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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
filed with the Securities and Exchange Commission on April 13, 2022</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Registration
No. 333- </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<!-- Field: Rule-Page --><div style="width: 100%"><div style="border-top: Black 4pt solid; font-size: 1pt; border-bottom: Black 1.5pt solid">&#160;</div></div><!-- Field: /Rule-Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>UNITED
STATES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>SECURITIES
AND EXCHANGE COMMISSION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 12pt"><b>Washington,
D.C. 20549</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<span id="xdx_909_edei--DocumentType_c20210401__20211231_zREdHFImfjX6"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:DocumentType">S-1</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>The
Singing Machine Company, Inc.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Exact
name of registrant as specified in its charter)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 32%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_907_edei--EntityIncorporationStateCountryCode_c20210401__20211231_zRifXNOO1se3"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" format="ixt-sec:stateprovnameen" name="dei:EntityIncorporationStateCountryCode">Delaware</ix:nonNumeric></span></b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 32%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>3652</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 32%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90E_edei--EntityTaxIdentificationNumber_c20210401__20211231_znlnfMhmTflf"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:EntityTaxIdentificationNumber">95-3795478</ix:nonNumeric></span></b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(State
    or other jurisdiction of</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">incorporation
    or organization)</span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Primary
    Standard Industrial</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Classification
    Code Number)</span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(I.R.S.
    Employer</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identification
    Number)</span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_900_edei--EntityAddressAddressLine1_c20210401__20211231_zYvTo3rLThCl"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:EntityAddressAddressLine1">6301
NW 5<sup>th</sup> Way, Suite 2900</ix:nonNumeric></span>,</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_904_edei--EntityAddressCityOrTown_c20210401__20211231_zIUwVnfTgwt6"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:EntityAddressCityOrTown">Fort
Lauderdale</ix:nonNumeric></span>, <span id="xdx_90D_edei--EntityAddressStateOrProvince_c20210401__20211231_z1GNkWCxWpU3"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:EntityAddressStateOrProvince">FL</ix:nonNumeric></span> <span id="xdx_901_edei--EntityAddressPostalZipCode_c20210401__20211231_z8BxaQRMENQh"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:EntityAddressPostalZipCode">33309</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span><span>(<span id="xdx_903_edei--CityAreaCode_c20210401__20211231_zWrwGCFqRvhj"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:CityAreaCode">954</ix:nonNumeric></span>)</span>
<span id="xdx_90B_edei--LocalPhoneNumber_c20210401__20211231_z5uplqg7yYb4"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="dei:LocalPhoneNumber">596-1000</ix:nonNumeric></span></span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address,
including zip code and telephone number, including</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">area
code, of registrant&#8217;s principal executive offices)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90C_edei--ContactPersonnelName_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zHZSCSVgcbH2"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:ContactPersonnelName">Gary
Atkinson</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Chief
Executive Officer</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90B_edei--EntityAddressAddressLine1_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zzsOo3HNdfq"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:EntityAddressAddressLine1">6301
NW 5<sup>th</sup> Way, Suite 2900</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90D_edei--EntityAddressCityOrTown_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z3gvf2TYCm76"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:EntityAddressCityOrTown">Fort
Lauderdale</ix:nonNumeric></span>, <span id="xdx_907_edei--EntityAddressStateOrProvince_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zDwooJFyLwi"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:EntityAddressStateOrProvince">FL</ix:nonNumeric></span> <span id="xdx_900_edei--EntityAddressPostalZipCode_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zoLdjlZHEW72"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:EntityAddressPostalZipCode">33309</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">(<span id="xdx_901_edei--CityAreaCode_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zcL7f9E0xft5"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:CityAreaCode">954</ix:nonNumeric></span>)
<span id="xdx_905_edei--LocalPhoneNumber_c20210401__20211231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z9X4VGYHuwx5"><ix:nonNumeric contextRef="From2021-04-012021-12-31_dei_BusinessContactMember" name="dei:LocalPhoneNumber">596-1000</ix:nonNumeric></span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Name,
address, including zip code and telephone number, including area code, of agent for service)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Copies
to:</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 49%"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Gregory
    Sichenzia, Esq.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Marcelle
    S. Balcombe, Esq.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Sichenzia
    Ross Ference LLP.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1185
    Avenue of the Americas</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>New
    York, NY 10036</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(212)
    930-9700</b></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 49%"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Anthony
    W. Basch, Esq.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Alexander
    W. Powell, Jr., Esq.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Sumita
    S. Ashrafi, Esq.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Kaufman
    &amp; Canoles, P.C.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1021
    E. Cary St.</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Richmond,
    Virginia 23219</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(804)
    771-5700 </b></span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-indent: 1in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of the registration statement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, check the following box. &#9746;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
&#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221;
&#8220;smaller reporting company&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 4%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 46%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
    accelerated filer &#9744;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated
    filer &#9744;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_edei--EntityFilerCategory_c20210401__20211231_z6ZxXcVRZLRk"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated
    filer</ix:nonNumeric></span> &#9746;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller
    reporting company <span id="xdx_902_edei--EntitySmallBusiness_c20210401__20211231_zbdxy6z7Fyha"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" format="ixt:booleantrue" name="dei:EntitySmallBusiness">&#9746;</ix:nonNumeric></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging
    growth company <span id="xdx_902_edei--EntityEmergingGrowthCompany_c20210401__20211231_zpy8GVRc1RWg"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" format="ixt:booleanfalse" name="dei:EntityEmergingGrowthCompany">&#9744;</ix:nonNumeric></span></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date
as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red">The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red">&#160;</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; width: 33%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>PRELIMINARY
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 34%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>SUBJECT
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 33%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><b>DATED
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img src="forms1_001.jpg" alt="" /></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Shares
of Common Stock</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine Company, Inc. is offering &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares of common stock, $0.01 par value, at an assumed public offering price of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share,
the closing price of our common stock on the OTCQX on &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, 2022, in a firm commitment underwritten offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
common stock is presently quoted on the OTCQX under the symbol &#8220;SMDM&#8221;. On April 12, 2022, the last reported sales
price of our common stock on the OTCQX was $0.1330 per share. We have applied to have our common stock listed on the Nasdaq Capital
Market under the symbol &#8220;MICS&#8221;. No assurance can be given that our application will be approved. If our application is not
approved, we will not complete this offering. </span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
final public offering price per share will be determined through negotiation between us and the underwriters in this offering and will
take into account the recent market price of our common stock, the general condition of the securities market at the time of this offering,
the history of, and the prospects for, the industry in which we compete, and our past and present operations and our prospects for future
revenues. The recent market price used throughout this prospectus may not be indicative of the public offering price per share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will complete a reverse split of our common stock simultaneously with this offering at a ratio that will be determined prior to this
offering. All share numbers in this registration statement will be adjusted to give effect to this reverse split, except in the financial
statements or as otherwise indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Investing
in our securities involves a high degree of risk. See &#8220;Risk Factors&#8221; beginning on page 5 of this prospectus for a
discussion of information that should be considered in connection with an investment in our securities.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">Per Share</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1.5pt solid; text-align: center">Total</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%">Public offering price</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underwriting discounts and commissions<sup>(1)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Proceeds to us, before expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
    &#8220;Underwriting&#8221; for a description of compensation payable to the underwriters.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have granted the underwriters a 45-day option to purchase up to &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional shares of common stock representing 15% of the common stock
sold in this offering, solely to cover over-allotments, if any. The purchase price to be paid per additional share of common stock will
be equal to the public offering price of one share of common stock, less the underwriting discount. If the underwriters exercise the
option in full, the total underwriting discounts and commissions payable by us will be $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#8239; and the total proceeds to us, before expenses,
will be $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; .</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriters expect to deliver our securities to purchasers in the offering on or about &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 16pt"><b>AEGIS
CAPITAL CORP.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
date of this prospectus is &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, 2022</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TABLE
OF CONTENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page<sup>
    </sup></b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prospectus Summary</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Offering</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk Factors</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Special Note Regarding Forward-Looking Statements</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><a href="#a_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Use of Proceeds</span></a></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_006">Market for Common Stock and Related Stockholder Matters</a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">13</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_007">Dilution</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">13</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><a href="#a_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Capitalization</span></a></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">14</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_009">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations</a></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: center">15</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_010">Business</a></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_011">Management</a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">26</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_012">Executive Compensation</a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">30</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain Relationships and Related Party Transactions </span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Security Ownership of Certain Beneficial Owners and Management</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">33</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Description of Capital Stock</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">35</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_016">Underwriting</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">36</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Legal Matters</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">39</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_018">Experts</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">39</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#a_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Where You Can Find More Information</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">39</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#SI_006">Financial Statements</a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">F-1</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
should rely only on the information contained in this prospectus, as supplemented and amended. We have not authorized anyone to provide
you with information that is different. This prospectus may only be used where it is legal to sell these securities. The information
in this prospectus may only be accurate on the date of this prospectus. We take no responsibility for, and can provide no assurance as
to the reliability of, any other information that others may give you. Neither we nor any of the underwriters is making an offer to sell
or seeking offers to buy these securities in any jurisdiction where, or to any person to whom, the offer or sale is not permitted. The
information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time
of delivery of this prospectus or of any sale of our securities. Our business, financial condition, results of operations and future
growth prospects may have changed since those dates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
investors outside the United States: We have not and the underwriters have not done anything that would permit this offering or possession
or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons
outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the securities and the distribution of this prospectus outside the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.45in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including
our general expectations and market position, market opportunity and market share, is based on information from our own management estimates
and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management
estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and
knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent source, and we have
not independently verified any third-party information. In addition, assumptions and estimates of our and our industry&#8217;s future
performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in
&#8220;Risk Factors.&#8221; These and other factors could cause our future performance to differ materially from our assumptions and
estimates. See &#8220;Special Note Regarding Forward-Looking Statements.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.45in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.45in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience,
trademarks and trade names referred to in this prospectus may appear without the <sup>&#174;</sup> or <sup>&#8482;</sup> symbols, but
such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights
or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies&#8217;
trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.45in"></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span id="a_001"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PROSPECTUS
SUMMARY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.45in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>This
summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a
summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified
in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus.
Before you decide to invest in our securities, you should read the entire prospectus carefully, including &#8220;Risk Factors&#8221;
beginning on page 5, and the financial statements and related notes included in this prospectus.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>As
used in this prospectus and unless otherwise indicated, the terms &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our,&#8221; &#8220;SMC&#8221;,
&#8220;Singing Machine,&#8221; or the &#8220;Company&#8221; refer to The Singing Machine Company, Inc. and its wholly owned subsidiaries</i>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Overview</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a leading global karaoke and music Entertainment Company that specializes in the design and production of quality karaoke and music
enabled consumer products for adults and children. Our products are among the most widely available karaoke products in the world. Our
mission is to &#8220;create joy through music.&#8221; In order to deliver on this mission, we are focused on the following multi-prong
approach:</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
in the short-term, improve profitability by optimizing operations and continue to expand gross margins.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
in the mid-to-long-term, continue to grow our global distribution and expand into new product categories that take advantage of our vast
distribution relationships and sourcing abilities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
operate in one principal industry segment across geographically diverse marketplaces, selling our products globally to large, national
retailers as well as independent retailers, on our retailers&#8217; websites, and our own direct to consumer website. In North America,
our customers include Amazon.com, Costco, Sam&#8217;s Club, Target and Wal-Mart. Our largest international territories are the U.K. and
Australia where we sell through international distributors, representatives, and to select international retail customers in geographic
locations where we do not have a direct sales presence.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
to the Company&#8217;s top five customers together comprised approximately 90% and 80% of our net sales in our fiscal years 2021 and
2020, respectively. In our fiscal year ended March 31, 2021, revenues from four of these customers each represented greater than
10% of net sales at a percentage of 36%, 20%, 13% and 12% of total net sales. In our fiscal year ended March 31, 2020, revenues from
three of these customers each represented greater than 10% of net sales at a percentage of 41%, 13%, and 10% of total net sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have no long-term contracts with our customers, and as a result, our success depends heavily on our customers&#8217; willingness to purchase
and provide shelf space for our products.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Our
Product Portfolio</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
portfolio of owned and licensed brands and products are organized into the following categories:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Karaoke</b>&#8212;including
our flagship brand Singing Machine, our karaoke line is driven by quality products at affordable price points that we believe deliver
great value to our customers. All of our karaoke products are Bluetooth&#174; enabled to allow access to digital music content via our
mobile apps available on iOS and Android platforms. We believe our core karaoke line offers best-in-class innovative features such as:
enable customers to output video to a TV screen, correct singer&#8217;s pitch in real-time, stream karaoke content directly to the machine,
sing duets, display scrolling lyrics in-time with the song, and play custom karaoke CD+G discs. The Company&#8217;s products are sold
directly to consumers via its retail channels, ecommerce, its own website, and distributors worldwide. This product category accounted
for approximately 76% of the Company&#8217;s net sales in our fiscal year 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Licensed
Products</b>&#8212;including brands such as Carpool Karaoke. In 2019, we entered into a 3-year license agreement with CBS&#174; for its
Carpool Karaoke brand, made popular by James Corden on The Late Show with James Corden. We launched an innovative Carpool Karaoke Microphone
that works specifically in the car. This license agreement with CBS&#174; expires on September 30, 2022. We are actively exploring renewing
the license agreement and exploring other new licensing opportunities. This product category accounted for approximately 10% of our net
sales in our fiscal year 2021.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Microphones
and Accessories</b>&#8212; we currently offer a line of traditional microphone accessories that are compatible with our karaoke machines.
These microphones feature an assortment of colors, come wired or wireless, and may include new features like party lighting and voice
changing effects. We are also seeing growth in portable Bluetooth&#174; microphones which are marketed under the Party Machine brand.
This product category accounted for approximately 10% of our net sales in our fiscal year 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Singing
Machine Kids Youth Electronics</b>&#8212;including the brand Singing Machine Kids. Our kids line of products offer fun music entertainment
features designed specifically for children. Our kids&#8217; products provide a high quality introduction to singing and music entertainment
for young singers and offer innovative features like voice changing effects, recording, Bluetooth&#174; compatibility, and portability.
