8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 28, 2024

THE SINGING MACHINE COMPANY, INC.

(Exact name of registrant as specified in charter)

Delaware	001-41405	95-3795478
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6301 NW 5th Way, Suite 2900

Fort Lauderdale, FL 33309

(Address of principal executive offices) (Zip Code)

(954) 596-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	MICS	The Nasdaq Stock Market LLC (The Nasdaq Capital Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth ☐

If an emerging growth company, indicate by check mart if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On March 28, 2024 (the “Closing Date”), The Singing Machine Company, Inc. (the “Company”) and Oxford Commercial Finance, a Michigan banking corporation, (referred to as “Oxford”) entered into a Loan Agreement (the “Loan Agreement”) and related Revolving Credit Note (the “Note”) for a $2 million revolving line of credit (the “Line of Credit”). The Line of Credit is available for advances to the Company from and including the Closing Date to the Termination Date (as defined in the Loan Agreement). Availability under the Line of Credit is determined monthly by a borrowing base comprised of a percentage of eligible accounts receivable of the Company as set forth in the Loan Agreement.

In connection with the Line of Credit, the Company is required to: (a) Pay to Oxford on the Closing Date and on each anniversary date thereof, a loan fee in the amount of one percent (1%) of the Revolving Loan Cap (as defined in the Loan Agreement), which will be fully earned as of such date and not refundable in any event; (b) Pay Field Exam (as defined in the Loan Agreement) expenses to Oxford; (c) Maintain an average outstanding principal balance of the loan for each month in the amount of Five Hundred Seventy Thousand Dollars ($570,000.00) (“Minimum Loan Balance”). If the actual average outstanding principal balance of the loan in any month is less than the Minimum Loan Balance, the Company must pay interest for such month calculated on the Minimum Loan Balance; (d) Pay an early exit fee to Oxford, in the event the Company terminates the Loan Agreement and repays the obligations under the Note in full, as liquidated damages and not as a penalty, in an amount equal to: (i) if prior to the one year anniversary date of the Note, two percent (2.00%) of the Revolving Loan Cap (as defined in the Loan Agreement) plus any fees which are due or to become due under the Loan Agreement, and (ii) if on and after the one year anniversary date of the Note, but prior to the two year anniversary date of the Note, two percent (2.00%) of the Revolving Loan Cap plus any fees which are due or to become due under the Loan Agreement; and (e) Pay any and all third party expenses, including the reasonable fees and disbursements of Oxford’s counsel, in connection with the preparation, administration and enforcement of the Line of Credit agreements or the other loan documents.

The revolving credit facility bears interest of the Prime Rate (the interest reported daily in the Wall Street Journal) plus 2.5%, but in any event, not less than 10%.

Pursuant to the Security Agreement (the “Security Agreement”) entered into by and between the Company and Oxford on March 28, 2024, the obligations under the Loan Agreement are secured by all of the assets of the Company, presently owned or later acquired, and all cash and non-cash proceeds thereof (including, without limitation, insurance proceeds).

The Loan Agreement, the Note and the Security Agreement contain certain representations and warranties and various affirmative and negative covenants and events of default that the Company considers customary for facilities of this type, including, but not limited to, restrictions on the incurrence of indebtedness, additional liens, mergers, sales of assets, and acquisitions, in each case, subject to certain conditions, exceptions, and thresholds.

The foregoing descriptions of the Loan Agreement, the Note, and the Security Agreement in this Item 1.01 do not purport to be complete in scope and are qualified in their entirety by the full text of such agreements included as exhibits and incorporated by reference herein.

Item 8.01. Other Events

On April 3, 2024, the Company issued a press release announcing the closing of a $2 million senior credit facility with Oxford Commercial Finance, a subsidiary of Oxford Bank. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1*	Loan Agreement dated March 28, 2024.
10.2*	Revolving Credit Note dated March 28, 2024.
10.3*	Security Agreement dated March 28, 2024.
99.1	Press Release
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).

* Schedules and similar attachments have been omitted pursuant to Regulation S-K Item 601(a)(5). The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the Securities and Exchange Commission upon request.

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: April 3, 2024

THE SINGING MACHINE COMPANY, INC.
By:	/s/ Gary Atkinson
	Gary Atkinson
	Chief Executive Officer

EX-10.1

Exhibit 10.1

LOAN AGREEMENT

This Loan Agreement dated as of March 28, 2024, as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof (this “Agreement”), is entered into between The Singing Machine Company, Inc., a Delaware corporation whose address is 6301 NW 5^th Way, Suite 2900, Fort Lauderdale, Florida 33309 (the “Borrower”), and Oxford Commercial Finance, a Michigan banking corporation whose address is 64 S. Washington Street, P.O. Box 17, Oxford, Michigan 48371 (the “Lender”).

RECITALS

WHEREAS, the Borrower has requested that the Lender provide financial accommodations to Borrower in the form of a Revolving Credit Loan (the “Loan”), and the Lender has agreed to make such loan subject to the terms and conditions set forth in this Agreement; and

WHEREAS, the Borrower and the Lender, intending to be legally bound, wish to evidence their agreement in writing.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Overview. This Agreement and all Exhibits and Schedules attached hereto set forth the terms and conditions under which Lender may make the Loan to Borrower. As a condition of making the Loan to Borrower, Borrower shall be required to establish and maintain its primary business accounts with Lender or one of its affiliates.

In addition to the capitalized terms throughout this Agreement, you are referred to the Definitions set forth in Schedule I and Schedule II of this Agreement.

It is Lender’s intention that the body of this Agreement sets forth the general terms of all commercial loans made by Lender to all of its borrowers, and that the Schedules and Exhibits set forth the specific terms and conditions applicable to the Loan to be made by Lender to Borrower.

2. General Loan Terms.

2.1 Loan.

(a) Subject to the terms and conditions of this Agreement, the Lender agrees to make the Loan to the Borrower from time to time during the Revolving Credit Period in an aggregate principal amount at any one time outstanding not exceeding the lesser of the Revolving Loan Cap or the Borrowing Base (each as defined in Schedule II).

(b) The Borrower shall repay all of the outstanding Loan on the Termination Date.

(c) The Borrower may borrow under the Loan on any Business Day during the Revolving Credit Period; provided that, the Borrower shall deliver to the Lender the “Deliverables” defined and described in the attached Schedule II no later than 10:30 a.m. Eastern Time on the requested Borrowing Date.

(d) Lender will determine in its sole discretion whether any accounts receivable are Eligible Accounts Receivable, if applicable whether any inventory is Eligible Inventory and whether any equipment is Eligible Equipment, and whether to make an Advance on the Loan. Regardless of whether any accounts receivable, inventory or equipment are considered Eligible, each is still part of the Collateral securing the Obligations.

(e) If for any reason the aggregate principal amount of the Loan at any time outstanding exceeds the lesser of the Revolving Loan Cap or the Borrowing Base then in effect (the “Revolving Credit Formula”), the Borrower shall immediately prepay the Loan in an amount equal to such excess.

(f) Borrower shall comply with the requirements described in Exhibit 1, concerning the account debtors payments to the DACA Account and the Lockbox Account. Without limiting the foregoing, Lender may at any time communicate directly with any of Borrower’s account debtors to, among other things, verify the amount, validity and payment status of any of Borrower’s accounts, whether an Event of Default has or has not occurred or is continuing.

2.2 Fees. In addition to any fees and expenses set forth in the other Loan Documents, Borrower shall pay the Lender the fees and expenses set forth on Exhibit 2.

2.3 Repayment of the Loan; Evidence of Debt.

(a) Borrower’s Obligations under the Revolving Credit Note shall be non-cancelable, absolute and unconditional under all circumstances.

(b) The Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Obligations of the Borrower to the Lender resulting from each loan, including the amounts of principal and interest payable and paid to the Lender from time to time under this Agreement.

