Singing Machine Closes Securities Purchase Agreement for $2 Million in Gross Proceeds

Singing Machine (OTCMKTS:SMDM) recently entered into a Securities Purchase Agreement (SPA) with Algorhythm Holdings, Inc., a Delaware corporation, on October 22, 2024. The agreement involved the issuance and sale of Original Issue Discount Senior Secured Notes (Notes) and common stock shares as part of the Offering. The Company secured approximately $2.0 million in gross proceeds from the transaction before deductions for placement agent fees and expenses.

The net proceeds from the SPA will be allocated by Singing Machine towards working capital and other corporate purposes. Additionally, specific registration rights for the issued shares were granted, alongside a provision allowing purchasers a 20% participation right in future common stock issuances for cash post the Offering’s closure.

Univest Securities LLC served as the placement agent and obtained 7% of the gross proceeds from the Company, along with reimbursement for legal fees. The Offering concluded on October 24, 2024, with Singing Machine disbursing 2,300,000 shares of common stock and Notes valued at $2,352,941. Prior to the SPA, the Company had around 11,896,273 common stock shares in circulation.

Regarding the Notes, each purchaser received a Note proportionate to their subscription amount divided by 0.85, issued with an original discount of 15%. Interest will only accrue on the Notes post an Event of Default at a rate of 14% annually, computed on a 360-day year basis. The maturity date was set at ninety days following the October 24, 2024 issuance.

The Notes outline several Events of Default scenarios, including failure to pay principal, interest, or breaches of obligations, among others. In case of default, purchasers are empowered to execute remedies mentioned in the Notes. The Notes are secured by Singing Machine’s assets and property, guaranteed by its subsidiaries through a Guarantee Agreement.

Noteworthy is that the Offering was exempted from registration under the Securities Act of 1933. The descriptions of the SPA and Notes provided are abridged and should be referred to in full within the Exhibit documents attached to the filing.

This transaction has also been documented under the creation of direct financial obligations and unregistered sales of equity securities in compliance with regulatory standards as specified in the Exhibit documents listed in the Form 8-K submission. Singing Machine anticipates leveraging the SPA proceeds strategically for operational enhancements and general corporate objectives.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Singing Machine’s 8K filing here.

About Singing Machine

The Singing Machine Company, Inc, together with its subsidiaries, engages in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings in North America, Europe, Asia, and Australia. It offers karaoke products under the flagship brand Singing Machine; licensed karaoke microphone products under the Carpool Karaoke brand; microphone accessories and portable Bluetooth microphones under the Party Machine brand; music entertainment singing machines for children under the brand Singing Machine Kids; and karaoke music subscription services for the iOS and Android platforms, as well as a web-based download store and integrated streaming services for Singing Machine hardware.