This product category accounted for approximately 3% of our net sales in our fiscal year 2021.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Music
Subscriptions</b>&#8212;in conjunction with its premium partner, Stingray Digital, the Company offers karaoke music subscription services
for the iOS and Android platforms as well as a web-based download store and integrated streaming services for our hardware. We currently
offer almost 20,000 licensed karaoke songs in the catalog. This product category accounted for approximately 1% of our net sales in our
fiscal year 2021.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risk
Factor Summary</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect
our business, financial condition, results of operations, liquidity and prospects. You should carefully consider these risks, including
the risks described under the heading &#8220;Risk Factors&#8221; included elsewhere in this prospectus, before deciding to invest in
our common stock. Risks relating to our business include, among others:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in">&#9679;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">significant
    disruption to financial market and other economic activity caused by the outbreak and continuance of the Covid-19 pandemic;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    impact of the worldwide financial markets and global events, including COVID-19 on our supply chain;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#9679;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Economic
    uncertainty and capital market disruptions;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">market
    shortages in raw materials or electronic components necessary to manufacture our products;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">concentration
    of sales among our four largest customers;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">return
    of karaoke products and its impact on our revenues and net profits;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pricing
    pressure due to rising competition and inflation;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">inaccurate
    forecast of karaoke product demand;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">costs
    and risks associated with carrying inventory;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">loss
    or damage to goods in transit from factories in China to warehouse in California;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">disruptions
    to the shipping industry;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    seasonality of our business which is tied to the holiday period;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    competitive nature of the industry in which we operate;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    dependence on third party suppliers and reliance on the suppliers to have all required licenses and comply with all laws in manufacturing
    our products;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">factors
    that may affect consumer discretionary spending;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">credit
    risk of customers, who experience financial difficulties and potential failure to pay us;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">disruption
    in the operation of our warehouse center in California;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">exposure
    to foreign currency exchange risk;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">prices
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    inability to renew license agreements for intellectual property that we use in our products;</span></td></tr>
  </table>

<p style="margin-top: 0; margin-bottom: 0">&#160;</p>

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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    ability to retain key staff, including management and employees;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    volatility of our share price;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">liquidity
    risk associated with our common stock;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">possible
    dilution to our stockholders;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    offering price of our common stock not being reflective of actual value;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    application of penny stock rules;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    management&#8217;s broad discretion in use of proceeds;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    effect future stock sales could have on the price of our shares ;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    lack of payment of dividends on our common stock;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">costs
    and risks associated with litigation; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">other
    risks described from time to time in periodic and current reports that we file with the SEC.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Corporate
Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is incorporated under the laws of the State of Delaware and was formed in 1994.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
common stock is currently traded on the OTCQX Market under the symbol &#8220;SMDM&#8221;.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
principal executive offices are located at 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, and our telephone number is (954) 596-1000.
We maintain our corporate website at www.singingmachine.com. The information on, or that can be accessed through, our website is not
part of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span id="a_002"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
OFFERING</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 35%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Securities
    offered by us:</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 63%">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">shares
of common stock </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Public
    offering price </b></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    per share</span></p></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Over-allotment
    option </b></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have granted the underwriters a 45-day option to purchase up to &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional shares of common stock (equal to 15% of the common stock
    sold in the offering), solely to cover over-allotments, if any. The purchase price to be paid per additional share of common stock
    shall be equal to the public offering price of one share, less the underwriting discount.</span></p></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Common stock outstanding before the offering<sup>(1)</sup></b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">shares
of common stock.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Common stock to be outstanding after the offering<sup>(2)</sup></b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
of common stock. If the underwriter&#8217;s over-allotment option is exercised in full, the total number of shares of common stock outstanding
immediately after this offering would be&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Use of proceeds</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We intend to use the net
    proceeds of this offering for [general corporate purposes, including working capital]. See &#8220;Use of Proceeds.&#8221;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risk factors</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investing in our securities
    is highly speculative and involves a high degree of risk. You should carefully consider the information set forth in the &#8220;Risk
    Factors&#8221; section beginning on page  5 before deciding to invest in our securities.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Trading symbol</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    common stock is currently quoted on the OTCQX under the trading symbol &#8220;SMDM&#8221;.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have applied to have our common stock listed on the Nasdaq Capital Market under the symbol &#8220;MICS&#8221;. No assurance can be
    given that our application will be approved. If our application is not approved, we will not complete this offering.</span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 35%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Reverse
    stock split</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 63%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective concurrently
    with this offering, we will complete a reverse split of our common stock, in a ratio to be determined by our board of directors,
    up to a maximum of up to 1-for-30. The purpose of the reverse stock split is to meet Nasdaq&#8217;s minimum stock price requirement.
    All share numbers in this registration statement will be adjusted to give effect to this reverse split, except in the financial statements
    or as otherwise indicated. </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lock-ups</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We, our executive officers,
    directors and stockholders holding at least 10% of our outstanding common stock, will agree with the underwriters not to offer for
    sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common
    stock for a period of 180 days after the date of this prospectus. See &#8220;Underwriting.&#8221;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td colspan="3" style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="text-align: justify; margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
                                            on shares of common stock outstanding on April 12, 2022 (unadjusted with respect to
                                            our contemplated reverse split) and excludes:&#160;</span></p></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">34,666,667
    shares of common stock issuable upon the exercise of warrants outstanding as of April 12, 2022, with an exercise price of
    $.35 per share;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#9679;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">16,833,333
    shares of common stock issuable upon the exercise of pre-funded warrants outstanding as of April 12, 2022, with an exercise
    price of $0.01 per share; </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#9679;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,610,000 shares of common
    stock issuable upon the exercise of outstanding options to directors, employees and consultants under our Equity Incentive Plan at
    a weighted average exercise price of $0.34; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#9679;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">assumes no exercise by
    the underwriters of their overallotment option. </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2) </span></td>
    <td colspan="3" style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based on assumed public offering price
    of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share. </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise indicated, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional
shares of common stock to cover over-allotments, if any.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span id="a_003"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>RISK
FACTORS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>An
investment in our common stock involves a high degree of risk. You should carefully consider the following risks and all of the other
information contained herein or incorporated by reference into this prospectus before deciding whether to invest in our common stock,
including the risks and uncertainties described below and under the caption &#8220;Risk Factors&#8221; in our most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC, in each case as these risk factors are amended or supplemented
by subsequent Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q s, including any amendments thereto. The occurrence of any
of such risks may materially and adversely affect our business, financial condition, results of operations and future prospects. In such
an event, the market price of our common stock could decline, and you could lose part or all of your investment. Some statements in this
prospectus, including such statements in the following risk factors, constitute forward-looking statements. See the section entitled
&#8220;Special Note Regarding Forward-Looking Statements.&#8221;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Associated With Our Business</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
COVID-19 pandemic has affected our business in many different ways, and may amplify the risks and uncertainties facing our business and
their potential impact on our financial position, results of operations, and cash flows.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
COVID-19 pandemic has significantly affected U.S. consumer shopping patterns and caused the health of the U.S. and world economy to deteriorate
in fiscal year 2021. During our fiscal year ended March 31, 2021, demand for consumer electronics products including home based entertainment
and toys was strong and resulted in a reduction in end-of-season overstock returns from three major customers as compared to overstock
returns in our fiscal year ended March 31, 2020. While many of the restrictions and measures initially implemented in response to the
pandemic have since been softened or lifted in varying degrees in different locations around the world, and the manufacture and distribution
of COVID-19 vaccines during calendar year 2021 helped to initiate a recovery from the pandemic, the uncertainty regarding existing and
new potential variants of COVID-19 and the success of any vaccines in respect thereof, may in the future cause a reduction in global
economic activity or prompt, the re-imposition of certain restrictions and measures. In addition, even if not required by governmental
authorities, increases in COVID-19 cases, such as if a new variant emerges, may result in significantly reduced economic activity, which
could impact our business and our financial results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
supply chain may be materially adversely impacted by the worldwide financial markets and global events.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely upon the facilities of our third-party manufacturers in China to manufacture our products and export our products throughout the
world. The COVID-19 pandemic has resulted in significant governmental measures being implemented to control the spread of COVID-19, including,
among others, restrictions on manufacturing and the movement of employees in many regions of China during our fiscal year ended March
31, 2021. In late 2021, the increased demand for consumer electronics products and current economic recovery continued to increase worldwide
demand for products using semiconductor &#8220;chip&#8221; components in the production of most consumer electronics which has resulted
in an international shortage of chips available to fulfill demand. As a result, we have experienced longer delivery lead times and some
unavailability of these components which have delayed delivery of some of our products. We have also experienced delays in delivery schedules
due to new outbreaks of COVID-19 in Southern China that have forced temporary closures of some key shipping ports. The port closures
have also led to a temporary shortage of shipping containers which have resulted in significant price increases due to increased demand.
While we have seen the easing of COVID-19 restrictions and the impact on our business, we cannot predict the impact of the resurgence
of variants of COVID-19 and other factors affecting local and global economies. In addition, the invasion of Ukraine and the resulting
sanctions imposed on Russia have resulted in increased volatility in the financial markets and the markets for certain commodities including
oil, which may impact significantly the manufacturers that we rely on.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy
and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions</i></b>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">U.S.
and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the
military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported.
Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market
disruptions, including significant volatility in credit and capital markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
Russia&#8217;s military interventions in Ukraine have led to sanctions and other penalties being levied by the U.S., European Union and
other countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military
actions and the resulting sanctions could adversely affect the global economy and financial markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial
and could adversely affect our operating results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>A
small number of our customers account for a substantial portion of our revenues, and the loss of one or more of these key customers could
significantly reduce our revenues and cash flow.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on a few large customers to provide a substantial portion of our revenues. Sales to the Company&#8217;s top five customers together
comprised approximately 90% and 80% of our net sales in our fiscal years 2021 and 2020, respectively. In our fiscal year ended March
31, 2021, revenues from four of these customers represented greater than 10% of net sales at a percentage of 36%, 20%, 13% and 12% of
total net sales. In our fiscal year ended March 31, 2020, revenues from three of these customers represented greater than 10% of net
sales at a percentage of 41%, 13%, and 10% of total net sales. We do not have long-term contractual arrangements with any of our customers
and they can cancel their orders at any time prior to delivery. A substantial reduction in or termination of orders from any of our largest
customers would decrease our revenues and cash flow.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to the risk that some of our large customers may return karaoke products that they have purchased from us and if this happens,
it would reduce our revenues and profitability.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
our fiscal years ended March 31, 2021 and March 31, 2020, a number of our customers and distributors returned karaoke products that they
had purchased from us. Our customers returned goods valued at approximately $4.1 million or 9.1% of our net sales in our fiscal year
ended March 31, 2021 and approximately $5.4 million or 14.1% of our net sales in our fiscal year ended March 31, 2020. The return of
products is due to a variety of reasons including defective units, customers&#8217; overstock and buyer&#8217;s remorse. The primary
reason for the 5.0 percentage point decrease in returns was primarily due to one-time overstock returns of licensed goods from one major
customer and significant overstock returns of non-licensed products from three other major customers in our fiscal year ended March 31,
2020 which were not repeated in our fiscal year ended March 31, 2021. Our factories charge customary repair and freight costs which increase
our expenses and reduce profitability. If any of our customers were to increase the volume of their returned karaoke products to us,
it would reduce our revenues and profitability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to pressure from our customers relating to price reduction and financial incentives and if we are pressured to make these
concessions to our customers, it will reduce our revenues and profitability.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
there is intense competition in the karaoke industry, we are subject to pricing pressure from our customers. Many of our customers have
demanded that we lower our prices, or they will buy our competitor&#8217;s products. If we do not meet our customer&#8217;s demands to
lower our regular prices, we will not sell as many karaoke products. We are also subject to pressure from our customers regarding certain
financial incentives, such as return credits or large cooperative (&#8220;co-op&#8221;) promotion incentives, which effectively reduce
our net sales and profit. We gave co-op promotion incentives of approximately $2.0 million during our fiscal year ended March 31, 2021
and $2.9 million during our fiscal year ended March 31, 2020. We have historically offered co-op promotion incentives to our customers
because it is standard practice in the retail industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
experience difficulty forecasting the demand for our karaoke products and if we do not accurately forecast demand, our revenues, net
income and cash flow may be affected.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
of our reliance on manufacturers in China for our machine production, our production lead times range from one to four months. Therefore,
we must commit to production in advance of customers&#8217; orders. It is difficult to forecast customer demand because we do not have
any scientific or quantitative method to predict this demand. Our forecasting is based on management&#8217;s general expectations about
customer demand, the general strength of the retail market and management&#8217;s historical experiences. In past years we have overestimated
demand for our products which led to excess inventory in some of our products and caused liquidity problems that adversely affected our
revenues, net income and cash flow.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to the costs and risks of carrying inventory for our customers and if we have too much inventory, it will affect our cash
flow for operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
of our customers place orders with us several months prior to the holiday season, but they schedule delivery two or three weeks before
the holiday season begins. As such, we are subject to the risks and costs of carrying inventory during the time period between the placement
of the order and the delivery date, which reduces our cash flow. As of December 31, 2021, we had approximately $11.1 million in inventory.
It is important that we sell our existing inventories, to ensure we have sufficient cash flow for operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to insurance risk of loss for goods damaged while in transit from the manufacturer to the customer and our warehouse.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
of our goods are manufactured in China and are transported to customers and our warehouse in California via ocean vessel. As such, we
are subject to damages that may occur to these goods when they are in transit to customers or our warehouse. Should substantial damage
incur while goods are in transit we could experience a significant loss of revenue, inventory and incur significant out of pocket expenses
associated with destruction of the damaged goods which could cause a significant loss from operations and reduction in cash flow. In
August 2019, a major customer received goods that were significantly water damaged due to excess moisture absorbed in pallets shipped
by the factory. As a result we incurred a loss of approximately $2.4 million during our fiscal year ending March 31, 2020. During our
fiscal year ended March 31, 2021 we recovered approximately $2.3 million from our cargo insurance coverage and secured vendor invoice
credits of $0.4 million from the factory that caused the damage. While we have taken measures to prevent a similar incident in the future
there can be no guarantee that this type of damage or other types of damage could occur in the future. Unfortunately, due to the size
of the claim, we can no longer obtain insurance coverage for goods that are shipped direct import to our customers whose shipping terms
are FOB shipping point however we have obtained insurance for goods in transit to our California warehouse.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
business is seasonal and therefore our annual operating results will depend, in large part, on our sales during the relatively brief
holiday season.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
of consumer electronics and toy products in the retail channel are highly seasonal, with a majority of retail sales occurring during
the period from September through December in anticipation of the holiday season, which includes Christmas. A substantial majority of
our sales occur during the second quarter ending September 30 and the third quarter ending December 31. Sales in our second and third
quarter, combined, accounted for approximately 86% and 85% of net sales in our fiscal years ended March 31, 2021 and March 31, 2020,
respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to compete in the karaoke products category, our revenues and net profitability will be reduced.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
major competitors for karaoke machines and related products are Singsation&#174;, Singtrix&#174;, eKids&#174;, Bonaok, Karaoke USA&#8482;,
Ion&#174; Audio, licensed property karaoke products and other consumer electronics companies. We believe that competition for karaoke
machines is based primarily on price, product features, reputation, delivery times, and customer support. To the extent that we lower
prices to attempt to enhance or retain market share, we may adversely impact our operating margins. Conversely, if we opt not to match
competitor&#8217;s price reductions we may lose market share, resulting in decreased volume and revenue. To the extent our leading competitors
reduce prices on their karaoke machines, we must remain flexible to reduce our prices. If we are forced to reduce our prices, it will
result in lower margins and reduced profitability. Because of intense competition in the karaoke industry in the United States during
our fiscal year ended March 31, 2021, we expect that the intense pricing pressure in the low end of the market will continue in the karaoke
market in the United States in our fiscal year ending March 31, 2022. In addition, we must compete with all the other existing forms
of entertainment including, but not limited to: motion pictures, video arcade games, home video games, theme parks, nightclubs, television,
prerecorded tapes, CD&#8217;s, and DVD&#8217;s and streaming video.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to develop new karaoke products, our revenues may not continue to grow.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
karaoke industry is characterized by rapid technological change, frequent new product introductions and enhancements and ongoing customer
demands for greater performance. In addition, the average selling price of any karaoke machine has historically decreased over its life,
and we expect that trend to continue. As a result, our products may not be competitive if we fail to introduce new products or product
enhancements that meet evolving customer demands. The development of new products is complex, and we may not be able to complete development
in a timely manner. To introduce products on a timely basis, we must:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">accurately
    define and design new products to meet market demand;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">design features that continue
    to differentiate our products from those of our competitors;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">transition our products
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">identify emerging technological
    trends in our target markets;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">anticipate changes in end-user
    preferences with respect to our customers&#8217; products;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">bring products to market
    on a timely basis at competitive prices; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">respond effectively to
    technological changes or product announcements by others.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that we will need to continue to enhance our karaoke machines and develop new machines to keep pace with competitive and technological
developments and to achieve market acceptance for our products. At the same time, we need to identify and develop other products which
may be different from karaoke machines.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
products are shipped from China and any disruption of shipping could prevent or delay our customers&#8217; receipt of inventory.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely principally on four contract ocean carriers to ship virtually all of the products that we import to our warehouse facility in Ontario,
California. Retailers that take delivery of our products in China rely on a variety of carriers to import those products. Any disruptions
in shipping, whether in California or China, caused by labor strikes, other labor disputes, war, terrorism, increased oil and gas prices
and international incidents may prevent or delay our customers&#8217; receipt of inventory. If our customers do not receive their inventory
on a timely basis, they may cancel their orders or return products to us. Consequently, our revenues and net income would be reduced
and our results of operations adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
manufacturing operations are located in the People&#8217;s Republic of China, subjecting us to risks common in international operations.
If there is any problem with the manufacturing process, our revenues and net profitability may be reduced.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are using five factories in the People&#8217;s Republic of China to manufacture the majority of our karaoke machines. These factories
are currently producing all of our karaoke products. Our arrangements with these factories are subject to the risks of doing business
abroad, such as import duties, trade restrictions, work stoppages, and foreign currency fluctuations, limitations on the repatriation
of earnings and political instability, which could have an adverse impact on our business. Furthermore, we have limited control over
the manufacturing processes. As a result, any difficulties encountered by our third-party manufacturers that result in product defects,
production delays, cost overruns or the inability to fulfill orders on a timely basis could adversely affect our revenues, profitability
and cash flow. Also, since we do not have written agreements with any of these factories, we are subject to additional uncertainty if
the factories do not deliver products to us on a timely basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
depend on third party suppliers for parts for our karaoke machines and related products, and if we cannot obtain supplies as needed,
our operations will be severely damaged.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
growth and ability to meet customer demand depends in part on our capability to obtain timely deliveries of karaoke machines and our
electronic products. We rely on third party suppliers to produce the parts and materials we use to manufacture and produce these products.
If our suppliers are unable to provide our factories with the parts and supplies, we will be unable to produce our products. Currently
there is a worldwide shortage of electronic chips due to the increased demand for semiconductors and we are currently competing with
large companies to obtain these parts and could see production and shipment delays. We cannot guarantee that we will be able to purchase
the parts we need at reasonable prices or in a timely fashion. If we are unable to anticipate any shortages of parts and materials in
the future, we may experience severe production problems and delivery delays, which would impact our sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
depend on the ability of our suppliers to manufacture our products without infringing, misappropriating of otherwise violating the intellectual
property of proprietary rights of others in manufacturing our products.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
source our products from a variety of contract manufacturers. We buy finished goods from our suppliers and generally do not source raw
materials and parts for manufacturing and assembly into the final product. We rely on our contract manufacturers&#8217; ability to secure
injected plastic, wood cabinets, integrated circuits, display panels, speaker drivers, and other components that are necessary for assembly
into our final products. While we are not responsible to source raw materials, we rely on these suppliers to have all required licenses
or proprietary rights to the materials that are incorporated into the final product. In addition, we rely on the representations of our
contract manufacturers that they are using materials and components that meet all necessary legal, safety, and compliance requirements.
If our suppliers do not have the proper licenses or rights or are not in compliance with all regulatory requirements, we may be named
a party or be subject to claims, including claims of infringement or violating the intellectual property or proprietary rights of third
parties with respect to our products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Consumer
discretionary spending may affect karaoke purchases and is affected by various economic conditions and changes.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business and financial performance may be damaged more than most companies by adverse financial conditions affecting our business or
by a general weakening of the economy. Purchases of karaoke machines and music are considered discretionary for consumers. Our success
will therefore be influenced by a number of economic factors affecting discretionary and consumer spending, such as employment levels,
business, interest rates, inflation and taxation rates, all of which are not under our control. Additionally, other extraordinary events
such as terrorist attacks or military engagements, which adversely affect the retail environment may restrict consumer spending and thereby
adversely affect our sales growth and profitability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are exposed to the credit risk of our customers, who are experiencing financial difficulties, and if these customers are unable to pay
us, our revenues and profitability will be reduced.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sell products to retailers, including national chains, warehouse clubs, department stores, lifestyle merchants, specialty stores, and
direct mail catalogs and showrooms. Deterioration in the financial condition of our customers could result in bad debt expense to us
and have a material adverse effect on our revenues and future profitability. As of the filing date of this document we are not aware
of any customers that are operating under the protection of bankruptcy laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>A
disruption in the operation of our warehouse center in California could impact our ability to deliver merchandise to our customers, which
could adversely affect our revenues and profitability.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
significant amount of our merchandise is shipped to our customers from our warehouse located in Ontario, California. Events such as fire
or other catastrophic events, any malfunction or disruption of our centralized information systems or shipping problems may result in
delays or disruptions in the timely distribution of merchandise to our customers, which could substantially decrease our revenues and
profitability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may encounter difficulties accessing capital </i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the fiscal year ended 2020, our financial condition and results of operations affected our ability to continue traditional financing
with PNC Bank and PNC chose not to renew financing with the Company. The PNC Revolving Credit Facility was terminated on June 16, 2020.
On June 16, 2020, the Company executed a tri-party Intercreditor Agreement for a Revolving Line of Credit (Intercreditor Revolving Credit
Facility&#8221;) on eligible accounts receivable and inventory. The Company signed a two-year Loan and Security Agreement for a $10,000,000
(reduced to $5,000,000 during non-peak season) financing facility with Crestmark, a division of Meta Bank, NA (&#8220;Crestmark&#8221;)
on eligible accounts receivable. Further, the Company also executed a two-year Loan and Security Agreement with Iron Horse Credit (&#8220;Iron
Horse&#8221;) for up to $2,500,000 in inventory financing. We are currently negotiating new lending arrangements and expect new financing
to be in place upon expiration of our current lending agreement with Crestmark and Iron Horse on June 11, 2022. However, there can be
no assurances that any new financing will be consummated by the expiration of our current financing agreements or that we will be able
to successfully enter into any arrangements upon terms that are acceptable to the Company. Should there be a disruption in the current
levels of these markets or a deterioration of our business, there can be no assurance that we will not experience an adverse effect,
which may be material, on our ability to access capital and on our business, financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
production costs may increase if we are required to make purchases using the Chinese Yuan instead of the U.S. dollar.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
majority of our products are currently manufactured in the People&#8217;s Republic of China. During the fiscal year ended March 31, 2021,
the Chinese local currency had no material effect on the Company as all of our purchases are denominated in U.S. currency. However, in
the event our purchases are required to be made in Chinese local currency, the Yuan, we will be subject to the risks involved in foreign
exchange rates. In the future the value of the Yuan may depend to a large extent on the Chinese government&#8217;s policies and China&#8217;s
domestic and international economic and political developments. As a result, our production costs may increase if we are required to
make purchases using the Yuan instead of the U.S. dollar and the value of the Yuan increases over time. Any significant increase in the
cost of manufacturing our products would have a material adverse effect on our business and results of operations. We sell our product
to Canadian customers some of whom require us to invoice them in Canadian Dollars. We are subject to risks involved in the exchange rate
between the Canadian and US dollar however, the exchange rate has been stable during our fiscal year ended March 31, 2021 and the associated
exchange rates did not have a material impact on the Company&#8217;s financial results. Should the exchange rate between the Canadian
and US Dollar become more volatile and sales to Canadian customers increase, there could be a material adverse effect on our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
profit margin may be decreased due to increased prices of raw materials, shipping costs, costs associated with production and inflation.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fluctuation
in the price of oil, electronic chip components and shipping costs have and will continue to affect the Company in connection with the
sourcing and delivery of raw materials and services. We expect to see increased cost in our finished goods during fiscal year 2022 due
to the significant increases in the price of oil, rising inflation, increased cost of trans-oceanic shipping, electronic component price
increases and increases in the cost of labor related to regulations instituted in China which impact wages related to the cost of production.
These issues are common to all companies in the same type of business and if the Company is not able to negotiate lower costs, reduce
other expenses, or pass on some or all of these price increases to our customers, our profit margin may be decreased.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
success depends largely on the continued services of our senior management team and certain key employees.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on our executive officers and key employees in the areas of business strategy, marketing, sales, services, and general and administrative
functions. From time to time, there may be changes in our executive management team or key employees resulting from the hiring or departure
of executives or key employees, which could disrupt our business. We do not maintain key-man insurance for any member of our senior management
team or any other employee. We do not have employment agreements with our executive officers or other key personnel that require them
to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time. The loss
of one or more of our executive officers or key employees could have a serious adverse effect on our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
primarily rely on trade secret protection and non-disclosure agreements to protect our proprietary information, which may not be effective.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
currently rely on trade secret protection and non-disclosure agreements with our employees, consultants and third-parties to protect
our confidential and proprietary information. If we do not protect our intellectual property and other confidential information adequately,
competitors may be able to use our proprietary technologies and information and thereby erode any competitive advantages they provide
us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will be able to protect our proprietary rights from unauthorized use by third parties only to the extent these rights are effectively
maintained as confidential. We expect to rely primarily on trade secret and contractual protections for our confidential and proprietary
information and we have taken security measures we believe are appropriate to protect this information. These measures, however, may
not provide adequate protection for our trade secrets, know-how or other confidential information. We seek to protect our proprietary
information by, among other things, entering into confidentiality agreements with employees, consultants and other third parties. These
confidentiality agreements may not sufficiently safeguard our trade secrets and other confidential information and may not provide adequate
remedies in the event of unauthorized use or disclosure of this information. Enforcing a claim that a party illegally disclosed or misappropriated
a trade secret or other proprietary information could be difficult, expensive and time-consuming and the outcome could be unpredictable.
In addition, trade secrets or other confidential information could otherwise become known or be independently developed by others in
a manner that could prevent legal recourse by us. If any of our trade secrets or other confidential or proprietary information were disclosed
or misappropriated or if any such information was independently developed by a competitor, our competitive position could be harmed and
our business could suffer.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to this Offering and Ownership of Our Common Stock</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
share price may be volatile, which could prevent you from being able to sell your shares at or above the offering price.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
stock could be subject to wide fluctuation in response to many risk factors listed in this section of the prospectus, and others beyond
our control, including:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td>&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td>&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td>&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 28.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
the stock markets have experienced extreme price and volume fluctuations in the past several years. These fluctuations often have been
unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well
as general economic, political, and market conditions such as inflation, war, economic slow-down, interest rate changes or international
currency fluctuations, may negatively impact the market price of shares of our common stock. If the market price of shares of our common
stock after this offering does not exceed the offering price, you may not realize any return on your investment in us and may lose some
or all of your investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
articles of incorporation allow for our board of directors to create new series of preferred stock without further approval by our stockholders,
which could adversely affect the rights of the holders of our common stock.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors
has the authority to issue up to 1,000,000 shares of our preferred stock without further stockholder approval. As a result, our board
of directors could authorize the issuance of a series of preferred stock that would grant to holders of preferred stock the right to
our assets upon liquidation, or the right to receive dividend payments before dividends are distributed to the holders of common stock.