2.4 Prepayments. The Borrower may prepay the Loan only if it pays any Exit Fee as defined in the Revolving Credit Note.

2.5 Reserves. The Lender may establish reserves from the funding of the Loan to ensure that any open closing items are satisfied and from time to time may require Borrower to fund any reserves required by this Agreement or any of the other Loan Documents, including but not limited to for the payment of property taxes or to make payments under any landlord agreements (collectively, the “Reserve”). In the event that Borrower fails to timely make payments required by this Agreement or the other Loan Documents the Lender is authorized to use funds in the Reserve to make such payments or may use such funds to satisfy any other amounts Borrower owes the Lender. Borrower will not earn interest on any funds held in Reserve and the existence of the Reserve shall not relieve the Borrower of its obligation to make payments under this Agreement and the other Loan Documents.

3. Conditions Precedent.

3.1 Conditions Precedent to Loan. The obligation of the Lender to make the Loan is subject to, among other things, the satisfaction or the waiver by the Lender of the following conditions precedent:

(a) The Lender shall have received fully executed Loan Documents;

(b) Proof that any applicable transaction shall have been consummated, including but not limited to the Lender’s receipt of true, complete copies of any purchase agreement and related documents as executed and delivered by the parties hereto, together with all exhibits and schedules thereto;

(c) The Lender shall have received results of recent lien searches confirming the priority of the Liens in favor of the Lender and reveal no Liens on any of the Borrower’s assets, except for liens permitted under this Agreement or discharged on or prior to the Closing Date pursuant to documentation reasonably satisfactory to the Lender;

(d) The Lender shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date. All such amounts will be paid with proceeds of the Loan made on the Closing Date and will be reflected in the funding instructions given by the Borrower to the Lender on or before the Closing Date;

(e) Before giving effect to the financing, there shall have occurred no Material Adverse Effect since the date of the last financial statements provided to the Lender;

(f) The Lender shall have received, in form and substance satisfactory to it, resolutions of the Borrower;

(g) The Lender shall have received the certificates representing any Equity Interests pledged to the Lender pursuant to the Security Agreement or Pledge Agreement; and

(h) The Lender shall have received evidence of insurance coverage in form, scope, and substance reasonably satisfactory to the Lender and otherwise in compliance with the terms of Section 5.9 and Section 6.6 of this Agreement.

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3.2 Conditions Precedent to each Advance on the Loan after the Closing Date. The obligation of the Lender to make any additional Advances requested to be made by Borrower hereunder after the Closing Date, is subject to the satisfaction or the waiver by the Lender of the following conditions precedent:

(a) Each of the provisions of Section 3.1 have been satisfied;

(b) Each of the representations and warranties made by Borrower in or pursuant to the Loan Documents shall be true and correct in all material respects (or, as to any representation and warranty that is qualified by materiality or Material Adverse Effect, in all respects) on and as of the date such Loan is made; and

(c) No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the additional Loan requested to be made on such date.

4. Taxes. Any and all payments by or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction or withholding for any Taxes.

5. Representations and Warranties. To induce the Lender to enter into this Agreement and to make the Loan hereunder, the Borrower hereby represents and warrants to the Lender that:

5.1 Existence; Compliance with Laws. Borrower (a) is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, (b) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease, or operation of property or the conduct of its business requires such qualification except to the extent that the failure to qualify in such jurisdiction could not reasonably be expected to have a Material Adverse Effect, and (c) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.2 Power; Authorization; Enforceability.

(a) Borrower has the power and authority, and the legal right, to own or lease and operate its property, and to carry on its business as now conducted and as proposed to be conducted, and to execute, deliver, and perform the Loan Documents and to obtain the Loan hereunder. Borrower has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents and conditions contained herein. No consent or authorization of, filing with, notice to, or other act by, or in respect of, any Governmental Authority or any other Person is required in connection with the extensions of credit hereunder or with the execution, delivery, performance, validity, or enforceability of this Agreement or any of the Loan Documents.

(b) This Agreement constitutes, and each other Loan Document when delivered hereunder will constitute, a legal, valid, and binding obligation of Borrower, enforceable against Borrower in accordance with its terms.

5.3 Financial Statements. The financial statements provided to the Lender present fairly the consolidated financial condition of the Borrower.

5.4 No Material Adverse Effect. Since the date of each Loan application submitted to the Lender, no development or event has occurred that has had or could reasonably be expected to have a Material Adverse Effect.

5.5 No Litigation. No action, suit, litigation, investigation, or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against Borrower or against any of its property or assets that could reasonably be expected to have a Material Adverse Effect.

5.6 No Default. No Default or Event of Default has occurred and is continuing and no default has occurred and is continuing under or with respect to any contractual obligation of the Borrower that could reasonably be expected to have a Material Adverse Effect.

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5.7 Ownership of Property; Liens. Borrower has fee simple title to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, and none of such property is subject to any Lien except for Permitted Liens.

5.8 Environmental Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect, none of the facilities or properties currently or formerly owned, leased, or operated by Borrower (the “Properties”) contain or previously contained, any Hazardous Materials in amounts or concentrations or under circumstances that constitute or constituted a violation of, or could result in liability under any Environmental Law, and no administrative or Governmental Authority action or judicial proceeding is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which Borrower is or will be a party with respect to the Properties or the business operated by Borrower, nor are there any decrees or orders or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the business operated by Borrower.

5.9 Insurance. The Properties are insured with financially sound and reputable insurance companies, in such amounts, with such deductibles, and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower operates. Each insurance policy is in full force and effect and all premiums in respect thereof that are due and payable have been paid, and the Lender is a named a lender loss payee on such policies.

5.10 Material Contracts. The Borrower is not in breach or in default in any material respect of or under any Material Contract and have not received any notice of the intention of any other party thereto to terminate any Material Contract.

5.11 Taxes. Borrower has filed all Federal, state, and other material tax returns that are required to be filed and has paid all taxes shown thereon to be due, together with applicable interest and penalties, and all other material taxes, fees, or other charges imposed on it or any of its property by any Governmental Authority including but not limited to personal property taxes (except those that are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower). No tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee, or other charge. Borrower is not a party to any tax sharing agreement.

5.12 Security Documents. The Security Agreement creates in favor of the Lender a legal, valid, continuing, first priority and enforceable security interest in the Collateral.

5.13 Solvency. Borrower is, and after giving effect to the incurrence of all Debt and obligations incurred in connection herewith will be, Solvent.

6. Affirmative Covenants. So long as amounts are payable to the Lender hereunder or under any other Loan Document, the Borrower shall comply with the following:

6.1 Financial Statements and Tax Returns. Borrower shall provide the financial statements and tax returns set forth on the attached Exhibit 6.1.

6.2 Financial Covenants. Borrower will maintain the financial covenants set forth on the attached Exhibit 6.2, if any.

6.3 Notices. Promptly, and in any event within five days, give notice to the Lender of:

(a) The occurrence of any Default or Event of Default;

(b) Any (i) default or event of default under any Material Contract or (ii) litigation, investigation, or proceeding that may exist at any time between Borrower and any Governmental Authority, that if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

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(c) Any litigation or proceeding against Borrower (i) in which the amount involved is at least $20,000.00 and not covered in full by insurance, (ii) in which injunctive or similar relief is sought, or (iii) which relates to any Loan Document; and

(d) Any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.3 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto.

6.4 Maintenance of Existence; Compliance.

(a) Preserve, renew, and maintain in full force and effect its corporate or organizational existence.

(b) Comply with all Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.5 Performance of Material Contracts. Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each Material Contract in full force and effect, and enforce each such Material Contract in accordance with its terms.

6.6 Maintenance of Property; Insurance. Maintain and preserve all of its property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. Maintain insurance with respect to its property and business (including without limitation, property and casualty and business interruption insurance) with financially sound and reputable insurance companies, in such amounts and covering such risks as are usually insured against by similar companies engaged in the same or a similar business.

6.7 Inspection of Property; Books and Records; Discussions.

(a) Keep proper books of records and accounts, in which full, true, and correct entries in all material respects and in any event in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions and assets in relation to its business and activities.

