UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
On November 20, 2023, The Singing Machine Company, Inc. (the “Company”) entered into a stock purchase agreement (the “Purchase Agreement”) with two purchasers (the “Purchasers”) pursuant to which the Company sold an aggregate of 2,197,802 shares (the “Shares”) of its common stock at a price of $0.91 per share, representing a 3% premium to the closing price of the Company’s common stock on November 17, 2023 (the “Offering”). One of the Purchasers, Regalia Ventures LLC, is an entity wholly owned by Jay Foreman, one of the Company’s directors. Mathieu Peloquin, one of the Company’s directors is an officer of the other Purchaser, Stingray Group, Inc. Stingray is a shareholder of the Company and an entity with which the Company does business through a music subscription sharing agreement.
The Offering closed on November 21, 2023 (the “Closing Date”). The gross proceeds to the Company from the Offering are approximately $2 million.
Pursuant to the Purchase Agreement, during the six (6) months period after the Closing Date, the Purchaser may make a written request for registration under the Securities Act of all or any portion of the Shares purchased (the “Registrable Shares”) pursuant to a registration statement registering the resale from time to time of the Registrable Shares held by the Purchaser. In addition, pursuant to the Purchase Agreement, the Company shall take action to, at a minimum, nominate each of the purchasers or its designee to serve on the Company’s board of directors so long as the Purchasers own 5% of the Company’s common stock.
Upon consummation of the Offering, the Company has 6,418,061 shares of common stock issued and outstanding.
In connection with the Offering, the Company relied upon an exemption from registration provided under Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, for transactions not involving a public offering.
The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as an exhibit to this report.
Item 1.02 Termination of a Material Definitive Agreement.
On November 17, 2023 (the “Termination Date”), the Company terminated the Credit and Security Agreement with Fifth Third Bank, National Association, dated October 14, 2022 (the “Credit Agreement”). As of the Termination Date, the outstanding balance, accrued interest and related fees of approximately $16,662.61, representing all obligations of the Company under the Credit Agreement, was repaid.
Item 3.02 Unregistered Sales of Equity Securities
The disclosures in Item 1.01 of this report are incorporated by reference into this Item 3.02.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 | Form of Stock Purchase Agreement dated November 20, 2023 | |
| 101 | Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business Reporting Language). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 22, 2023
| THE SINGING MACHINE COMPANY, INC. | ||
| By: | /s/ Gary Atkinson | |
| Gary Atkinson | ||
| Chief Executive Officer | ||