In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our
common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result
in dilution to our existing stockholders. Although we have no present intention to issue any shares of preferred stock or to create any
series of preferred stock, we may create such series and issue such shares in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>There
are liquidity risks associated with our common stock.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is a limited trading market for our shares of common stock and while the Company&#8217;s common stock may be approved for listing on
NASDAQ Capital Market, there can be no assurance that (1) an active trading market will be developed or sustained, (2) the liquidity
of such market, (3) the ability of our stockholders to sell their shares of common stock, or (4) the price that our stockholders may
obtain for their common stock. If an active market for our common stock with meaningful trading volume does not develop or is not maintained,
the market price of our common stock may decline materially below the offering price and you may not be able to sell your shares. Further,
prior to NASDAQ listing, our stock traded on OTCQX and our shares of common stock were thinly traded. Therefore, prospective stockholders
who require immediate liquidity in their investments should not invest in our common stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock. Therefore,
if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible
book value per share after this offering. You will experience immediate dilution of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share, representing the difference between
our pro forma net tangible book value per share after giving effect to this offering and the public offering price. See &#8220;Dilution&#8221;
for more detail.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
offering price per share of our common stock offered under this prospectus may not accurately reflect the value of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prior
to this offering, our common stock was trading on the OTCQX. The offering price per share of our common stock offered by this prospectus
was based upon following factors:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
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    capital structure, including a reverse split of our common stock in the amount of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; for
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
offering price may not accurately reflect the value of our common stock and may not be realized upon any subsequent disposition of the
shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
management will have broad discretion in the use of the net proceeds we receive in this offering and may not apply the proceeds in ways
that increase the value of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management will have broad discretion in the application of the net proceeds we receive in this offering, including for any of the purposes
described in the section titled &#8220;Use of Proceeds,&#8221; and you will not have the opportunity as part of your investment decision
to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine
our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. If we do
not use the net proceeds that we receive in this offering effectively, our business, results of operations, financial condition and prospects
could be harmed, and the market price for our common stock could decline.</span></p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Future
sales, or the possibility of future sales, of a substantial number of our common shares could adversely affect the price of the shares
and dilute stockholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 28.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Future
sales of a substantial number of our common shares, or the perception that such sales will occur, could cause a decline in the market
price of our common shares. This is particularly true if we sell our stock at a discount. In addition, in connection with this offering,
our directors and executive officers will enter into lock-up agreements. If, after the end of such lock-up agreements, these stockholders
sell substantial amounts of common shares in the public market, or the market perceives that such sales may occur, the market price of
our common shares and our ability to raise capital through an issue of equity securities in the future could be adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 28.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, in the future, we may issue additional common shares or other equity or debt securities convertible into common shares in connection
with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such issuance could result in substantial
dilution to our existing stockholders and could cause our common share price to decline.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to
the value of our common stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 28.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends
on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as
our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your
investment will only occur if our stock price appreciates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span id="a_004"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
prospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, or the Exchange Act. Forward-looking statements give current expectations or forecasts of
future events or our future financial or operating performance. We may, in some cases, use words such as &#8220;anticipate,&#8221; &#8220;believe,&#8221;
&#8220;could,&#8221; &#8220;estimate,&#8221; &#8220;expect,&#8221; &#8220;intend,&#8221; &#8220;may,&#8221; &#8220;plan,&#8221; &#8220;potential,&#8221;
&#8220;predict,&#8221; &#8220;project,&#8221; &#8220;should,&#8221; &#8220;will,&#8221; &#8220;would&#8221; or the negative of those
terms, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
forward-looking statements reflect our management&#8217;s beliefs and views with respect to future events, are based on estimates and
assumptions as of the date of this prospectus and are subject to risks and uncertainties, many of which are beyond our control, that
could cause our actual results to differ materially from those in these forward-looking statements. We discuss many of these risks in
greater detail in this prospectus under &#8220;Risk Factors.&#8221; Moreover, new risks emerge from time to time. It is not possible
for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may
make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments
or otherwise, except as may be required by applicable laws or regulations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span id="a_005"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>USE
OF PROCEEDS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
estimate that the net proceeds from our issuance and sale of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; shares of our common stock in this offering will be approximately $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (or
approximately $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; if the underwriters exercises the over-allotment option in full), based upon an assumed public offering price of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per
share, and after deducting underwriting discounts and commissions and offering expenses payable by us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
intend to use the net proceeds from this offering for general corporate purposes, including working capital.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions. Pending
our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments,
including short-term, investment grade, interest bearing instruments and U.S. government securities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="a_006"></span><b>MARKET
FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
common stock is presently quoted on the OTCQX under the symbol &#8220;SMDM&#8221;. We have applied to have our common stock listed on
the Nasdaq Capital Market under the symbol &#8220;MICS&#8221;. No assurance can be given that our application will be approved. If our
application is not approved, we will not complete this offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of April 12, 2022, there were approximately 184 holders of record of our common stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Dividend
Policy</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have never declared or paid cash dividends on our common stock and our Board of Directors intends to continue its policy for the foreseeable
future. Future dividend policy will depend upon our earnings, financial condition, contractual restrictions and other factors considered
relevant by our Board of Directors and will be subject to limitations imposed under Delaware law.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_007"></span>DILUTION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
you purchase in this offering, your interest will be diluted to the extent of the difference between the public offering price per share
of common stock and the net tangible book value per share of our common stock after this offering. Our net tangible book value as of
December 31, 2021 was $11,799,697 or $0.32 per share of common stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Net
tangible book value&#8221; is total assets minus the sum of liabilities and intangible assets. &#8220;Net tangible book value per share&#8221;
is net tangible book value divided by the total number of shares of common stock outstanding.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
giving effect to the sale by us in this offering of shares at an assumed public offering price of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share (the closing price of our
common stock on &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, 2022), and after deducting the estimated underwriting discounts and commissions and estimated offering expenses that
we will pay, our as adjusted net tangible book value as of December 31, 2021 would have been approximately $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; , or $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share of common
stock. This amount represents an immediate increase in net tangible book value of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share to existing stockholders and an immediate
dilution of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share to purchasers in this offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table illustrates the dilution:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 80%">Assumed public offering price per share of common stock</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Net tangible book value per share as of December 31, 2021</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">0.32</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Increase in net tangible book value per share attributable to this offering</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">As adjusted net tangible book value per share after this offering</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Dilution per share to new investors</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
above table is based on 36,636,264 shares of common stock outstanding as of December 31, 2021, and excludes (except as otherwise set
forth), as of such date:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">34,666,667
    shares of common stock issuable upon the exercise of warrants, with an exercise price of $0.35 per share; </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#9679;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">16,833,333
    shares of common stock issuable upon the exercise of pre-funded warrants, with an exercise price of $0.01 per share; and </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#9679;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,710,000
    shares of common stock issuable upon the exercise of outstanding options to directors, employees and consultants under our Equity
    Incentive Plan at a weighted average exercise price of $0.33. </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
the underwriters exercise in full their over-allotment option, our net tangible book value per share after giving effect to this offering
would be approximately $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; or $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share, which amount represents an immediate increase in net tangible book value of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share to existing
stockholders and dilution to new investors of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_008"></span>CAPITALIZATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth our cash and our capitalization as of December 31, 2021 on:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an actual basis; and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">on an adjusted basis to
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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should read this table in conjunction with &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations,&#8221;
and our unaudited financial statements as of and for the period ended December 31, 2021, and the related notes thereto, included in this
prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
number of shares to be outstanding immediately after giving effect to this offering as shown above is based on 36,636,264 shares outstanding
as of December 31, 2021 and excludes:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td>&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Available
Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is incorporated under the laws of the State of Delaware and was formed in 1994. Our common stock trades on the OTCQX Market under
the symbol &#8220;SMDM&#8221;. Our principal executive offices are located at 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, and our
telephone number is (954) 596-1000. We maintain our corporate website at <span style="text-decoration: underline">www.singingmachine.com</span>. The information on, or that can
be accessed through, our website is not part of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
file reports with the Securities and Exchange Commission (&#8220;SEC&#8221;), including an annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports that we file with, or furnish to, the SEC. The SEC maintains
an Internet website, www.sec.gov that contains reports, proxy and information statements and other information that we file electronically
with the SEC. Our website also includes corporate governance information, including our Code of Ethics and our Board committee charters.
The information contained on our website does not constitute a part of this report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span id="a_009"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MANAGEMENT&#8217;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Forward-Looking
Statements </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following discussion should be read in conjunction with the condensed consolidated financial statements and notes included elsewhere
in this quarterly report. This document contains certain forward-looking statements including, among others, anticipated trends in our
financial condition and results of operations and our business strategy. (See Part II, Item 1A, &#8220;Risk Factors &#8220;). These forward-looking
statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could
differ materially from these forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Statements
included in this quarterly report that do not relate to present or historical conditions are called &#8220;forward-looking statements.&#8221;
Such forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results or
outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements may
include, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. Words such as &#8220;believes,&#8221;
&#8220;forecasts,&#8221; &#8220;intends,&#8221; &#8220;possible,&#8221; &#8220;estimates,&#8221; &#8220;anticipates,&#8221; &#8220;expects,&#8221;
&#8220;plans,&#8221; &#8220;should,&#8221; &#8220;could,&#8221; &#8220;will,&#8221; and similar expressions are intended to identify
forward-looking statements. Our ability to predict or project future results or the effect of events on our operating results is inherently
uncertain. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be
accurate indications of the times at, or by which, such performance or results will be achieved.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Important
factors to consider in evaluating such forward-looking statements include, but are not limited to: (i) changes in external factors or
in our internal budgeting process which might impact trends in our results of operations; (ii) unanticipated working capital or other
cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the
industries in which we operate; and (iv) the effects of adverse general economic conditions, both within the United States and globally,
(v) vendor price increases and decreased margins due to competitive pricing during the economic downturn (vi)various competitive market
factors that may prevent us from competing successfully in the marketplace and (vii) other factors described in the risk factors section
of our annual report on Form 10-K, our quarterly reports on 10-Q, or in our other filings made with the SEC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Readers
are cautioned not to place undue reliance on these forward-looking statements, which reflect management&#8217;s opinions only as of the
date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Overview
</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine Company, Inc., a Delaware corporation (the &#8220;Company&#8221;, &#8220;SMC&#8221;, &#8220;The Singing Machine&#8221;)
and its three wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (&#8220;Macau Subsidiary&#8221;), SMC Logistics, Inc.
(&#8220;SMC-L&#8221;) and SMC-Music, Inc.(&#8220;SMC-M&#8221;) are primarily engaged in the development, marketing, and sale of consumer
karaoke audio systems, accessories, musical instruments and musical recordings. The products are sold by SMC to retailers and distributors
for resale to consumers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
products are sold throughout North America, Europe and Australia primarily through major mass merchandisers and warehouse clubs, on-line
retailers and to a lesser extent department stores, lifestyle merchants, direct mail catalogs and showrooms, music and record stores,
and specialty stores.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Representative
customers include Amazon, Best Buy, BJ&#8217;s Wholesale, Costco, Sam&#8217;s Club, Target, and Wal-Mart. Our business has historically
been subject to seasonal fluctuations causing our revenues to vary from quarter to quarter and between the same periods in different
fiscal years. Our products are manufactured for the most part based on the purchase indications of our customers. We are uncertain of
how significantly our business would be harmed by a prolonged economic recession, but we anticipate that continued contraction of consumer
spending would negatively affect our revenues and profit margins.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
of consumer electronics and toy products in the retail channel are highly seasonal, with a majority of retail sales occurring during
the period from September through December in anticipation of the holiday season, which includes Christmas. A substantial majority of
our sales occur during the second quarter ending September 30 and the third quarter ending December 31. Sales in our second and third
quarter, combined, accounted for approximately 86% and 85% of net sales in fiscal 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>RESULTS
OF OPERATIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth, for the periods indicated, certain items related to our consolidated statements of income as a percentage
of net sales for the three and nine months ended December 31, 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">0.0</td><td style="text-align: left">%</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>QUARTER
ENDED DECEMBER 31, 2021 COMPARED TO THE QUARTER ENDED DECEMBER 31, 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Net
Sales</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
sales for the quarter ended December 31, 2021 increased to approximately $21,244,000 from approximately $16,973,000 an increase of approximately
$4,271,000 as compared to the same period ended December 31, 2020. The increase in net sales was primarily due to strong demand for products
and goods that shipped late in the season due to the late arrival of goods that were scheduled to ship in the previous quarter but were
significantly delayed at the Port of Los Angeles due to global logistics issues affecting all industries.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Gross
Profit</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit for the quarter ended December 31, 2021 increased to approximately $5,309,000 from approximately $4,974,000 an increase of approximately
$335,000 as compared to the same period in the prior year. The increase in net sales contributed approximately $1,252,000 to the increase
in gross profit but was offset by a reduction in gross profit margin of approximately $917,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit margin for the three months ended December 31, 2021 was 25.0% compared to 29.3% for the three months ended December 31, 2020.
