REVENUE DISAGGREGATION

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

REVENUE DISAGGREGATION

NOTE 11 – REVENUE DISAGGREGATION

The Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments:

Revenue by product line is as follows:

	Three Months Ended				Six Months Ended
Product Line	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Classic Karaoke Machines	$	1,257,000	$	1,463,000	$	2,308,000	$	2,729,000
Licensed Products		107,000		8,000		198,000		(4,000	)
SMC Kids Toys		102,000		21,000		171,000		154,000
Microphones and Accessories		865,000		957,000		1,818,000		2,737,000
Music and other income		109,000		176,000		371,000		392,000
Total Net Sales	$	2,440,000	$	2,625,000	$	4,866,000	$	6,008,000

Sales by geographic region for the periods presented are as follows:

	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Australia		124,000		-		124,000		-
North America		2,316,000		2,625,000		4,742,000		6,008,000
Total Net Sales	$	2,440,000	$	2,625,000	$	4,866,000	$	6,008,000

The Company selectively participates in a retailer’s co-op promotion incentives by providing marketing fund allowances to its customers. As these co-op promotion initiatives 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 cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. For the three months ended June 30, 2024 and 2023, co-op promotion incentives were approximately $240,000 and $91,000, respectively. For the six months ended June 30, 2024 and 2023, co-op promotion incentives were approximately $349,000 and $264,000, respectively.

The Company estimates variable consideration under its return allowance programs for goods returned from the customer whereby a revenue return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns as of June 30, 2024 and December 31, 2023, was approximately $2,174,000 and $3,390,000, respectively. In conjunction with the recording of the revenue sales return reserve, the Company estimates the cost of products that are expected to be returned under its return allowance program whereby the estimated cost of product returns is recorded as an asset. The asset is separately stated as returns asset on the condensed consolidated balance sheets. The Company’s estimated cost of returns as of June 30, 2024 and December 31, 2023, was approximately $619,000 and $1,919,000, respectively.

A return program for defective goods is negotiated with each of the Company’s wholesale customers on a year-to-year basis. Customers are allowed to return defective goods within a specified period of time after shipment (between six and nine months). The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates.

The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets.