mean, it's going to have to grow that much to become significant and you talk a lot about it. And I guess it's the future of the company with the margins and all. So am I correct in that, that you expect that to grow just exponentially at least for the next few years?

[Gary Atkinson:]

Yes, I think we do. I think the key factor though is a number of machines that we sell into the market, right? So those are the best way to sell the services to the customers that are buying the machines. So our goal is to convert more and more of those machines from more of a traditional karaoke machine into more of an integrated technology machine that supports the Stingray services. So that's kind of the burden that's on us right now is trying to innovate and just continue to keep releasing more and more new products that support that Stingray platform.

[Unknown Analyst:]

Okay. Good enough. Just some questions on the finances. We did -- I guess you raised a net of about, just back of the envelope here, is $7 million to $8 million between last year and this year's secondary offerings and the buybacks and all. And look at the balance sheet, I see we've got a lot of inventory. So I'm guessing most of that money has been sunk into inventory, which leaves me to wonder what -- how the financial situation look to go ahead this year and finance whatever it is more that you need for the holidays in terms of the inventory and the receivables? How have we set up to finance that stuff? Are we going to need more secondaries? Would you like to get a bank financing lined up? Do you have enough money in the [ tail ]? How does it work?

[Lionel Marquis:]

We've got -- we have financing. We currently have financing with Crestmark and Iron Horse that has served us well. It's kind of an evergreen type of situation. It's up to us to terminate. If we don't give a termination notice on -- at the anniversary, the renewal each year, if you will, the agreements continue to move on as evergreen. Certainly, I'm working on alternative financing because that's -- that market is not the cheapest market right now. And I'm working diligently on alternative financing to that point. But there's no concern about having financing for what we have right now.

[We mentioned that we raised approximately $8 million over the last year and a lot of it went to $7 million on the first tranche when to buy out the parent company, if you will, not $7 million. But a large portion of it went on to buy out the former parent corporation that left us with approximately $4 million, $5 million of working capital and operating capital, much of which we did use to buy down the inventory. Now that having been said, the inventory that we do have on hand, there's no obsolescence that involved here, at least not in the near future. We'll have to buy less inventory this year than we had to last year, which is going to help us something on the cost situation. If cost of containers and stuff do start going up again and logistics issues start existing, we'll have that in its active inventory.:]

[It is inventory that's [indiscernible] going to be moved, and we do have plans for placement, if you will, on all of that inventory that's there. I believe that we're -- we have sufficient cash to operate between the -- what we've raised so far. We're not contemplating another raise at this point in time, we think the -- from what our projections are for our operations and also what we have from financing will be sufficient for the next 12 months to take care of the operations for this year.:]

[Unknown Analyst:]

Okay. Yes, one more quick one for you, Lionel. I've looked through the financial statements. I noticed we said we got -- we had net income of $230,000 on the bottom line. Then over on the balance sheet, it shows that our accumulated deficit increased by something like $2.6 million. My understanding is and maybe you can educate me here is your net income figure should go over directly and adjust the accumulated deficit in the other direction by the amount of net income. So what happened there? Why do I not understand your accounting system or...

[Lionel Marquis:]

No, I'm not sure I understand the question. I'll tell you what -- what I'll do is I'll take a look at it for you and -- because I'm not sure I understand your question.

[Unknown Analyst:]

Well, let me put it simple. You had $230,000 of net income, but it looks the accumulated deficit shows an increase of $2.6 million. And I just want to know why that is? That's what I'd like to -- maybe you give me color or something or I'll call you later on.

[Lionel Marquis:]

Yes. Yes, why don't we take this offline because I'll take a look at that and see because we -- a lot of things have happened with equity over the past 6 months. So it may have something to do with that, but I'll take a look at that.

[Unknown Analyst:]

Okay. Just a few questions in quickly about our new majority owner. Is he wanting to install any directors on the Board?

[Gary Atkinson:]

Sure, I'll tackle that. So nothing has been publicly announced yet. I know that I believe that BitNile in one of their 13D filings did say that they had intention to add directors to the Board. But obviously, we're still in the process of getting to know each other and understanding sort of the mutual working relationship moving forward. So I will say it has been very positive. We've met and spoken with Todd Ault, who is the Executive Chairman of BitNile. He's been so far just very, very supportive of our business and looking for ways to help us grow. So we are very sort of confident in terms of moving forward together. But right now, there's been no -- we haven't finalized any number of directors on the Board. And once we do, obviously, we'll make those disclosures.

[Unknown Analyst:]

Okay. Had he proposed any strategy shifts or management changes or anything like that, that would impact what you guys want to do going forward?

[Gary Atkinson:]

No. So far, no. I mean he's not -- he's been very, very clear and adamant that he is not looking to run this business. He has a lot of faith and has shown a lot of support to the existing management team that's in place now. And he just felt like we were undervalued. I think -- I mean, I don't want to put words in his mouth, but I feel like he sees the opportunity with all of the retail distribution that we have with every single major big box retailer, and he felt like The Street wasn't really appreciating what we have and felt like there was opportunities to help us expand. So I think I'll leave it at that.

[Lionel Marquis:]

Eric, sorry, it's Lionel again. Just to go back to your question earlier. If you take a look at the consolidated statements of shareholders' equity, you'll notice that the -- there was a $2.8 million decrease in the accumulated -- sorry, in the accumulated deficit because of the buyback of -- and retirement of treasury shares when we purchased -- when we took out the majority shareholder back in August. So that was approximately $2.8 million of shares bought back and retired in the treasury, and that's what reduced the accumulated deficit.

[So you had a $230,000 pickup and a buyback, if you will, of treasury share with redemption and retirement of treasury shares when we took out the parent that was approximately $2.8 million. So the net was $2.6 million [indiscernible] accumulated deficit...:]

[Operator:]

Okay. And this is the operator. I was just letting you know, Eric's line got disconnected during the middle of that. And there is currently -- there are currently no further questions at this time.

[Gary Atkinson:]

Perfect. All right. Well, thank you, everybody. I appreciate everybody taking the time to listen to our fiscal '22 year-end earnings call, and thanks for everybody that asked some great questions. We look forward to speaking with you all next month to cover the results of our first quarter for fiscal '23, so right around the corner.

[All right. Thanks, everybody. That concludes our call today. Have a great day, and we'll talk to you all soon. Take care.:]

[Operator:]

Thank you for joining The Singing Machine Fiscal 2022 earnings report. This does conclude today's program. You may now disconnect, and have a great weekend.