There was a decrease in Carpool Karaoke (&#8220;CPK) product sales, of approximately $2,256,000, which accounted for approximately 2.9
margin points of the 4.3 gross profit margin point decrease with the remaining 1.4 point decrease primarily due to product cost increases
in raw materials and a significant increase in freight costs due to global logistics issues that were only partially passed on to customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operating
Expenses </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the quarter ended December 31, 2021, total operating expenses increased to approximately $3,616,000 compared to approximately $3,481,000
from the same period in the prior year. This represents an increase in total operating expenses of approximately $135,000 from the quarter
ended December 31, 2020. The increase in operating expenses is primarily due to an increase in general and administrative expenses of
approximately $229,000. There was an increase in pallet expenses, warehouse supplies and expense and temporary labor at our California
facility of approximately $206,000 due to an increase in third party logistics business as well as price increases due to inflation and
supply chain shortages. There was an increase in legal, accounting, consulting fees and investor relations expenses of approximately
$138,000 primarily related to the private placement transaction (see Note 10 - AUGUST 2021 PRIVATE PLACEMENT). There was an increase
in bad debt reserve expense of approximately $165,000 related to the increase in net sales and accounts receivable. These increases were
offset by a decrease in payroll expenses of approximately $295,000 primarily due to significant decrease in executive bonus accruals
during the three months ended December 31, 2021 compared to the three month period ended December 31, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
From Operations</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
was income from operations of approximately $1,694,000 for the three months ended December 31, 2021 compared to income from operations
of approximately $1,493,000 for the three months ended December 31, 2020. The increase in income from operations of approximately $201,000
was primarily due to the increase in gross profit offset by the increase in operating expenses as explained above.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Other
Income (Expenses)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
expenses increased by approximately $103,000 to approximately $165,000 in other expenses, net for the three months ended December 31,
2021 compared to approximately $61,000 in other expenses, net for the same period ended December 31, 2020. During the three months ended
December 31, 2020 there was a gain from related party of approximately $188,000 from related party accounts receivable that had previously
been written off as uncollectible. During the three months ended December 31, 2021 there was a reduction in interest expense and finance
amortization costs of approximately $85,000 compared to the three months ended December 31, 2020 which offset the gain from related party.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
Taxes</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended December 31, 2021 and 2020 the Company recognized an income tax provision of approximately $103,000 and $264,000,
respectively, due to management&#8217;s best estimate of the Company&#8217;s full year effective tax rate of approximately 11.1% and
23.0%, respectively.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Net
Income</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended December 31, 2021 there was net income of approximately $1,426,000 compared to net income of approximately $1,167,000
for the same period a year ago. The decrease in net income was primarily due to the same reasons discussed in Income from Operations,
Other Income (Expenses) and Income Taxes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NINE
MONTHS ENDED DECEMBER 31, 2021 COMPARED TO THE NINE MONTHS ENDED DECEMBER 31, 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Net
Sales</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
sales for the nine months ended December 31, 2021 increased to approximately $44,679,000 from $42,310,000 an increase of approximately
$2,369,000 as compared to the same period ended December 31, 2020 primarily due to sales increases in two &#8220;club store&#8221; customers
that increased their assortment due to increased consumer demand and was offset by a decrease in CPK product sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Gross
Profit </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit for the nine months ended December 31, 2021 decreased to approximately $10,215,000 from approximately $11,759,000 a decrease of
approximately $1,544,000 as compared to the same period in the prior year. Despite the increase in net sales, which contributed approximately
$658,000 increase in gross profit margin, this increase was offset by a decrease of approximately $2,202,000 in gross profit margin or
approximately 4.9 margin points on products sold.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit margin for the nine months ended December 31, 2021 was 22.9% compared to 27.8% for the nine months ended December 31, 2020. There
was a decrease in CPK product sales, (that yield a substantially higher gross profit margin than our traditional product) of approximately
$2,493,000, which accounted for approximately 2.5 margin points of the 4.9 gross profit margin point decrease. The remaining decrease
of approximately 2.4 points of gross margin was primarily due to product cost increases in raw materials and a significant increase in
freight costs due to global logistics issues that were only partially passed on to customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operating
Expenses </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the nine months ended December 31, 2021, total operating expenses decreased to approximately $8,261,000 compared to approximately $8,599,000
from the same period in the prior year. This represents a decrease in total operating expenses of approximately $338,000 from the nine
months ended December 31, 2020. The decrease in operating expenses is primarily due to a decrease in selling expenses of $547,000. There
was a decrease in freight expenses of approximately $460,000 associated with a decrease in outbound freight as two major club accounts
did not have special projects requiring the company to ship freight prepaid instead of collect as well as inbound freight expense reduction
due to a decrease in product returns. There was a reduction in royalty expense of approximately $325,000 primarily due to the reduction
in CPK sales as explained in net sales. These decreases in selling expenses were offset by an increase in discretionary marketing expense
of approximately $284,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
decreases in selling expenses of approximately $547,000 were offset by an increase in general and administrative expenses of approximately
$223,000 primarily due to an increase in legal, accounting, consulting fees and investor relations expenses primarily related to the
private placement transaction (see Note 10 - August 2021 Private Placement).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
From Operations</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
was income from operations of approximately $1,954,000 for the nine months ended December 31, 2021 compared to income from operations
of approximately $3,160,000 for the nine months ended December 31, 2020. The decrease in income from operations of approximately $1,206,000
was primarily due to the reduction in operating expenses offset by the decrease in gross profit as explained above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Other
Income (Expenses)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
income decreased by approximately $920,000 to approximately $294,000 in other income, net for the nine months ended December 31, 2021
compared to approximately $1,214,000 in other income, net for the same period ended December 31, 2020. During the nine months ended December
31, 2021 there were one-time gains of approximately $696,000 primarily due to forgiveness of the loan under the Paycheck Protection Program
of approximately $448,000 which included principal and interest and there was an accounts payable forgiveness of approximately $236,000
from one vendor on goods that were damaged in the prior year compared to a recovery of approximately $1,068,000 in out-of-pocket expenses
relating to a prior year damaged goods insurance claim during the nine months ended December 31 2020 and accounts payable forgiveness
of $390,000 from the vendor who caused the damaged goods problem. During the nine months ended December 31, 2020 there was a gain from
related party of approximately $188,000 from related party accounts receivable that had previously been written off as uncollectible.
The remaining variance in other income, net was primarily due to a decrease in interest expense and amortization of deferred financing
costs associated with the financing terms of the Crestmark Facility and IHC Facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
Taxes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the nine months ended December 31, 2021 and 2020 the Company recorded an income tax provision of approximately $249,000 and an approximately
$1,006,000, respectively, due to management&#8217;s best estimate of the Company&#8217;s full year effective tax rate of approximately
11.1% and 23.0%, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Net
Income </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the nine months ended December 31, 2021 there was net income of approximately $2,000,000 compared to net income of approximately $3,368,000
for the same period a year ago. The decrease in net income was primarily due to the same reasons discussed in Income from Operations,
Other Income (Expenses) and Income Taxes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FISCAL
YEAR ENDED MARCH 31, 2021 COMPARED WITH FISCAL YEAR ENDED MARCH 31, 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth, for the periods indicated, certain income and expense items expressed as a percentage of the Company&#8217;s
total revenues:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Net
Sales</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
sales for the year ended March 31, 2021 (&#8220;Fiscal 2021&#8221;) were approximately $45.8 million. This represents an increase of
approximately $7.3 million as compared to approximately $38.5 million in the fiscal year ended March 31, 2020 (&#8220;Fiscal 2020&#8221;).
There was an increase in sales of our Carpool Karaoke Product (&#8220;CPK&#8221;) of approximately $2.7 million as the product gained
popularity on social media. There was an increase in product demand and a decrease in overstock returns of approximately $2.0 million
due to the increase in demand for home entertainment products like karaoke related to COVID 19 activity restrictions. There was no one-time
revenue loss as in the prior fiscal year when we experienced a loss of revenue of approximately $1.6 million of chargebacks from a major
customer due to a water damaged goods incident. There was a decrease in co-op promotion incentives of approximately $0.9 million as several
major customers did not run customary holiday promotions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Gross
Profit</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit for Fiscal 2021 was approximately $12.3 million or 26.8% of total revenues compared to approximately $8.2 million or 21.2% of
sales for Fiscal 2020, an increase of approximately $4.1 million as compared to the same period in the prior year. The increase in net
sales and decrease in co-op promotion incentives as explained above accounted for approximately $1.6 million and $0.8 million, respectively
of the increase in gross profit. The remaining increase of approximately $1.6 million was primarily due to an increase in profit margin
primarily from the increased sales of CPK product which yield significantly higher gross profit margin.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit margin for Fiscal 2021 was 26.8% compared to 21.2% for Fiscal 2020, an increase of 5.6 margin points. The decrease in in co-op
promotion incentives of approximately $0.9 million as explained above accounted for approximately 3.3 points of the increase in gross
profit margin. There was an increase in gross profit margin of approximately $1.6 million or 1.5 margin points due to increased sales
of our CPK product which yielded average gross profit margins of 59.8%. The remaining 0.8 margin point increase was primarily due to
the mix of products sold.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operating
Expenses</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
fiscal year 2021, our operating expenses decreased from approximately $11.5 million to approximately $10.9 million, a decrease of approximately
$0.6 million compared to the same period last year. Selling expenses decreased by approximately $0.3 million due to a decrease in discretionary
marketing expenses of approximately $0.5 million associated with one-time expenses associated with the rollout of the new CPK Product
in the prior year and offset by an increase of approximately in $0.2 million in royalty expense associated with the increase in licensed
CPK product.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
was a decrease in bad debt expense of approximately $0.2 million as only one smaller customer filed for bankruptcy in fiscal 2021 compared
to the bankruptcy filing of two customers of approximately $0.3 million in fiscal 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Other
Income (Expenses)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
income and (expenses), net increased by approximately $1.5 million to approximately $1.2 in other income, net for the fiscal year ended
March 31, 2021 compared to approximately $0.3 million in other expenses, net for the same period ended March 31, 2020. This increase
in other income, net was primarily due to one-time gains associated with the recovery of approximately $1.1 million in out-of-pocket
expenses relating to a prior year damaged goods insurance claim and a vendor settling accounts payable of $0.4 million from the factory
that caused the damage. There was an additional one-time gain of approximately $0.2 million from Cosmo, a related party, related to payment
in fiscal 2021 of prior year sales which were reversed and the related receivable was initially deemed uncollectible and written off
in the prior fiscal year. These increases in other income were offset by an increase in interest expense and amortization of deferred
financing costs of approximately $0.2 million associated with the financing terms of the Crestmark Facility and IHC Facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
(Loss) Before Income Tax (Provision) Benefit</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had income before income tax provision of approximately $2.6 million in Fiscal 2021 compared to a loss before tax benefit of approximately
$3.5 million in Fiscal 2020 for a total increase in income before income tax provision of approximately $6.1 million. Net income from
operations contributed approximately $4.6 million of the increase due increases in net sales and gross profit and decreased operating
expenses as explained above. The increase in other income and expenses, net of $1.5 million as explained above accounted for the remaining
increase in income before income tax provision.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
Tax Benefit (Provision)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Significant
management judgment is required in developing our provisions for income taxes, including the determination of foreign tax liabilities,
deferred tax assets and liabilities and any valuation allowances that might be required against deferred tax assets. Management evaluates
its ability to realize its deferred tax assets on a quarterly basis and adjusts its valuation allowance when it believes that it is not
likely to be realized. On March 31, 2021 and 2020, we had net deferred tax assets of approximately $0.9 million and approximately $1.3
million, respectively. The deferred tax assets on March 31, 2021 and 2020 were net of a valuation allowance of approximately $23,000
and approximately $88,000, respectively due to management&#8217;s belief that certain tax assets will more than likely expire prior to
the Company&#8217;s these assets being realized.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
Fiscal 2021 we recognized an income tax provision of approximately $0.5 million compared to an income tax benefit of approximately $0.6
million in Fiscal 2020. The Company&#8217;s effective tax rate for the fiscal year ended March 31, 2021 was approximately 17.4% as compared
to 18.1% for Fiscal 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
operate within multiple taxing jurisdictions and are subject to audit in those jurisdictions. Because of the complex issues involved,
any claims can require an extended period to resolve. In management&#8217;s opinion, adequate provisions for income taxes have been made.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Net
Income</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the foregoing, we had net income of approximately $2.2 million and a net loss of approximately $2.9 million for Fiscal 2021
and Fiscal 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LIQUIDITY
AND CAPITAL RESOURCES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, Singing Machine had cash on hand of approximately $7,375,000 as compared to cash on hand of approximately $823,000
on December 31, 2020. We had working capital of approximately $9,811,000 as of December 31, 2021. Net cash used in operating activities
was approximately $3,113,000 for the nine months ended December 31, 2021. During the nine months ended December 31, 2021 there was an
increase in accounts receivable of approximately $10,124,000 due to a seasonal increase in sales and an increase in inventories of approximately
$5,933,000 due to in-transit and receipt of inventory intended for peak season shipments but were received too late to ship due to global
logistics issues. These increases in net cash used in operating activities were offset by an increase in in accounts payable and accrued
expenses of approximately $4,531,000 due to delayed receipt of seasonal purchases of product for the peak season due to global logistics
issues. There was a decrease in amounts due from Crestmark Bank of approximately $4,557,000 as cash collected in excess of amounts due
on the revolving credit during the first quarter was used to pay for the seasonal increase in inventory. There was a seasonal increase
in reserve for sales returns of approximately $1,962,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by operating activities was approximately $165,000 for the nine months ended December 31, 2020. During the nine months
ended December 31, 2020 there was a decrease in insurance receivable of approximately $1,268,000 as we received proceeds for the one-time
damaged goods incident that occurred in the prior fiscal year as well as a gain from the extinguishment of accounts payable of $390,000
from one vendor related to the damaged goods issue. There was a decrease in inventory of approximately $1,781,000 as the Company sold
excess inventory left over from the prior fiscal year. There was a seasonal increase in reserves for sales returns of approximately $1,742,000.