(b) Permit the Lender or its agents to visit and inspect any of its properties and examine and make abstracts from any of its books and records (a “Field Exam”) at any reasonable time one (1) time per year absent an Event of Default (after an Event of Default, the number of Field Exams shall not be limited) to discuss its business operations, properties, and financial and other condition with its officers and employees and accountants with all expenses, including but not limited to, transportation, hotel, parking, and meals, paid by Borrower. Such examinations are performed for Lender’s internal use and Lender has no obligation to provide Borrower or Guarantor with the results of the examination or copies of any reports or work papers in whole or in part.

6.8 Use of Proceeds. Use the proceeds of the Loan to repay existing loans, finance capital expenditures of the Borrower, or for working capital and general business purposes, in each case to the extent not prohibited under any Requirement of Law or the Loan Documents.

6.9 Further Assurances. Promptly upon the request of the Lender, correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgement, filing, or recordation thereof, and perform any and all such further acts as the Lender may require from time to time in order to carry out more effectively the purposes of the Loan Documents.

7. Negative Covenants. So long as the Loan or any other amounts payable to the Lender hereunder or under any other Loan Document have not been paid in full, the Borrower shall not:

7.1 Limitation on Liens. Create, incur, assume, or permit to exist any Lien on any property or assets now owned or hereafter acquired by it or on any income or rights in respect of any thereof, except the following “Permitted Liens”:

(a) Liens created pursuant to or arising under any Loan Document;

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(b) Liens imposed by law for taxes, assessments, or governmental charges not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted if adequate reserves with respect thereto are maintained in accordance with GAAP on the books of the applicable Person;

(c) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, and other similar Liens imposed by law, arising in the ordinary course of business, and securing obligations that are not overdue by more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted; and

(d) Liens in existence as of the date hereof which are listed on the attached Exhibit 7.1, provided that (i) the aggregate principal amount of the debt secured by such Liens does not increase from that amount outstanding at the time of any such renewal, modification, replacement, or extension and (ii) any such renewal, modification, replacement, or extension does not encumber any additional assets or properties of the Borrower.

7.2 Mergers; Nature of Business. Merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve.

7.3 Limitation on Dispositions. Dispose of any of its property, whether now owned or hereafter acquired, or issue or sell any Equity Interests to any Person, except the sale of inventory in the ordinary course of business. Without limiting the foregoing, Borrower shall not sell any of its existing or future accounts or revenues or enter into any merchant cash advance or similar agreements.

7.4 Limitation on Restricted Payments. During the continuance of an Event of Default (a) declare or pay any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement, or other acquisition of, any Equity Interests of the Borrower, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower; or (b) pay any salary or guaranteed distributions in lieu of salary to any owners of Equity Interests of the Borrower (collectively, “Restricted Payments”).

8. Events of Default and Remedies.

8.1 Events of Default. Each of the following events or conditions shall constitute an “Event of Default” (whether it shall be voluntary or involuntary or come about or be affected by any Requirement of Law or otherwise):

(a) the Borrower fails to pay any payment under any Revolving Credit Note by its due date;

(b) any representation, warranty, certification, or other statement of fact made or deemed made by or on behalf of Borrower in this Agreement, in any other Loan Document, or in any certificate, document, report, financial statement, or other document furnished by or on behalf of Borrower under or in connection with this Agreement or any other Loan Document, proves to have been false or misleading in any material respect on or as of the date made or deemed made;

(c) Borrower fails to perform or observe any covenant, term, condition, or agreement contained in Section 6.4(a), Section 6.8, or Section 7;

(d) Borrower fails to perform or observe any other covenant, term, condition, or agreement contained in this Agreement or any other Loan Document (other than as provided in subsections (a) through (c) of this Section 8.1) and such failure continues unremedied for a period of ten (10) calendar days;

(e) (i) Borrower commences any case, proceeding, or other action under any existing or future Debtor Relief Law, seeking (A) to have an order for relief entered with respect to it, or (B) to adjudicate it as bankrupt or insolvent, or (C) reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition, or other relief with respect to it or its debts, or (D) appointment of a receiver, trustee, custodian, conservator, or other similar official for it or for all or any substantial part of its assets or (y) makes a general assignment for the benefit of its creditors; (ii) there is commenced against Borrower in a court of competent jurisdiction any case, proceeding, or other action of a nature referred to in clause (i) above which (x) results in the entry of an order for relief or any such adjudication or appointment or (y) remains undismissed, undischarged, unstayed, or unbonded for 60 days; (iii) there is commenced against Borrower any case, proceeding, or other action seeking issuance of a warrant of attachment, execution, or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which has not been vacated, discharged, stayed, or bonded pending appeal within 60 days from the entry thereof; or (iv) Borrower is generally not, or is unable to, or admits in writing its inability to, pay its debts as they become due;

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(f) a final and non-appealable judgment or decree is entered against Borrower, or the Collateral by a court of competent jurisdiction;

(g) the Security Agreement ceases for any reason to be valid, binding, and in full force and effect or any Lien created by the Security Agreement ceases to be enforceable and of the same effect and priority purported to be created thereby; any material provision of any Loan Document ceases for any reason to be valid, binding, and in full force and effect, Borrower contests in any manner the validity or enforceability of any provision of any Loan Document; or Borrower denies that it has any or further liability or obligation under any provision of any Loan Document or purports to revoke, terminate, or rescind any provision of any Loan Document;

(h) any Change of Control occurs; and

(i) there occurs in the reasonable judgment of the Lender a Material Adverse Effect.

8.2 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, then:

(a) if such event is an Event of Default specified in subsection (e) above, the Loan (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable;

(b) if such event is an Event of Default (other than an Event of Default under subsection (e)), any or all of the following actions may be taken:

(i) the Lender may declare the Loan (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable;

(ii) the Lender may seek the appoint a receiver for the Borrower and all or any part of the Collateral. Borrower consents to the appointment of a receiver without notice or bond, to the fullest extent not prohibited by applicable law, and waives all notices of and defenses to the appointment of a receiver and may not oppose any application the Lender makes for the appointment of a receiver; and

(iii) the Lender may exercise all rights and remedies available to it under the Revolving Credit Note, the Security Agreement, any of the other Loan Document, or applicable law. The exercise or non-exercise of any right or remedy does not preclude the exercise of any other right or remedy. All rights and remedies are cumulative.

9. Miscellaneous.

9.1 Notices.

(a) Except in the case of notices and other communications expressly permitted to be given by telephone or by e-mail as provided in paragraph (b) below, all notices and other communications provided for herein shall be made in writing and mailed by certified or registered mail, delivered by hand or overnight courier service, or sent by facsimile according to the information set forth in the first paragraph of this Agreement. Notices mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received. Notices sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next Business Day).

(b) Notices and other communications to the Lender hereunder may be delivered or furnished by electronic communications (including e-mail and internet or intranet websites) pursuant to procedures approved by the Lender. The Lender or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that, approval of such procedures may be limited to particular notices or communications.

(c) Unless the Lender specifies otherwise: (i) notices and other communications sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail, or other written acknowledgment); and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. Provided that, if such notice, e-mail or other communication is not sent during the recipient’s normal business hours, such notice, e-mail, or communication shall be deemed to have been sent at the recipient’s opening of business on the next Business Day.

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(d) Either party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other party.

9.2 Amendments and Waivers. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power, or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. The rights, remedies, powers, and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers, and privileges provided by law. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Lender may have had notice or knowledge of such Default at the time. Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, or modified except (i) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Lender or (ii) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Lender and the Borrower.

9.3 Expenses; Indemnity; Damage Waiver.

(a) The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Lender and its Affiliates, including reasonable attorneys’ fees, in connection with the preparation, modification, administration and enforcement of the Loan Documents.