There was an increase in accrued expenses of approximately $580,000 primarily due to seasonal co-op promotion allowances, commissions
and royalties. These increases in cash provided by operations were offset by an increase in accounts receivable of approximately $7,056,000
due to peak season sales. There was an increase in amounts due from banks of approximately $1,172,000 due to cash collected in excess
of amounts due on the revolving credit facilities with Crestmark Bank. There was a reduction in refunds due to customers of approximately
$705,000 primarily due to settlement of prior year damaged goods claims with one major customer. There was a decrease in accounts payable
of approximately $1,470,000 as the Company sold off excess inventory from the prior year and did not need to purchase as much new inventory
to fulfill orders.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in investing activities for the nine months ended December 31, 2021 was approximately $78,000 as compared to approximately
$89,000 used in investing activities for the same period ended a year ago and consisted primarily of purchases of molds and tooling for
new products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by financing activities for the nine months ended December 31, 2021 was approximately $6,979,000 compared to cash provided
by financing activities of approximately $402,000 for the same period ended of the prior year. We borrowed approximately $8,562,000 from
our Crestmark Facility and IHC Facility for working capital. In August 2021, the Company received net proceeds of approximately $1,838,000
from the execution of private placement and stock redemption agreements as summarized in the next two paragraphs. These financing activities
were offset by a payment of $150,000 on the subordinated related party debt, payment of deferred finance charges associated with the
closing of the Crestmark and IHC Facilities of approximately $38,000 with the remaining difference used to pay scheduled installments
on installment notes and finance leases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2021, the Company entered into a securities purchase agreement (the &#8220;Purchase Agreement&#8221;) with large institutional
investors and a strategic investor for private placement of (i) 16,500,001 shares of its common stock (the &#8220;Shares&#8221;) together
with common warrants to purchase up to 16,500,000 shares of common stock for an exercise price of $0.35 per share, and (ii) 16,833,333
pre-funded warrants (&#8220;Pre-Funded Warrants&#8221;) with each Pre-Funded Warrant exercisable for one share of common stock at an
exercise price of $0.01 per share, together with Common Warrants to purchase up to 16,833,333 shares of common stock at an exercise price
of $0.35 per share (the &#8220;Private Placement&#8221;). Shares issuable upon the exercise of the Pre-Funded Warrants and Common Warrants
are hereinafter referred to as the &#8220;Warrant Shares&#8221;. The closing of the Private Placement took place on August 10, 2021,
when the Shares, Common Warrants, and Pre-Funded Warrants were delivered to the purchasers and funds, in the amount of approximately
$9,800,000, were received by the Company. Approximately $7,200,000 of the funds received were used to execute the Redemption Agreement
as explained in the next paragraph. The Company received an increase in working capital of approximately $1,800,000 of working capital
after settlement of expenses associated with closing of these transactions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August, 2021, the Company entered into a stock redemption agreement (the &#8220;Redemption Agreement&#8221;) with Koncepts International
Limited (&#8220;Koncepts&#8221;) and Treasure Green Holdings, Ltd. (&#8220;Treasure Green&#8221;), pursuant to which the Company agreed
to redeem 19,623,155 shares of common stock of the Company (the &#8220;Redeemed Shares&#8221;). The closing of the transactions set forth
in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were assigned and transferred back to the
Company and the Company paid approximately $7,200,000 to Koncepts and Treasure Green. The Redeemed Shares were retired and are available
for reissuance in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by financing activities for the nine months ended December 31, 2020 was approximately $402,000. We received loan proceeds
from Crestmark in the amount of approximately $444,000 under the Paycheck Protection Program with the remaining variance primarily due
to repayments of installment and capital lease payments. In the prior fiscal year we received approximately $284,000 from a financing
arrangement with Dimension Funding to finance implementation of a new Enterprise Resource Planning system. This increase in cash provided
by financing activities were offset by payments of finance leases and the bank term note of approximately $136,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility with Crestmark and IHC on eligible accounts receivable
and inventory which replaced the Company&#8217;s previous revolving credit facility with PNC Bank which was terminated on June 16, 2020
(See Note 6 - Bank Financing). As of this filing, we have borrowed approximately $2,500,000 on the IHC Facility, is the maximum loan
amount on eligible inventory allowed by this facility and borrowed approximately $1,000,000 on our Crestmark Facility which will make
available up to $10,000,000 of eligible accounts receivable as the fiscal year progresses. As of this filing the Company has approximately
no additional borrowings currently available from the Crestmark facility until the end of February as per the facility agreement at which
time the Company will have approximately $1,000,000 available on the facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $444,000 under the Paycheck Protection
Program (&#8220;PPP&#8221;). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (&#8220;CARES Act&#8221;),
which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying
business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including
payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced if the borrower
terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan is payable over two years
at an interest rate of 1%, with a deferral of payments until a forgiveness application has been accepted and reviewed by the Small Business
Administration (&#8220;SBA&#8221;), and the SBA provided Crestmark with the loan forgiveness amount. In June 2021 the Company received
notification from the SBA that the loan had been forgiven in its entirety. For the nine months ended December 31, 2021, a gain of approximately
$448,000 (including principal and interest) from the forgiveness of the loan was included in other income and expenses in the accompanying
condensed consolidated statements of income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2019, a major customer received goods that were significantly water damaged due to excess moisture absorbed in pallets shipped
by the factory. As a result we incurred a loss in cash flow of approximately $1,559,000 in revenue and approximately $849,000 in additional
out of pocket expenses to retrieve, inspect, warehouse and properly destroy the goods in the prior fiscal year. As of this filing we
have we recovered approximately $2,336,000 from our cargo insurance coverage which settled approximately $1,268,000 in insurance claim
receivable with the remaining proceeds reflected in other income and (expenses) as a gain from damaged goods insurance claim in the condensed
consolidated statement of income. For the three and nine months ended December 31, 2020 the gain from damaged goods insurance claim was
approximately $0 and $1,068,000, respectively. We also secured vendor invoice credits of $390,000 from the factory that caused the damage
which is reflected as gain from extinguishment of accounts payable in the condensed consolidated statement of income for the nine months
ended December 31, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that current working capital, cash expected to be generated from our operating forecast, along with the availability of cash
from our credit facilities (See Note 6 - BANK FINANCING) assuming that they are revised and or extended, will be adequate to meet the
Company&#8217;s liquidity requirements for at least twelve months from the filing of this report. As both the Crestmark Bank (&#8220;Crestmark
Facility&#8221;) and the Iron Horse Credit (&#8220;IHC&#8221;) Facility (&#8220;IHC Facility&#8221;) are set to expire on June 15, 2022,
the Company expects to negotiate a revision or extension of these debt facilities upon their maturity, however, there can be no assurance
that such revision or extension will occur or at what terms.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CRITICAL
ACCOUNTING POLICIES </b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s interim financial statements were prepared in accordance with United States generally accepted accounting principles,
which require management to make subjective decisions, assessments and estimates about the effect of matters that are inherently uncertain.
As the number of variables and assumptions affecting the judgement increases such judgements become even more subjective. While management
believes that its assumptions are reasonable and appropriate, actual results may be materially different than estimated. The critical
accounting estimates and assumptions have not materially changed from those identified in the Company&#8217;s 2021 Annual Report on Form
10-K.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span id="a_010"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>BUSINESS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>History</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine Company, Inc., a Delaware corporation, and wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (&#8220;Macau
Subsidiary&#8221;), SMC Logistics, Inc. (&#8220;SMCL&#8221;) and SMC-Music, Inc. (&#8220;SMCM&#8221;), are primarily engaged in the development,
marketing, and sale of consumer karaoke audio equipment, accessories and musical recordings. The products are sold directly to distributors
and retail customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Singing
Machine is a leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke
and music enabled consumer products for adults and children. Our products are among the most widely available karaoke products in the
world. Our mission is to &#8220;create joy through music.&#8221; In order to deliver on this mission, we are focused on the following
multi-prong approach:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
    the short-term, improve profitability by optimizing operations and continue to expand gross margins.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
    the mid-to-long-term, continue to grow our global distribution and expand into new product categories that take advantage of our
    vast distribution relationships and sourcing abilities.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
portfolio of owned and licensed brands and products are organized into the following categories:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Karaoke</b>&#8212;including
our flagship brand Singing Machine, our karaoke line is driven by quality products at affordable price points that deliver great value
to our customers. All of Singing Machine&#8217;s karaoke products are Bluetooth&#174; enabled to allow access digital music content via
our mobile apps available on iOS and Android platforms. The core karaoke line offers best-in-class innovative features such as: enable
customers to output video to a TV screen, correct singer&#8217;s pitch in real-time, stream karaoke content directly to the machine,
sing duets, display scrolling lyrics in-time with the song, and play custom karaoke CD+G discs. Its products are sold directly to consumers
via its retail channels, ecommerce, own website, and distributors worldwide. This product category accounted for approximately 76% of
the Company&#8217;s net sales in our fiscal year ending March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Licensed
Products</b>&#8212;including brands such as Carpool Karaoke. In 2019, we entered into a 3-year license agreement with CBS&#174; for its
Carpool Karaoke brand, made popular by James Corden on The Late Late Show with James Corden. The Company launched an innovative Carpool
Karaoke Microphone that works specifically in the car. While this license agreement with CBS&#174; expires on September 30, 2022, we are
exploring renewing the license agreement and exploring other new licensing opportunities. This product category accounted for approximately
10% of the Company&#8217;s net sales in our fiscal year ending March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Microphones
and Accessories</b>&#8212; the Company currently offers a line of traditional microphone accessories that are compatible with Singing
Machine karaoke machines. These microphones feature an assortment of colors, come wired or wireless, and may include new features like
party lighting and voice changing effects. The Company is also seeing growth in portable Bluetooth&#174; microphones which are marketed
under the Party Machine brand. This product category accounted for approximately 10% of the Company&#8217;s net sales in our fiscal year
ending March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Singing
Machine Kids Youth Electronics</b>&#8212;including the brand Singing Machine Kids. Our Kids line of products offer fun music entertainment
features designed specifically for children. SMC Kids products provide a high quality introduction to singing and music entertainment
for young singers and offer innovative features like voice changing effects, recording, Bluetooth&#174; compatibility, and portability.
This product category accounted for approximately 3% of the Company&#8217;s net sales in our fiscal year ending March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Music
Subscriptions</b>&#8212;in conjunction with its premium partner, Stingray Digital, the Company offers 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.
The Company currently offers almost 20,000 licensed karaoke songs in the catalog. This product category accounted for approximately 1%
of the Company&#8217;s net sales in our fiscal year ending March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Product
Development and Design</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Product
development is a key element of our strategic growth plan. We strive to deliver many new exciting consumer products to market every single
year to retain our presence as the market-leader in consumer karaoke products. Strategic product development is done in-house from our
corporate headquarters in Fort Lauderdale, FL where we identify new potential categories, features, and price points. Products are created
in conjunction with contract product designers and inventors in collaboration with our contract manufacturers in China to deliver fun
products that represent tremendous value to our customers. In addition to new products, we always look for ways to improve existing products
to hit more affordable price points or improve features based upon market feedback.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Business
Segments</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
operate in one principal industry segment across geographically diverse marketplaces, selling our products globally to large, national
retailers as well as independent retailers, on our retailer&#8217;s websites, and our own direct to consumer website. In North America,
our customers include Amazon.com, Costco, Sam&#8217;s Club, Target and Wal-Mart. Our largest international territories are the U.K. and
Australia where we sell through international distributors, representatives, and to select international retail customers in geographic
locations where we do not have a direct sales presence.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Suppliers
and Manufacturing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
source our products from a variety of contract manufacturers in southern China. We are not dependent on any one supplier as we use many
manufacturers (currently over 5) to make our products. We maintain a Hong Kong office that provides us with factory management, sourcing,
quality control, engineering, and product development. We buy finished goods from our suppliers and generally do not source raw materials
for manufacturing, however in limited circumstances where we develop proprietary hardware and software, we will secure the proprietary
circuits and provide to our contract manufacturers for assembly into the final product. While we are not responsible to source raw materials,
we rely on our contract manufacturers&#8217; ability to secure injected plastic, wood cabinets, integrated circuits, display panels,
speaker drivers, and other components that are necessary for assembly into our final products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
goods are produced by our contract manufacturers and are either shipped via ocean vessels to our distribution center in Ontario, California
or we utilize a direct import program where our retail customers coordinate to pick up the goods FOB China. The direct import program
allows our customers to take advantage of better ocean container rates through bigger volume and allows us to bypass our California warehouse.
We maintain a third-party logistics warehouse in Canada where we sell directly to retail customers and independent channels in Canada.
Historically, most of our customers pick up goods from our warehouse (freight collect).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Sales
and Marketing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
products are marketed and sold through our direct sales team, working in conjunction with independent sales representatives that provide
sales and customer support for our retail customers in North America. Sales are recognized upon transfer of title to our customers and
are made utilizing standard credit terms of approximately 60-90 days. Our sales terms indicate that we only accept returns for defective
merchandise, however we have accepted overstock returns from our retail partners in the past. Please see risk factor titled &#8220;<i>We
are subject to the risk that some of our large customers may return karaoke products that they have purchased from us and if this happens,
it would reduce our revenues and profitability&#8221; under</i> &#8220;Risk Factors&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
seek to expand our direct-to-consumer sales, which we believe will increase overall gross margins and also increase brand awareness.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Marketing,
promotion and consumer engagement are key elements in the youth electronics, toy, and music categories. Historically, a significant percentage
of our promotional spending has been structured as co-op promotion incentives with our large retail partners. We continue to focus our
marketing efforts on growing brand awareness among our target consumer demographic, optimizing marketing investments, and executing an
integrated marketing strategy. We believe an important component of our future growth is based on speaking to the right customer, with
the right content, in the right channel, at the right time. We have implemented online marketing, social media, and digital analytics
tools, which allow us to better measure the performance of our marketing activities, learn from our consumers, and receive valuable insights
into industry and competitor activities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Customer
service is a critical component of our marketing strategy. We maintain a U.S.-based internal customer service department within our corporate
headquarters that responds to customer inquiries, investigates and resolves issues, and is available to assist customers and consumers
during business hours.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Competition</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
youth electronics, toy, and music industry has many participants, none of which has dominant market share, though certain companies may
have disproportionate strength in specific product categories. We compete with a number of different companies in a variety of categories,
although there is no single company that competes with us across all of our product categories. Our largest direct competitors are Singsation&#174;,
Singtrix&#174;, eKids&#174;, Bonaok, Karaoke USA&#8482;, and Ion&#174; Audio.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
primary method of competition in the industry consists of brand positioning, product innovation, quality, price, and timely distribution.
Our competitive strengths include our ability to develop innovative new products, speed to market, our relationships with major retailers,
and the quality and pricing of our products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Intellectual
Property</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on a combination of trademarks and trade secrets to protect our intellectual property. In certain circumstances, we will partner
with third parties to develop proprietary products, and, where appropriate, we have license agreements related to the use of third-party
innovation in our products. The duration of our trademark registrations varies from country to country. However, trademarks are generally
valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Customers</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
to the Company&#8217;s top five customers together comprised approximately 90% and 80% of our net sales in our fiscal years ending March
31, 2021 and March 31, 2020, respectively. In our fiscal year ending March 31, 2021, revenues from four of these customers represented
greater than 10% of net sales at a percentage of 36%, 20%, 13% and 12% of total net sales. In our fiscal year ending March 31, 2020,
revenues from three of these customers represented greater than 10% of net sales at a percentage of 41%, 13%, and 10% of total net sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have no long-term contracts with these customers, and as a result, our success depends heavily on our customers&#8217; willingness to
purchase and provide shelf space for our products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Seasonality</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do experience heightened seasonal demand for our products in our second and third quarters of our fiscal year. In our fiscal year ending
March 31, 2021 and our fiscal year ending March 31, 2020, approximately 86% and 85%, respectively of our net sales shipped in our second
and third quarters. However, we continually look for products and new categories to reduce our reliance on seasonality.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Regulatory
Matters</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
of our products is designed to comply with all applicable mandatory and voluntary safety standards. In the United States, these safety
standards are promulgated by federal, state and independent agencies such as the US Consumer Product Safety Commission, ASTM, the Federal
Communications Commission, the Food and Drug Administration, the Federal Trade Commission, and various states Attorney Generals and state
regulatory agencies. All of our products are independently tested by third party laboratories accepted by the Consumer Product Safety
Commission to verify compliance to applicable safety standards. A similar approach is used to design and test products sold internationally.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Insurance</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
carry product liability insurance that provides us with $10,000,000 coverage with a minimal deductible. We consult with our insurers
to ascertain appropriate liability coverage for our product mix. We believe our current coverage is adequate for our existing business
and will continue to evaluate our coverage in the future in line with our expanding sales and product breadth.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Human
Capital Resources</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that the development, attraction and retention of employees is an important factor to our Company&#8217;s success. We offer our
employees a wide range of benefits, including 100% paid health benefits for the employee, generous leave, vacation, and personal paid
time-off, 12 paid company holidays a year, and flexible work hours to work-from-home. To support the advancement of our employees, we
offer training and development programs encouraging advancement from within. As of the filing of this prospectus, we had 23 employees,
15 of which are located at our corporate office and 8 at our logistics center in Ontario, California. During peak shipping season
(July thru December), we rely heavily on temporary labor at our logistics warehouse to handle the increased shipment volume.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Environmental
Issues</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may be subject to legal and financial obligations under environmental, health and safety laws in the United States and in other jurisdictions
where we operate. We are not currently aware of any material environmental liabilities associated with any of our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Properties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective October 1, 2017, for our corporate headquarters located in Fort Lauderdale, Florida
where we lease approximately 6,500 square feet of office space. The lease expires on March 31, 2024. The base rent payment is approximately
$9,400 per month, subject to annual adjustments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective June 1, 2013, for 86,000 square feet of warehouse space in Ontario, California for
our logistics operations. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. The renewal
base rent payment is $65,300 per month with a 3% increase every 12 months for the remaining term of the extension.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective May 1, 2018, for 424 square feet of office space in Macau. The rent is fixed at
approximately $1,600 per month for the duration of the lease which expired on April 30, 2021. In May 2021 we executed a one-year lease
extension which will expire on April 30, 2022. The lease provides for a renewal option to extend the lease. Rent expense on the new lease
is fixed at approximately $1,700 per month for the duration of the lease term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that our facilities are well maintained, in substantial compliance with environmental laws and regulations, and adequately covered
by insurance. We also believe that our leased facilities are not unique and could be replaced, if necessary, at the end of the term of
the existing leases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Legal
Proceedings</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 11, 2020 a complaint was filed against the Company&#8217;s SMCL subsidiary and various staffing agencies used by SMCL in a
Superior Court of San Bernadino County. The complaint alleges an employee of the Company committed employment practice violations against
a former temporary employee not employed by us. Management has investigated the allegation and has engaged an employment attorney to
defend the lawsuit. The case is still in discovery and no trial date has been set. Management does not believe the claims have
merit and does not believe the lawsuit will have a material adverse effect on our financial results.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than as disclosed above, we are not a party to, and our property is not the subject of, any material legal proceedings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Available
Information</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is incorporated under the laws of the State of Delaware and was formed in 1994. We are publicly traded on the OTCQX Market under
the symbol &#8220;SMDM&#8221;. Our principal executive offices are located at 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, and our
telephone number is (954) 596-1000. We maintain our corporate website at <span style="text-decoration: underline">www.singingmachine.com</span>. The information on, or that can
be accessed through, our website is not part of this prospectus.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
file reports with the Securities and Exchange Commission (&#8220;SEC&#8221;), including an annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports that we file with, or furnish to, the SEC. The SEC maintains
an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information that we file electronically
with the SEC. Our website also includes corporate governance information, including our Code of Ethics and our Board committee charters.
The information contained on our website does not constitute a part of this report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_011"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MANAGEMENT</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Directors
and Executive Officers</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table and biographical summaries set forth information, including principal occupation and business experience about our directors
and executive officers:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 23%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 7%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Age</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 66%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Position(s)</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gary
    Atkinson</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">40</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Executive Officer, Director</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Bernardo
    Melo</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">45</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VP
    Global Sales and Marketing</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lionel
    Marquis</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">69</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Financial Officer</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Harvey
    Judkowitz</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Joseph
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mathieu
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">51</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></td></tr>
  </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Gary
Atkinson</b> joined the Company in January 2008 and served as General Counsel and Corporate Secretary. In November 2009, Mr. Atkinson
was appointed as Interim Chief Executive Officer and was promoted as the Company&#8217;s permanent Chief Executive Officer in May, 2012.
Since taking over as Chief Executive Officer, Mr. Atkinson has led the Company to seven consecutive years of profitability and growth
in sales. Mr. Atkinson is a licensed attorney in Florida and Georgia. He graduated from the University of Rochester with a Bachelor&#8217;s
Degree in Economics and has been awarded a dual-degree J.D./M.B.A. from Case Western Reserve University School of Law and Weatherhead
School of Management. Effective August 11, 2021, Mr. Atkinson was appointed to the Board of Directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company believes that Mr. Atkinson is qualified to serve on the Board of Directors because of his 14+ years of karaoke industry experience
and management experience.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Bernardo
Melo</b> has been with the Company since February 2003 and has served as the Vice President of Global Sales and Marketing (&#8220;VP
of Sales&#8221;) since 2008. During his tenure at the Singing Machine, Mr. Melo has overseen the sales and operations of the music division
as well as managed the customer service department. Before taking over the responsibility of VP of Sales, Mr. Melo held dual roles with
the Company managing the operations, licensing and sales of the music division while concentrating on hardware sales for the Latin America
and Canada market as well as key U.S. accounts such as Walmart. Prior to joining the Company, Mr. Melo held a consulting role for Rewards
Network formerly Idine. Mr. Melo&#8217;s assignment during his tenure was improving their operational procedures while increasing efficiencies
and lowering operating cost. Mr. Melo also worked at Coverall North America as Director of Sales managing a startup initiative for the
company covering 15 regional office and 40 sales reps across North America focusing on franchise sales. Overall Mr. Melo has over 15
years of sales, marketing and management experience.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lionel
Marquis</b> joined the Company in June 2008 as Controller and Principal Accounting Officer and was appointed as the Company&#8217;s Chief
Financial Officer in May, 2012. For the past 26 years Mr. Marquis has served as Controller and or Chief Financial Officer for several
manufacturing and distribution companies in the South Florida area. Some of these companies include Computer Products, Inc (Artesyn Technologies
Inc), US Plastic Lumber Corp., Casi-Rusco, (division of Interlogix Inc.), DHF Industries, Inc and Ingear Fashions, Inc. Mr. Marquis graduated
from Bryant University with a Bachelor&#8217;s Degree in Business Administration with a major in accounting. Mr. Marquis is a Certified
Public Accountant in the state of Florida.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Harvey
Judkowitz</b> has served as a director of the Company since March 29, 2004 and is the chairman of the Audit Committee. He is licensed
as a CPA in New York and Florida. From 1988 to the present date, Mr. Judkowitz has conducted his own CPA practices. He has served as
the Chairman and CEO of UniPro Financial Services, a diversified financial services company up until the company was sold in September
of 2005. He was formerly the President and Chief Operating Officer of Photovoltaic Solar Cells, Inc.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company believes that Mr. Judkowitz is qualified to serve on the Board of Directors because he is a qualified CPA with over 18+ years&#8217;
experience on the Board.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Joseph
Kling</b> was appointed as a director of the Company on May 9, 2017. Mr. Kling has spent his entire career in the toy industry, most
notably serving as CEO of View-Master, the iconic stereoscopic toy company, which later purchased Ideal Toy from CBS and later became
View-Master Ideal, publicly traded on the Nasdaq. View-Master Ideal later acquired California Plush Toys and the entire group was later
acquired by Tyco Toys in 1989. Kling later went into private M&amp;A consulting and sat on the board of Russ Berrie &amp; Co (currently
known as Kids Brands, Inc.) for 21 years advising on the acquisition of several toy companies. Mr. Kling has also served on the Board
of Crown Crafts, a large distributor of infant, toddler, and juvenile consumer products and on the board of Lancit Media Entertainment,
a children&#8217;s and family media production company (formerly listed on the Nasdaq). Notably, Mr. Kling has been involved in many
major toy company acquisitions of brands such as Melissa &amp; Doug and Brio.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company believes that Mr. King is qualified to serve on the Board of Directors because of his success and relationships in the toy industry
and his deep understanding of consumer products and market awareness of mergers and acquisitions in the toy industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Mathieu
Peloquin</b> was appointed as a director of the Company on December 1, 2021. Mr. Peloquin was appointed Senior Vice-President, Marketing
and Communications at Stingray Group, Inc. (&#8220;Stingray&#8221;) in 2013 and oversees marketing, communication strategies, content
and investor relations. Mr. Peloquin brings more than 20 years of experience as an expert marketer, strategist and inspiring leader.
Prior to joining Stingray, Mr. Peloquin was Vice President of Marketing at Transcontinental Media Inc. and Vice President of Transcontinental
Media Inc.&#8217;s Digital Marketing Solutions Group from 2010 to 2013. He also held several executive positions at Reader&#8217;s Digest
Magazines Canada Limited and co-founded Equinox Marketing Services. Mr. Peloquin is a CPA, CMA and holds a Bachelor of Commerce from
the School of Management of the Universit&#233; du Qu&#233;bec &#224; Montr&#233;al.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company believes that Mr. Peloquin is qualified to serve as a member of the Board of Directors due to his extensive business experience.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOMINATION
OF DIRECTORS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
provided in our nominating and governance committee charter and our Company&#8217;s corporate governance principles, the Nominating Committee
is responsible for identifying individuals qualified to become directors. The Nominating Committee seeks to identify director candidates
based on input provided by a number of sources, including (1) the Nominating Committee members, (2) our other directors, (3) our shareholders,
(4) our Chief Executive Officer or Chairman, and (5) third parties such as professional search firms. In evaluating potential candidates
for director, the Nominating Committee considers the entirety of each candidate&#8217;s credentials.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Qualifications
for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing
composition of the Board of Directors. However, at a minimum, candidates for director must possess:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">high
    personal and professional ethics and integrity;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    ability to exercise sound judgment;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    ability to make independent analytical inquiries;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
    willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    appropriate and relevant business experience and acumen.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to these minimum qualifications, the Nominating Committee also takes into account when considering whether to nominate a potential
director candidate the following factors:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">whether
    the person possesses specific industry expertise and familiarity with general issues affecting our business;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">whether
    the person&#8217;s nomination and election would enable the Board to have a member that qualifies as an &#8220;audit committee financial
    expert&#8221; as such term is defined by the Securities and Exchange Commission (the &#8220;SEC&#8221;) in Item 401 of Regulation
    S-K;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">whether
    the person would qualify as an &#8220;independent&#8221; director under the listing standards of the OTC;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    importance of continuity of the existing composition of the Board of Directors to provide long term stability and experienced oversight;
    and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    importance of diversified Board membership, in terms of both the individuals involved and their various experiences and areas of
    expertise.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Committees
of the Board of Directors</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee.
The composition and responsibilities of each of the committees of our board of directors are described below. Members serve on these
committees until their resignation or until otherwise determined by our board of directors. Our board of directors may establish other
committees as it deems necessary or appropriate from time to time.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Audit
Committee</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
members of our Audit Committee are Messrs. Judkowitz, Kling and &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, with Mr. Judkowitz serving as the Chairperson. Each of Messrs.
Judkowitz, Kling and &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq Stock
Market applicable to audit committee members. Our board of directors has determined that each of Ms. Macleod and Ms. Cunningham qualify
as an audit committee financial expert within the meaning of SEC regulations and meet the financial sophistication requirements of the
Nasdaq Stock Market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Audit Committee has the responsibility for, among other things, (i) selecting, retaining and overseeing our independent registered public
accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm&#8217;s internal quality
control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent
auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the
integrity of the Company&#8217;s financial statements, (v) reviewing and discussing with the Company&#8217;s independent auditors any
other matters required to be discussed by PCAOB Auditing Standard No. 1301, (vi) reviewing, approving and overseeing any transaction
between the Company and any related person and any other potential conflict of interest situations, (vii) overseeing the Company&#8217;s
internal audit department, (v) reviewing, approving and overseeing related party transactions, and (viii) establishing and overseeing
procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls
or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or
auditing matters.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Compensation
Committee</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
members of our Compensation Committee are Messrs. Judkowitz, Kling and &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, with &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; serving as the Chairperson. Our Compensation
Committee has the responsibility for, among other things, (i) reviewing and approving the chief executive officer&#8217;s compensation
based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all
other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing
and discussing with management the Company&#8217;s Compensation Discussion and Analysis and related information to be included in the
annual report on Form 10-K and proxy statements, and (v) reviewing and recommending to the Board for approval procedures relating to
Say on Pay Votes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Nominating
and Corporate Governance Committee </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
members of our Nominating and Corporate Governance Committee are Messrs. &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; and &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, with &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; serving as
the Chairperson. Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other
things, (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved
by our board of directors, (ii) recommending to the Board the approval of nominees for director, (ii) developing and recommending to
our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>No
Family Relationships</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no family relationship between any director and executive officer or among any directors or executive officers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Involvement
in Certain Legal Proceedings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
directors and executive officers have not been involved in any of the following events during the past ten years:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">any
    bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer
    either at the time of the bankruptcy or within two years prior to that time;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">any
    conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor
    offenses);</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">being
    subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
    permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">being
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    or commodities law, and the judgment has not been reversed, suspended, or vacated;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed,
    suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law
    or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or
    fraud in connection with any business entity; or</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">being
    subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,
    any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
    or persons associated with a member.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Director
Independence</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Board evaluates the independence of each nominee for election as a director of our Company in accordance with the Nasdaq Listing Rules.
Pursuant to these rules, a majority of our Board must be &#8220;independent directors&#8221; within the meaning of the Nasdaq Listing
Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must
also be independent directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Code
of Ethics</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, and principal accounting
officer. Our Code of Ethics is available on our website at https://singingmachine.com/.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_012"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>EXECUTIVE
COMPENSATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Executive
Compensation Philosophy</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Executive Compensation Committee believes that the Singing Machine must maintain short and long-term executive compensation plans that
enable us to attract and retain well-qualified executives. Furthermore, we believe that our compensation plans must also provide a direct
incentive for our executives to create shareholder value. A well designed executive compensation plan will align the interests between
the executives and the shareholders as well as creating a positive environment of goals, performances and rewards.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that the executive compensation should reflect the success of the management team, rather than the individual, in attaining the
key operating objectives such as revenues growth, operation cost reduction, fund raising and the appreciation of the stock price. A clear
measurement should be established to reward the performance. We will also evaluate our executive compensation package by comparison to
similar companies to ensure the competitiveness of our compensation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
furtherance of this philosophy, the compensation of our executives generally consists of three components: base salary, annual cash incentives
and long-term performance-based incentives.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Base
Salaries</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Annual
base salaries for executive officers are initially determined by evaluating the responsibility of the position and the experience and
the skill sets of the individual. Also taken into consideration is the competitiveness of the market place for executive talent, including
a comparison of base annual salaries with comparable positions within similar companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Incentive
Cash Bonuses</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Generally,
we award cash bonuses to our management employees and other employees, based on their personal performance in the past year and overall
performance of our Company. The overall performance of our Company includes the revenue growth, reduction of the operation expenses,
fund raising and the stock price appreciation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Long
Term Compensation - Stock Option Grants</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have utilized stock options to motivate and retain executive officers and other employees for the long-term. We believe that stock options
closely align the interests of our executive officers and other employees with those of our stockholders and provide a major incentive
to building stockholder value. Options are typically granted annually, and are subject to vesting provisions to encourage officers and
employees to remain employed with the Company. Our stock options are usually granted at a price equal to or above the fair market value
of our common stock on the date of grant. As such, our officers only benefit from the grant of stock options if our stock price appreciates.