(b) The Borrower agrees to indemnify and hold harmless the Lender and each of its Related Parties (each, an “Indemnified Party”) from and against, any and all claims, damages, losses, liabilities, and related expenses (including the reasonable fees, charges, and expenses of any counsel for any Indemnified Party, and shall indemnify and hold harmless each Indemnified Party from all allocated costs of internal counsel for such Indemnified Party), incurred by any Indemnified Party or asserted against any Indemnified Party by any Person (including the Borrower) other than such Indemnified Party and its Related Parties arising out of, in connection with, or by reason of:

(i) the execution or delivery of any Loan Document or any agreement or instrument contemplated in any Loan Document, the performance by the parties thereto of their respective obligations under any Loan Document, or the consummation of the transactions contemplated by the Loan Documents;

(ii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower, or any Environmental Liability related to the Borrower in any way; or

(iii) any actual or prospective claim, investigation, litigation, or proceeding relating to any of the foregoing, whether based on contract, tort, or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnified Party is a party thereto;

provided that, such indemnity shall not be available to any Indemnified Party to the extent that such claims, damages, losses, liabilities, or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnified Party.

(c) The Borrower agrees, to the fullest extent permitted by applicable law, not to assert, and hereby waives, any claim against any Indemnified Party, on any theory of liability, for special, indirect, consequential, or punitive damages (including, without limitation, any loss of profits or anticipated savings), as opposed to actual or direct damages, resulting from this Agreement or any other Loan Document or arising out of such Indemnified Party’s activities in connection herewith or therewith (whether before or after the Closing Date).

(d) All amounts due under Section 9.3 shall be payable promptly/not later than ten (10) Business Days after demand is made for payment by the Lender.

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(e) The Borrower agrees that it will not settle, compromise, or consent to the entry of any judgment in any pending or threatened claim, action, or proceeding in respect of which indemnification or contribution could be sought under Section 9.3 (whether or not any Indemnified Party is an actual or potential party to such claim, action, or proceeding) without the prior written consent of the applicable Indemnified Party, unless such settlement, compromise, or consent includes an unconditional release of such Indemnified Party from all liability arising out of such claim, action, or proceeding, which consent shall not be unreasonably withheld or delayed.

9.4 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy, or claim under or by reason of this Agreement.

(b) The Lender may, at any time, without the consent of the Borrower assign all or a portion of its rights and obligations under this Agreement, or sell participations to one of more third parties, without any amendment to this Agreement or to any other Loan Documents and without the execution of any assignment documents unless requested by the Lender. Provided, however, the Borrower hereby agrees to execute any amendment and/or any other document that may be requested to effectuate such an assignment.

9.5 Survival. All covenants, agreements, representations, and warranties made by the Borrower in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of the Loan. Section 9 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loan, or the termination of this Agreement or any provision hereof.

9.6 Counterparts; Integration; Effectiveness.

(a) This Agreement and the other Loan Documents and any amendments, waivers, consents, or supplements hereto may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Lender constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect to the subject matter hereof. This Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received a counterpart hereof executed by the Borrower. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (“pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

(b) The words “execution,” “signed,” “signature,” and words of similar import in any Loan Document shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity, and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be. The Lender may request original signatures on the Loan Documents in its sole discretion.

9.7 Severability. If any term or provision of any Loan Document is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision thereof or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify the applicable Loan Document so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

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9.8 Right of Setoff. If an Event of Default shall have occurred and be continuing, the Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, and without prior notice to the Borrower, any such notice being expressly waived by the Borrower, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender or Affiliate to or for the credit or the account of the Borrower, against any and all of the obligations of the Borrower now or hereafter existing under the Loan Documents to the Lender or its Affiliates, whether direct or indirect, absolute or contingent, matured or unmatured, and irrespective of whether or not the Lender or any Affiliate shall have made any demand under the Loan Documents and although such obligations of the Borrower are owed to a branch, office, or Affiliate of the Lender different from the branch, office, or Affiliate holding such deposit or obligated on such indebtedness. The Lender agrees to notify the Borrower promptly after any such set off and appropriation and application; provided that the failure to give such notice shall not affect the validity of such set off and appropriation and application.

9.9 Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement and the other Loan Documents and any claim, controversy, dispute, or cause of action (whether in contract or tort or otherwise) based upon, arising out of, or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of Michigan, without regard to conflicts of laws principles.

(b) Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation, or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against the Lender or any of its Related Parties in any way relating to this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, in any forum other than the courts of the State of Michigan sitting in Oakland County, and of the United States District Court of the Eastern District of Michigan and the parties hereto irrevocably and unconditionally submit to the jurisdiction of such courts and agrees that any such action, litigation, or proceeding may be brought in any such Michigan State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein or in any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Borrower or its properties in the courts of any jurisdiction.

(c) Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any such court referred to in subsection (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

9.10 Waiver of Jury Trial. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO AGENT, ATTORNEY, REPRESENTATIVE, OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF LITIGATION AND (B) ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

9.11 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

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9.12 USA PATRIOT Act. The Lender hereby notifies Borrower that pursuant to the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “PATRIOT Act”), it is required to obtain, verify, and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow the Lender to identify the Borrower in accordance with the PATRIOT Act, and the Borrower agrees to provide such information from time to time to the Lender.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

BORROWER:
THE SINGING MACHINE COMPANY, INC.
By:	/s/ Gary Atkinson
Name:	Gary Atkinson
Title:	CEO
LENDER:
OXFORD COMMERCIAL FINANCE
By:	/s/ Lisa Spence
Name:	Lisa Spence
Title:	Vice President

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SCHEDULE I

(Definitions)

Unless otherwise defined herein, capitalized terms used herein shall have the following meanings:

“Advance” means any funds advanced to or for the benefit of Borrower whether under the Loan, plus amounts advanced for the payment of interest, fees, expenses and disbursements to preserve or protect the Collateral.

“Affiliate” as to any Person, means any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Availability” means for the Loan, as of any date of determination, the result (if a positive number) of (a) the Revolving Credit Formula as of such date, minus (b) the aggregate outstanding amount of the Loan as of such date.

“Availability Reserves” means, as of any date of determination, without duplication of any other items that are otherwise addressed or excluded through eligibility criteria, such reserves in amounts as the Lender may from time to time establish or revise in good faith, reducing the amount of the Loan which would otherwise be available to the Borrower under the lending formula provided for herein, to reflects events, conditions, contingencies or risks which, as determined by the Lender in its reasonable discretion, adversely affect, or would have a reasonable likelihood of adversely affecting, (i) the Collateral or any property that is security for the Obligations, its value or the amount that might be received by the Lender from the sale or other disposition or realization upon such Collateral, or (ii) the assets, business or prospects of any Loan Party or (iii) the security interests and other rights of the Lender in the Collateral (including the enforceability, perfection and priority thereof). Without limiting the foregoing, there will be an Availability Reserve built up during the months of October, November of December of each year equal to the fifteen percent (15%) of all funds sent to the Lockbox Account during such months.

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time to time, or any similar federal or state law for the relief of debtors.

“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in Oxford, Michigan are authorized or required by law to close.

“Change of Control” means any Person or group of persons becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the outstanding Equity Interests of the Borrower.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” has the meaning for such term set forth in the Security Agreement.

“Collateral Access Agreement” means an agreement from a warehouseman, bailee or lessor, as applicable, to provide Lender with access to inventory located in a public warehouse, in the possession of a bailee or located in a facility leased by the Borrower or any of its Affiliates, and a reasonable time to sell and dispose of the inventory from the relevant location, such agreement to be in form and substance satisfactory to Lender.

“Closing Date” means the date of execution of this Agreement or the date on which the conditions precedent set forth in Section 2 are satisfied.

“Debtor Relief Law” means the Bankruptcy Code and all other liquidation, bankruptcy, assignment for the benefit of creditors, conservatorship, moratorium, receivership, insolvency, rearrangement, reorganization, or similar debtor relief laws of the US or other applicable jurisdictions in effect from time to time.

“Disposition” or “Dispose” means the sale, transfer, license, lease, or other disposition of any property or any Equity Interests by any Person.

“Environmental Law” means any and all Federal, state, foreign, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority, or other Requirements of Law (including common law) concerning the environment and the related human health and safety.

“Equity Interests” means any and all shares, membership interests, participations, or other ownership interests in a Person, and any and all warrants, rights, or options to purchase any of the foregoing, whether voting or nonvoting.

“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authority” means the government of any nation or any political subdivision thereof, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive, legislative, judicial, taxing, regulatory, or administrative powers or functions of, or pertaining to, government.

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“Hazardous Materials” means (a) any gasoline, petroleum or petroleum products or by-products, radioactive materials, friable asbestos or asbestos-containing materials, urea-formaldehyde insulation, polychlorinated biphenyls, and radon gas and (b) any other chemicals, materials, or substances designated, classified, or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“Lien” means any mortgage, pledge, hypothecation, assignment as security, deposit arrangement, encumbrance, lien (statutory or other), charge, or other security interest of any kind or nature.

“Loan” means the Revolving Credit Loan.

“Loan Documents” means, collectively, this Agreement, the Security Agreement, the Guaranty if applicable, the Revolving Credit Note, and all other agreements, documents, certificates, and instruments executed and delivered to the Lender by Borrower or any other party in connection therewith.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, properties, liabilities (actual or contingent), operations or condition (financial or otherwise) or prospects of the Borrower, (b) the validity or enforceability of any Loan Document, (c) the perfection or priority of any Lien purported to be created by any Loan Document, or (d) the rights or remedies of the Lender under any Loan Document.

“Material Contracts” with respect to any Person, means each contract to which such Person is a party involving aggregate consideration payable by or to such Person equal to at least $25,000.00 annually or otherwise material to the business, condition (financial or otherwise), operations, performance, properties, or prospects of such Person.

“Obligations” means all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, covenants, and indemnities of, Borrower arising under any Loan Document whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

“Permitted Liens” has the meaning set forth in Section 7.1.

“Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership, unincorporated organization, Governmental Authority, or other entity.

“Related Parties” with respect to any Person, means such Person’s Affiliates and the directors, officers, employees, partners, agents, trustees, administrators, managers, advisors, and representatives of it and its Affiliates.

“Requirement of Law” as to any Person, means the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law (including common law), statute, ordinance, treaty, rule, regulation, order, decree, judgment, writ, injunction, settlement agreement, requirement or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” with respect to any Person, means the chief executive officer, president, chief financial officer, member manager, or manager of such Person.

“Revolving Credit Period” means the period from and including the Closing Date to the Termination Date.

“Revolving Credit Loan” means any revolving credit loan made by the Lender to Borrower.

“Revolving Credit Note” means any promissory note of the Borrower payable to the Lender evidencing the aggregate indebtedness of the Borrower to the Lender resulting from Loan, as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time to the extent permitted under the Loan Documents.

“Revolving Loan Cap” means the stated principal amount of the Revolving Credit Note.

“Security Agreement” means the Security Agreement made by the Borrower in favor of the Lender, as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time to the extent permitted under the Loan Documents.

“Solvent” with respect to any Person as of any date of determination, means that on such date (a) the present fair salable value of the property and assets of such Person exceeds the debts and liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the property and assets of such Person is greater than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities, including contingent liabilities, as such debts and other liabilities become absolute and matured, (c) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts and liabilities, including contingent liabilities, beyond its ability to pay such debts and liabilities as they become absolute and matured, and (d) such Person does not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Taxes” means any and all present or future income, stamp, or other taxes, levies, imposts, duties, deductions, charges, fees, or withholdings imposed, levied, withheld, or assessed by any Governmental Authority, together with any interest, additions to tax, or penalties imposed thereon and with respect thereto.

“Termination Date” means the date of the demand for payment under the Obligations under the Loan.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect in the state of Michigan.

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SCHEDULE II

(Revolving Credit Loan)

1. The Revolving Credit Formula

Advances under the Loan may not exceed the Revolving Credit Formula, which is the lesser of:

(A)	the Revolving Loan Cap; and
(B)	the Borrowing Base.

“Borrowing Base” means, as of the date of determination, an amount equal to the sum of:

(a)	75% of the SMC Eligible Accounts Receivable of the Borrower; plus
(b)	75% of the SMI Eligible Accounts Receivable of the Borrower minus
(c)	Availability Reserves.

Lender may, in its discretion, from time to time, make changes to applicable standards of eligibility, advance rates and reserves for any assets in the Borrowing Base, which changes shall be effective immediately after the Lender shall have delivered notice of such changes to the Borrower.

“Eligible Accounts Receivable” means an account receivable owing to the Borrower which satisfies the following requirements:

(a) (i) the account results from the sale of goods or the performance of services by the Borrower in the ordinary course of its business, (ii) payment of the account by the account debtor is not contingent on the completion of further performance by the Borrower, and (iii) the Borrower has no additional obligation to service, repair, or maintain any such goods sold other than pursuant to any applicable warranty;

(b) the account does not represent a sale on bill-and-hold, guaranteed sale, sale-or-return, sale on approval, consignment sale, cash-on-delivery sale, or sale on any other repurchase or return basis;

(c) the account debtor has not notified the Borrower that it is claiming any defense to payment of the account, whether well-founded or otherwise;

(d) the account is not the obligation of an account debtor who has asserted or may assert any counterclaim, credit, allowance, adjustment, deduction or offset against the Borrower;

(e) the account represents a genuine obligation of the account debtor for goods sold to, or for services performed for, and accepted by the account debtor;

(f) the account debtor or any of its Affiliates is not also a supplier to, or creditor of, the Borrower or any of its Subsidiaries, unless such supplier or creditor has executed a no offset letter in form and substance satisfactory to Lender;

(g) the account is evidenced by an invoice or other written terms in a form acceptable to Lender, which the Borrower has sent to the debtor;

(h) the Borrower is not prohibited by the laws of the state where the account debtor is located from bringing and maintaining an action in the courts of that state to enforce the account debtor’s obligation to pay the account. The Borrower has taken all appropriate actions to ensure access to the courts of the state where the account debtor is located, including, where necessary, the qualification by the Borrower as a foreign corporation authorized to transact business in such state;

(i) the account is owned by the Borrower free of any title defects and any Liens or interests of others, except for the Lien in favor of Lender and Permitted Liens that do not have priority over the Lien in favor of Lender;

(j) the account debtor is not an Affiliate, Parent or Subsidiary of the Borrower, or an entity which has common officers or directors with the Borrower, or a director, officer or employee of any of the foregoing;

(k) the account debtor is not a Governmental Authority;

(l) the account debtor maintains its chief executive office in the United States of America. Lender may approve foreign account debtors in its sole discretion, including those in any province of Canada other than Quebec and those in Mexico. Without limiting the foregoing, at any time promptly on the Lender’s request, the Borrower shall execute and deliver, or cause to be executed and delivered, such other agreements, documents and instruments as may be required by Lender to perfect the security interests of the Lender in those accounts of an account debtor with its chief executive office or principal place of business outside of the United States of America;

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(m) the account debtor has not (i) applied for, suffered, or consented to the appointment of any receiver, interim receiver, receiver-manager, custodian, trustee, or liquidator of its assets, (ii) had possession of all or a material part of its property taken by any receiver, interim receiver, receiver-manager, custodian, trustee or liquidator, (iii) filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any federal, state, provincial or territorial bankruptcy laws, (iv) admitted in writing its inability to pay its debts as they become due, or become generally unable to pay its debts as they become due, (v) become insolvent, (vi) made a general assignment for the benefit of its creditors or (vii) ceased operation of its business;

(n) the account is not more than ninety (90) days past the date of invoice;

(o) the account is not the obligation of a debtor for which more than twenty five percent (25%) of the accounts of such debtor that were Eligible Receivables at the time they arose have become ineligible under clause (n) of this definition;

(p) the account is not an account that Lender has determined may not be paid by reason of the account debtor’s financial condition or inability to pay;

(q) the account does not arise from the sale of goods which remain in the Borrower’s possession or under the Borrower’s control;

(r) the sale represented by such account is denominated in United States dollars;

(s) all representations and warranties contained in this Agreement or any other Loan Document with respect to accounts or Eligible Receivables in general, or to such account in particular, are true and correct with respect to such account; and

(t) the account is otherwise acceptable to the Lender.

“SMC Eligible Accounts Receivable” means Eligible Accounts Receivable arising from direct shipments to account debtors from domestic warehouses.

“SMI Eligible Accounts Receivable” means Eligible Accounts Receivable arising from direct import shipments to account debtors.

2. Requests for Advances on the Loan.

Borrower will provide Lender the following as a condition of any Advance (the “Deliverables”): A Borrowing Base Certificate not less than once per week, provided that Lender in its sole discretion may require Borrower to provide a Borrowing Base Certificate more frequently such as with each request for an Advance. “Borrowing Base Certificate” means a certificate as may be required by Lender to reflect the components of, and Availability Reserves against, the Revolving Loan Cap and the Borrowing Base as provided for hereunder from time to time, executed by a Responsible Officer of the Borrower. In addition, prior to any request for an Advance, upon request by Lender, Borrower must furnish to the Lender invoices, credit memos, sales and cash receipt journals, purchase orders, evidence of delivery, proof of shipment, timesheets or any other documents Lender requests, in its sole discretion, with respect to the Collateral to support the Advance. Lender will use reasonable efforts to provide the requested funds by the end of the same business day that it receives the request so long as the complete package of information for the request has been received by 10:30 a.m. Eastern Time that day. All requests for funding will be subject to Lender’s then standard fees for electronic funds transfer, wire transfers and check services.

Each time an Advance is made, the amount of the Obligations will be increased by the amount of the Advance. After checks, ACH or wire transfers or other credit instruments are deposited in or forwarded to the Lockbox Account, and upon receipt of the Borrowing Base Certificate reflecting such deposit, Lender will credit the Loan Account with the net amount actually received in good funds, whereupon interest will no longer be charged. On the date a Borrowing Base Certificate is received on the net funds actually received, Borrower will receive immediate credit on such funds in determining availability for Advances.

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EX-10.2

Exhibit 10.2

REVOLVING CREDIT NOTE

PRINCIPAL AMOUNT UP TO $2,000,000 3/28/2024

FOR VALUE RECEIVED, The Singing Machine Company, Inc. a Delaware corporation (the “Borrower”), having an office at 6301 NW 5^th Way, Suite 2900, Fort Lauderdale, Florida 33309, unconditionally promises to pay to the order of Oxford Commercial Finance, a Michigan banking corporation (the “Lender”), at its offices at 64 S. Washington Street, P.O. Box 17, Oxford, Michigan 48371 or at such other place as the Lender may designate in writing, ON DEMAND, the principal amount of up to $2,000,000.00 (the “Loan”) together with all accrued interest thereon as provided in this Revolving Credit Note (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms, the “Note”).

1. Definitions. In addition to terms defined herein and in the Loan Agreement (as defined below), capitalized terms used herein shall have the following meanings.

“Applicable Rate” means the rate equal to the Prime Rate plus the Margin, but in any event, not less than ten percent (10%).

“Default Rate” means, at any time, the Applicable Rate plus six percent (6%).

“Interest Payment Date” means the last day of each month commencing on the first such date to occur after the execution of this Note.

“Loan Agreement” means the Loan Agreement, dated as of the date hereof, by and between the Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.

“Margin” means two and one-half percent (2.5%).

“Prime Rate” means that rate of interest reported daily in the Wall Street Journal as the Prime Rate. If the Lender abandons the use of the Wall Street Journal Prime Rate, or the paper ceases publishing it, the new index will be the prime commercial rate established or selected by the Lender.

“Security Agreement” means the Security Agreement, dated as of the date hereof, by and between the Borrower and the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.

2. Loan Agreement and Security Agreement. The Borrower’s performance of its obligations under this Note is governed by the terms and conditions set forth in the Loan Agreement and the Security Agreement.

3. Payments.

3.1 Manner of Payments. All payments of interest and principal shall be made in lawful money of the United States of America. Payments may be made via discretionary Advances under Revolving Credit Loan or via ACH or by wire transfer of immediately available funds to the Lender’s account as specified by the Lender in writing to the Borrower from time to time.

3.1 Application of Payments. All payments made hereunder shall be applied first to the payment of any fees or charges outstanding hereunder, second to accrued interest, and third to the payment of the principal amount outstanding under the Note.

3.2 Prepayment. In the event Borrower terminates the Loan Agreement and repays the obligations under this Note in full, [Borrower must repay all outstanding Obligations under any Term Loan, and] Borrower shall also pay to Lender as an early exit fee (the “Exit Fee”) as liquidated damages and not as a penalty, an amount equal to: (i) if prior to the one year anniversary date of this Note, two percent (2.00%) of the Revolving Loan Cap plus any fees which are due or to become due under the Loan Agreement, and (ii) if on and after the one year anniversary date of this Note, but prior to the two year anniversary date of this Note, two percent (2.00%) of the Revolving Loan Cap plus any fees which are due or to become due under the Loan Agreement. The Exit Fee shall automatically renew on the two year anniversary date of the Loan Agreement for an additional one year period unless (i) Borrower notifies Lender in writing within sixty (60) days before such anniversary date of Borrower’s intention to pay off this Note and terminate the Loan Agreement and (ii) the Obligations are paid in full by such anniversary date. In the event that payment of the obligations shall be accelerated for any reason whatsoever by the Lender, the Exit Fee in effect as of the date of such acceleration shall be paid and such Exit Fee shall also be added to the outstanding balance of the Obligations.

4. Interest.

4.1 Interest Rate. The outstanding principal amount of the Loan shall bear interest at a rate per annum equal to the Applicable Rate, or if applicable the Default Rate, from the date the Loan is made until the Loan is paid in full. Interest on the Loan shall be payable monthly as of the last day of each calendar month. In no event shall interest exceed the maximum legal rate permitted by law.

4.2 Computations of Interest. All computations of interest shall be made on the basis of 365 or 366 days, as the case may be, and the actual number of days elapsed. Interest shall accrue on the Loan on the day on which the Loan is made, and shall not accrue on the Loan for the day on which it is paid.

4.3 Interest Rate Limitation. If at any time and for any reason whatsoever, the interest rate payable on the Loan shall exceed the maximum rate of interest permitted to be charged by the Lender to the Borrower under applicable Law, such interest rate shall be reduced automatically to the maximum rate of interest permitted to be charged under applicable Law/that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary prepayment of principal.

5. Miscellaneous.

5.1 Notices.

(a) All notices, requests, or other communications required or permitted to be delivered hereunder shall be delivered in writing at the addresses set forth in this Note or such other address as either the Borrower or the Lender may from time to time specify in writing.

(b) Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received; (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next business day); and (iii) sent by email shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email, or other written acknowledgment).

5.2 Costs and Expenses. The Borrower shall reimburse the Lender on demand for all reasonable out-of-pocket costs, expenses, and fees (including reasonable expenses and fees of its counsel) incurred by the Lender in connection with the transactions contemplated hereby including the negotiation, documentation, and execution of this Note, the Loan Agreement, the Security Agreement and the enforcement of the Lender’s rights hereunder and thereunder.

5.3 Governing Law. This Note, the Loan Agreement, the Security Agreement and any claim, controversy, dispute, or cause of action (whether in contract or tort or otherwise) based upon, arising out of, or relating to this Note, the Loan Agreement and the Security Agreement, and the transactions contemplated hereby and thereby shall be governed by the laws of the State of Michigan.

5.4 Submission to Jurisdiction.

(a) The Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit, or proceeding arising out of or relating to this Note, the Loan Agreement or the Security Agreement may be brought in the courts of the State of Michigan or of the United States of America for the Eastern District of Michigan and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit, or proceeding. Final judgment against Borrower in any action, suit, or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment.

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(b) Nothing in this Section 5.4 shall affect the right of the Lender to (i) commence legal proceedings or otherwise sue the Borrower in any other court having jurisdiction over the Borrower or (ii) serve process upon the Borrower in any manner authorized by the laws of any such jurisdiction.

5.5 Waiver of Jury Trial. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE, THE LOAN AGREEMENT, THE SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.

5.6 Integration. This Note, the Loan Agreement and the Security Agreement, and the documents referenced therein, constitute the entire contract between the parties hereto with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto.

5.7 Successors and Assigns. The Borrower may not assign or transfer this Note or any of its rights hereunder without the prior written consent of the Lender. This Note shall inure to the benefit of and be binding upon the parties hereto and their permitted successors and assigns.

5.8 Amendment and Waiver. No term of this Note may be waived, modified or amended except by an instrument in writing signed by both of the parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.

5.9 Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof.

5.10 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Lender, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

5.11 Electronic Execution. The words “execution,” “signed,” “signature,” and words of similar import in this Note shall be deemed to include electronic or digital signatures or electronic records, each of which shall be of the same effect, validity, and enforceability as manually executed signatures or a paper-based record-keeping system, as the case may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S.C. §§ 7001 to 7031), the Uniform Electronic Transactions Act (UETA), or any state law based on the UETA, including the New York Electronic Signatures and Records Act (N.Y. State Tech. §§ 301 to 309).

5.12 Severability. If any term or provision of this Note, the Loan Agreement or the Security Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Note, the Loan Agreement or the Security Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Note so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

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IN WITNESS WHEREOF, the Borrower has executed this Note as of the date first above written.

The Singing Machine Company, Inc., as the Borrower
By:	/s/ Gary Atkinson
Name:	Gary Atkinson
Title:	CEO

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EX-10.3

Exhibit 10.3

SECURITY AGREEMENT

THIS SECURITY AGREEMENT dated as of March 28, 2024, as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof (this “Agreement”), is entered into between The Singing Machine Company, Inc., a Delaware corporation whose address is 6301 NW 5^th Way, Suite 2900, Fort Lauderdale, Florida 33309 (the “Grantor”), in favor of Oxford Commercial Finance whose address is 64 S. Washington Street, P.O. Box 17, Oxford, Michigan 48371 (the “Lender”).

WHEREAS, the Lender has made a loan and hereafter may make additional loans to the Grantor (the “Loans”), evidenced by, among other documents, that certain Loan Agreement of even date herewith as amended, supplemented or otherwise modified from time to time (the “Loan Agreement”);

WHEREAS, this Agreement is given by the Grantor in favor of the Lender to secure the payment and performance of all of the Obligations; and

WHEREAS, it is a condition to the obligations of the Lender to make the Loans under the Loan Agreement that the Grantor execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Definitions. Unless otherwise defined herein or in the Loan Agreement or in Article 9 of the UCC, capitalized terms used herein shall have the following meaning.

“Collateral” has the meaning set forth in Section 2.

“Event of Default” has the meaning set forth in the Loan Agreement.

“First Priority” means, with respect to any lien and security interest purported to be created in any Collateral pursuant to this Agreement, such lien and security interest is the most senior lien to which such Collateral is subject (subject only to liens permitted under the Loan Agreement).

“Obligations” has the meaning set forth in Section 3.

“Proceeds” means “proceeds” as such term is defined in Section 9-102 of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Michigan or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.

2. Grant of Security Interest. The Grantor hereby pledges and grants to the Lender a First Priority lien and security interest in favor of the Lender in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired (collectively, the “Collateral”):

(a) all fixtures and personal property of every kind and nature including all accounts (including health-care-insurance receivables), goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, commercial tort claims described on Schedule 1 hereof and as supplemented by any written notification given by the Grantor to the Lender pursuant to Section ‎4(c), general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; and

(b) all Proceeds and products of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Grantor from time to time with respect to any of the foregoing.

3. Secured Obligations. The Collateral secures the due and prompt payment and performance of the obligations, covenants, duties, debts, and liabilities of any kind of the Grantor under or in respect of the Loan Agreement, this Agreement or any other document made, delivered or given in connection with any of the foregoing or under any other agreement or loan by and between Grantor and Lender, whether allowed in any bankruptcy, insolvency, receivership or other similar proceeding (all such obligations, covenants, duties, debts, liabilities, sums and expenses set forth in Section ‎3 being herein collectively called the “Obligations”).

4. Perfection of Security Interest and Further Assurances.

(a) The Grantor shall, from time to time, as may be required by the Lender with respect to all Collateral, take all actions as may be requested by the Lender to perfect the security interest of the Lender in the Collateral at the sole cost and expense of the Grantor. Without limiting the foregoing, the Grantor shall deliver to Lender the original certificates of title and shall execute all documentation requested by Lender to reflect Lender’s security interest on titled vehicles and vessels.

(b) The Grantor hereby irrevocably authorizes the Lender at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral. The Grantor agrees to provide all information required by the Lender pursuant to this Section promptly to the Lender upon request.

(c) If the Grantor shall at any time hold or acquire a commercial tort claim, the Grantor shall (i) timely notify the Lender in a writing signed by the Grantor of the particulars thereof and grant to the Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Lender and (ii) deliver to the Lender an updated Schedule 1.

(d) If any Collateral is at any time in the possession of a bailee, the Grantor shall promptly notify the Lender thereof and, at the Lender’s request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to the Lender, that the bailee holds such Collateral for the benefit of the Lender and the bailee agrees to comply, without further consent of the Grantor, at any time with instructions of the Lender as to such Collateral.

(e) The Grantor agrees that at any time and from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that the Lender may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Lender to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.

5. Representations and Warranties. The Grantor represents and warrants as follows:

(a) The Grantor holds no commercial tort claims except as indicated on Schedule 1. None of the Collateral constitutes, or is the proceeds of, (i) farm products, (ii) as-extracted collateral, (iii) manufactured homes, (iv) health-care-insurance receivables, (v) timber to be cut, (vi) aircraft, aircraft engines, satellites, ships or railroad rolling stock. None of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral. The Grantor has at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

(b) At the time the Collateral becomes subject to the lien and security interest created by this Agreement, the Grantor will be the sole, direct, legal and beneficial owner thereof, free and clear of any lien, security interest, encumbrance, claim, option or right of others except for the security interest created by this Agreement and other liens expressly permitted by the Loan Agreement.

(c) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected First Priority security interest in the Collateral, securing the payment and performance when due of the Obligations, other than liens expressly permitted by the Loan Agreement.

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(d) This Agreement and the Loan Agreement have been duly authorized, executed and delivered by the Grantor and constitute the legal, valid and binding obligation of the Grantor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

(e) No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the borrowing of the Loans and the pledge by the Grantor of the Collateral pursuant to this Agreement or for the execution and delivery of the Loan Agreement and this Agreement by the Grantor or the performance by the Grantor of its obligations thereunder. The execution and delivery of the Loan Agreement and this Agreement by the Grantor and the performance by the Grantor of its obligations thereunder, will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to the Grantor or any of its property, or the organizational or governing documents of the Grantor or any agreement or instrument to which the Grantor is party or by which it or its property is bound.

6. Voting, Distributions and Receivables.

(a) The Lender agrees that the Grantor may, unless an Event of Default shall have occurred and be continuing, receive and retain all dividends and other distributions with respect to the Collateral consisting of securities, other Equity Interests or indebtedness owed by any obligor.

(b) The Lender may, or at the request and option of the Lender the Grantor shall, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Lender in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Lender. Without limiting the foregoing, the Lender may at any time communicate directly with any of the Grantor’s account debtors to, among other things, verify the amount, validity and payment status of any of the Grantor’s accounts, whether an Event of Default has or has not occurred or is continuing.

7. Covenants. The Grantor covenants as follows:

(a) The Grantor will not, without providing at least 30 days’ prior written notice to the Lender, change its legal name, identity, type of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place of business or its organizational identification number. The Grantor will, prior to any change described in the preceding sentence, take all actions reasonably requested by the Lender to maintain the perfection and priority of the Lender’s security interest in the Collateral.

(b) The Collateral, to the extent not delivered to the Lender pursuant to Section ‎4, will be kept at those locations indicated to Lender in writing and the Grantor will not remove the Collateral from such locations without providing at least 30 days’ prior written notice to the Lender. The Grantor will, prior to any change described in the preceding sentence, take all actions reasonably required by the Lender to maintain the perfection and priority of the Lender’s security interest in the Collateral.

(c) The Grantor shall, at its own cost and expense, defend title to the Collateral and the First Priority lien and security interest of the Lender therein against the claim of any person claiming against or through the Grantor and shall maintain and preserve such perfected First Priority security interest for so long as this Agreement shall remain in effect.

(d) The Grantor will not sell, offer to sell, dispose of, convey, assign or otherwise transfer, grant any option with respect to, restrict, or grant, create, permit or suffer to exist any mortgage, pledge, lien, security interest, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein, except as expressly provided for in the Loan Agreement or with the prior written consent of the Lender.

(e) The Grantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon. The Grantor will permit the Lender, or its designee, to inspect the Collateral at any reasonable time, wherever located.

(f) The Grantor will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement.

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(g) The Grantor shall cause the landlord or mortgagee where the equipment portion of the Collateral is located to provide with a lien waiver and collateral access agreement satisfactory to Lender in its sole discretion.

(h) Each item of equipment Collateral that is a motor vehicle or moving equipment will be equipped with GPS tracking equipment with access to Lender.

8. Lender Appointed Attorney-in-Fact. The Grantor hereby appoints the Lender the Grantor’s attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time during the continuance of an Event of Default in the Lender’s discretion to take any action and to execute any instrument which the Lender may deem necessary or advisable to accomplish the purposes of this Agreement. This appointment, being coupled with an interest, and shall be irrevocable until the Obligations are paid in full.

9. Lender May Perform. If the Grantor fails to perform any obligation contained in this Agreement, the Lender may itself perform, or cause performance of, such obligation, and the expenses of the Lender incurred in connection therewith shall be payable by the Grantor; provided that the Lender shall not be required to perform or discharge any obligation of the Grantor.

10. Reasonable Care. The Lender shall have no duty with respect to the care and preservation of the Collateral beyond the exercise of reasonable care.

11. Remedies Upon Default.

(a) If any Event of Default shall have occurred and be continuing, the Lender, without any other notice to or demand upon the Grantor, may assert all rights and remedies of a Lender under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to the Grantor at its notice address in the first paragraph of this Agreement ten days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, the Lender may sell such Collateral on such terms and to such purchaser(s) as the Lender in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At any public sale of the Collateral, the Lender may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, the Grantor waives all claims, damages and demands it may acquire against the Lender arising out of the exercise by it of any rights hereunder. At any such sale, unless prohibited by applicable law, the Lender or any custodian may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Lender nor any custodian shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto. The Grantor agrees that it would not be commercially unreasonable for the Lender to dispose of the Collateral or any portion thereof by utilizing internet sites that provide for the auction of assets of the type included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. The Lender shall not be obligated to clean-up or otherwise prepare the Collateral for sale.

(b) If any Event of Default shall have occurred and be continuing, any cash held by the Lender as Collateral and all cash Proceeds received by the Lender in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in whole or in part by the Lender to the payment of expenses incurred by the Lender in connection with the foregoing or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Lender hereunder, including reasonable attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part of the Obligations in such order as the Lender shall elect. Any surplus of such cash or cash Proceeds held by the Lender and remaining after payment in full of all the Obligations shall be paid over to the Grantor or to whomsoever may be lawfully entitled to receive such surplus. The Grantor shall remain liable for any deficiency if such cash and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Obligations and the fees and other charges of any attorneys employed by the Lender to collect such deficiency.

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(c) If the Lender shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, the Grantor agrees that, upon request of the Lender, the Grantor will, at its own expense, do or cause to be done all such acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

12. No Waiver and Cumulative Remedies. The Lender shall not by any act (except by a written instrument pursuant to Section ‎14), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

13. Security Interest Absolute. The Grantor hereby waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. All rights of the Lender and liens and security interests hereunder, and all Obligations of the Grantor hereunder, shall be absolute and unconditional.

14. Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by the Grantor therefrom shall be effective unless the same shall be in writing and signed by the Lender and the Grantor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

15. Addresses For Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Loan Agreement, and addressed to the respective parties at their addresses as specified in the opening paragraph of this Agreement as to either party at such other address as shall be designated by such party in a written notice to each other party.

16. Continuing Security Interest; Further Actions. This Agreement shall create a continuing First Priority lien and security interest in the Collateral and shall (a) subject to Section ‎17, remain in full force and effect until payment and performance in full of the Obligations, (b) be binding upon the Grantor, its successors and assigns, and (c) inure to the benefit of the Lender and its successors, transferees and assigns; provided that the Grantor may not assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender. Without limiting the generality of the foregoing clause (c), any assignee of the Lender’s interest in any agreement or document which includes all or any of the Obligations shall, upon assignment in accordance with Section 9.4 of the Loan Agreement, become vested with all the benefits granted to the Lender herein with respect to such Obligations.

17. Termination; Release. On the date on which all Obligations have been paid (in good funds) and performed in full, the Lender will, at the request and sole expense of the Grantor, (a) duly assign, transfer and deliver to or at the direction of the Grantor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of the Lender, together with any monies at the time held by the Lender hereunder, and (b) execute and deliver to the Grantor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

18. Governing Law. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of Michigan. The other provisions of Section 9.9 [Governing Law; Jurisdiction; Consent to Service of Process] and Section 9.10 [Waiver of Jury Trial] of the Loan Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

19. Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement and the Loan Agreement constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

The Singing Machine Company, Inc., as Grantor
By:	/s/ Gary Atkinson
Name:	Gary Atkinson
Title:	CEO
Oxford Commercial Finance, as Lender
By:	/s/ Lisa Spence
Name:	Lisa Spence
Title:	Vice President

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EX-99.1

Exhibit 99.1

Singing Machine Secures $2 Million Senior Credit Facility

Company Expands Non-Dilutive Working Capital Funding to Support Growth

Fort Lauderdale, FL, April 03, 2024 (GLOBE NEWSWIRE) — The Singing Machine Company, Inc. (“Singing Machine”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products, today announced the closing of a $2 million senior credit facility with Oxford Commercial Finance, a subsidiary of Oxford Bank. The credit facility has a 2-year term and is intended to support the funding of accounts receivable generated from ongoing sales.

The Company has historically financed both accounts receivable and inventory working capital needs through a combination of working capital lines of credit with various senior lenders. The Company primarily relies on a financing program available through an early pay platform with C2FO to fund accounts receivable without any dollar limitations. This is an ongoing financing arrangement that the Singing Machine has maintained since 2009. This program specifically enables the Company to accelerate the majority of its receivables due from select domestic retail partners. The Oxford credit facility is intended to expand the financing on receivables that are not already approved for accelerated payments through the C2FO program.

“We’re pleased to close this line of credit with Oxford, which provides the Company with expanded options for funding receivables with more of our retail customers to support our working capital needs,” commented Gary Atkinson, CEO of the Singing Machine. “By utilizing a hybrid approach with the early pay program with C2FO and a traditional accounts receivable line of credit with Oxford, we have expanded our receivables financing to almost all of our domestic customers while still maintaining a lower cost, more flexible form of accounts receivable financing.”

“This facility is well within prevailing markets rates in terms of cost of capital and carries no financial covenants. We see this as one of the most flexible funding options available to us today, and we were pleased to complete the transaction with minimal cost during the process,” concluded Mr. Atkinson.

About The Singing Machine

The Singing Machine Company, Inc. is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry’s widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.

Investor Relations Contact:

investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors

XML

Cover	Mar. 28, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 28, 2024
Entity File Number	001-41405
Entity Registrant Name	SINGING MACHINE CO INC
Entity Central Index Key	0000923601
Entity Tax Identification Number	95-3795478
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	6301 NW 5th Way
Entity Address, Address Line Two	Suite 2900
Entity Address, City or Town	Fort Lauderdale
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33309
City Area Code	(954)
Local Phone Number	596-1000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	MICS
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false