Generally, we try to tie bonus payments to our financial performance. However, if an individual has made significant contributions to
our Company, we will provide them with a bonus payment for their efforts even if our Company&#8217;s financial performance has not been
strong.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
Compensation Table </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table provides information regarding the compensation earned by or paid to our named executive officers with respect to the
years ended March 31, 2022 and 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 3%; text-align: right">2022</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%">$</td>
    <td style="width: 3%; text-align: right">&#160;</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 3%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 3%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 3%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    Melo does not have an employment contract with the Company and had an annual salary of $163,004 for the fiscal year ended March 31,
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Outstanding
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Employment
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Separation
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has not entered into any employment contracts with any of its employees. However, on January 3, 2014, the Company entered into
agreements with the three executive officers named above that if an executive&#8217;s employment is terminated by the executive or the
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 34 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->31<!-- Field: /Sequence --></td></tr></table></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Director
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Joseph Kling</td><td>&#160;</td>
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    <td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Mathieu Peloquin</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">4,461</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Refer
to Note 1 &#8220;Stock Based Compensation&#8221; in the Notes to the Consolidated Financial Statements included elsewhere in this prospectus
for the relevant assumptions used to determine the valuation of our option awards.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)
As of March 31, 2022 the aggregate number of stock awards held by Messrs. Judkowitz and Kling is 350,337 and 15,668, respectively. The
aggregate stock awards held by Messrs. Hon, Yat Tung Lau and Philip Lau is 54,942, 44,525 and 15,668, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)
As of March 31, 2022 the aggregate number of Company stock options held by Messrs. Judkowitz and Kling is 140,000 and 100,000, respectively
and Messrs. Hon, Yat Tung Lau and Philip Lau is 100,000, 80,000 and 80,000 respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)
Messrs. Hon, Yat Tung Lau, and Philip Lau resigned effective August 10, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
our fiscal year ended March 31, 2022, our compensation package for our non-employee directors consisted of grants of stock options, cash
payments, stock issuances and reimbursement of costs and expenses associated with attending our board meetings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_013"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">A
transaction may be a related person transaction if any of our directors, executive officers, owners of more than 5% of our common stock,
or their immediate family were involved in a transaction in which the Company was or is to be a participant, and the amount involved
exceeds the lesser of $120,000 or 1% of the average of the Company&#8217;s total assets at year end for the last two completed fiscal
years. The Company engaged in the following related persons transactions in the last three fiscal years or expects to engage in the following
transactions since the end of that three year period:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Due
to/from related parties</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
our fiscal year 2021, the Company did business with entities owned by our former Chairman, Philip Lau. Those entities were: Starlight
R&amp;D Ltd (&#8220;SLRD&#8221;), Starlight Consumer Electronics USA, Inc. (&#8220;SCE&#8221;), Cosmo Communications Corporation of Canada,
Inc. (&#8220;Cosmo&#8221;), Winglight Pacific, Ltd. (&#8220;Winglight&#8221;), and Starlight Electronics Company Ltd. (&#8220;SLE&#8221;)On
March 31, 2021 the Company had approximately $0.1 million due to related parties SLRD, SCE and SLE for services provided by these companies
and licensing fees for use of pedestal model molds and tools owned by them. On March 31, 2020, the Company had approximately $0.5 million
due from related parties SLRD, SCE and SLE for goods and services sold these companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Lau resigned as Chairman effective August 10, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Subordinated
Related Party Debt and Note Payable</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Revolving Credit Facility with PNC Bank, the Company was required to subordinate related party debt to Starlight
Marketing Development, Ltd. (&#8220;Subordinated Debt&#8221;). The Subordinated Debt of approximately $924,000 bore interest
at 6% and was scheduled to be paid in quarterly installments of $123,000 which included interest and commenced September 30, 2017 and
ending on the debt maturity date of June 30, 2019. Quarterly installment payments of $123,000 due on the last day of each fiscal quarter
were not made since September 2017 however, a payment of $25,000 which included principal and interest, was made during Fiscal 2020.
On June 1, 2020 the remaining amount due on the Subordinated Debt of approximately $803,000, which was classified as a non-current
liability on the consolidated financial statements as of March 31, 2020, was converted to a note payable which bears interest at 6%.
As part of the agreement to convert the Subordinated Debt to a note payable it was agreed that interest expense would be accrued
on the unpaid principal retroactively from the date that scheduled payments had been missed resulting in an incremental charge to interest
expense of approximately $72,000 for Fiscal 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended March 31, 2021 and 2020 interest expense was approximately $12,000 and $74,000, respectively on the related party Subordinated
Debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the note payable (&#8220;Subordinated
Note Payable&#8221;) to Starlight Marketing Development, Ltd. Both agreements allow for the repayment of the Subordinated Note
Payable provided any amounts borrowed against these credit facilities are paid in full, the Company maintains a 1:1 debt coverage
ratio and exhibits sufficient cash liquidity to support on-going operations. There is no set schedule with regards to payment of the
note however, during Fiscal 2021 the Company was able to make principal payments of $300,000 on the Subordinated Note Payable.
As of March 31, 2021 the remaining principal balance of approximately $503,000 is classified as a current liability on the accompanying
consolidated balance sheets. During the years ended March 31, 2021 and 2020 interest expense was approximately $35,000 and $0, respectively
on the Subordinated Note Payable.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Trade</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
both Fiscal 2021 and 2020 the Company paid approximately $0.4 million to SLE as reimbursement for engineering, quality control and other
administrative services performed on our behalf in China. These expense reimbursements were included in general and administrative expenses
on our consolidated statements of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
Fiscal 2021 and 2020 the Company sold approximately $0.0 million and $0.9 million, respectively of product to Winglight for direct shipment
to Cosmo at discounted pricing granted to major direct import customers shipped internationally with freight prepaid. These amounts were
included as a component of net sales in the accompanying consolidated statements of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company&#8217;s Canadian distributor and the
Company became the sole and exclusive distributor of the Company&#8217;s products in Canada. As part of the agreement, the companies
executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo&#8217;s karaoke inventory for approximately $0.7 million.
During Fiscal 2021 there was a gain of approximately $0.2 million from Cosmo related to payments received in Fiscal 2021 on prior year
sales and the related receivable previously reversed and written off as they were initially deemed uncollectible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_014"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth certain information regarding the beneficial ownership of our common stock as of April 12, 2022, unless
otherwise noted below, for the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">each
    director; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">all
    current directors and executive officers as a group.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify; text-indent: -0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Security
ownership is based on 36,636,264 shares of our common stock issued and outstanding. In computing the number and percentage of shares
beneficially owned by a person, shares of common stock subject to convertible securities and options currently convertible or exercisable,
or convertible or exercisable within 60 days of April 12, 2022 are counted as outstanding, but these shares are not counted as
outstanding for computing the percentage</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ownership
of any other person.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power
(including the power to dispose or direct the disposition of) with respect to the security through any contract, arrangement, understanding,
relationship or otherwise, including a right to acquire such power(s) during the next 60 days. Unless otherwise noted below, and subject
to applicable property laws, to our knowledge each person has sole investment and sole voting power over the shares shown as beneficially
owned by them. Unless otherwise noted, the principal address of each of the directors and officers listed below is c/o The Singing Machine
Company, Inc., 6301 NW 5<sup>th</sup> Way, Suite 2900, Fort Lauderdale, FL 33309.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Name and Address of Beneficial Owner</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Gary Atkinson (1)</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right">459,481</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Harvey Judkowitz (1)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">607,579</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1.7</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Joseph Kling (1)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">112,910</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Mathieu Peloquin</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Officers &amp; Directors as a Group (7 individuals)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,367,886</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6.4</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">5% or Greater Shareholders:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Armistice Capital Master Fund Ltd. (2)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,469,085</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6.7</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Stingray Group Inc. (3)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,666,667</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">18.2</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Arts Electronics Ltd. (4)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,745,917</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.2</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Gentle Boss Investments Ltd (5)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,100,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5.7</td><td style="text-align: left">%</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
Less than 1%</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)
Includes as to the person indicated, the following outstanding stock options to purchase shares of the Company&#8217;s Common Stock issued
under 2001 Stock Option Plan and other stock option awards, which will be exercisable within 60 days of April 12, 2022: 300,000
options held by Gary Atkinson, 575,000 options held by Bernardo Melo, 165,000 options held by Lionel Marquis, 180,000 options held by
Harvey Judkowitz, and 80,000 options held by Joseph Kling</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)
Based solely upon Schedule 13G filed with the Securities and Exchange Commission on February 14, 2022 . The address of Armistice Capital
Master Fund Ltd. is 510 Madison Ave, 7th Floor, New York, NY 10022. <span style="background-color: white">Armistice Capital, LLC (&#8220;Armistice
Capital&#8221;) is the investment manager of Armistice Capital Master Fund Ltd. (the &#8220;Master Fund&#8221;), the direct holder of
the shares, and pursuant to an Investment Management Agreement, Armistice Capital exercises voting and investment power over the securities
of the Issuer held by the Master Fund and thus may be deemed to beneficially own the securities of the Issuer held by the Master Fund.
Mr. Boyd, as the managing member of Armistice Capital, may be deemed to beneficially own the securities of the Issuer held by the Master
Fund. The Master Fund specifically disclaims beneficial ownership of the securities of the Issuer directly held by it by virtue of its
inability to vote or dispose of such securities as a result of its Investment Management Agreement with Armistice Capital</span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)
Does not include 6,666,667 shares that are acquirable upon exercise of common warrants. As of December 31, 2021, Eric Boyko indirectly
controlled approximately 57.2% of the combined voting power of Stingray&#8217;s outstanding shares. As a result, Eric Boyko may be deemed
to share beneficial ownership of the shares of common stock and the Stingray Warrants held by Stingray. The address of Stingray Group
Inc. is 730 Wellington Street, Montr&#233;al, Qu&#233;bec H3C 1T4. The security holder may not exercise the warrants to the extent
such exercise would cause the security holder, together with its affiliates, to beneficially own a number of shares of common stock which
would exceed 4.99% of our then outstanding common stock following such exercise, excluding for purposes of such determination shares
of common stock issuable upon exercise of such securities which have not been so exercised.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)
The address for Arts Electronics Ltd. is Room 101, Fo Tan Ind CTR 1/F, 26-28 Au Pui Wan, Fo Tan, Shatin N.T. Hong Kong.4</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)
The address for Gentle Boss Investments Ltd. is Unit 6, 9/F, Tower B, 55 Hoi Yuen Road, Kwun Tong, Kowloon Hong Kong.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_015"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DESCRIPTION
OF CAPITAL STOCK</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Common
Stock</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Certificate of Incorporation, as amended, authorizes the issuance of up to 100.1 million shares of common stock of which 100 million
shares are Class B common stock and 100,000 shares are Class A common stock, each with a par value of $0.01 per share. As of April
12, 2022, there were 36,636,264 shares of common stock outstanding, and 1,610,000 unissued shares of common stock underlying outstanding
options and warrants. No shares of Class A common stock are currently issued and outstanding. The following summary of certain provisions
of our common stock does not purport to be complete. You should refer to our certificate of incorporation and our bylaws, as amended
from time to time.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Holders
of our common stock have the exclusive right to vote for the election of directors and for all other purposes and each holder of common
stock shall be entitled to one vote for each share of common stock held. Except as otherwise required by law, the Class A common stock
shall have no voting right on any matter. The rights, preferences and privileges of the holders of common stock are subject to, and may
be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in
the future. All of our outstanding shares of common stock are fully paid and non- assessable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Preferred
Stock</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is authorized to issue 1,000,000 shares of preferred stock, with par value of $1.00 each. As of April 12, 2022, there
were no shares of Preferred Stock issued and outstanding.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
certificate of incorporation, as amended, provides our board of directors the authority, subject to limitations prescribed by Delaware
law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series,
and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations,
or restrictions, in each case without further vote or action by our stockholders. Our board of directors also has the authority to increase
or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding,
without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting
or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of
preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other
things, have the effect of delaying, deferring, or preventing a change in control of our company and might adversely affect the market
price of our common stock and the voting and other rights of the holders of our common stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Anti-Takeover
Provisions</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
provisions of Delaware General Corporation Law (DGCL), and our certificate of incorporation and bylaws, each as amended, may have the
effect of delaying, deferring, or discouraging another person from acquiring control of us. They are also designed, in part, to encourage
persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection
of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal
to acquire us because negotiation of these proposals could result in an improvement of their terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Delaware
Takeover Statute</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are governed by the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a public Delaware corporation from engaging
in a &#8220;business combination&#8221; with an &#8220;interested stockholder&#8221; for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0 0pt 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;the
transaction was approved by the board of directors prior to the time that the stockholder became an interested stockholder;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0 0pt 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;upon
consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by directors
who are also officers of the corporation and shares owned by employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0 0pt 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;at
or subsequent to the time the stockholder became an interested stockholder, the business combination was approved by the board of directors
and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds
of the outstanding voting stock which is not owned by the interested stockholder.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
general, Section 203 defines a &#8220;business combination&#8221; to include mergers, asset sales and other transactions resulting in
financial benefit to a stockholder and an &#8220;interested stockholder&#8221; as a person who, together with affiliates and associates,
owns, or, within three years, did own, 15% or more of the corporation&#8217;s outstanding voting stock. These provisions may have the
effect of delaying, deferring, or preventing changes in control of our company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Transfer
Agent and Registrar</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
transfer agent for our common stock is Continental Stock Transfer &amp; Trust Company. The transfer agent&#8217;s address is 1 State
Street, 30th Floor, New York, NY 10004-1561 and its telephone number is 212-509-4000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Listing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
common stock is currently listed on the OTCQX under the symbol &#8220;SMDM.&#8221; We have applied to have our common stock listed on
The NASDAQ Capital Market under the symbol &#8220;MICS&#8221; and are awaiting approval.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_016"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>UNDERWRITING</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Aegis
Capital Corp. is the underwriter of the offering. We have entered into an underwriting agreement dated &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, 2022 with the Aegis. Subject
to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriter and the underwriter has agreed to
purchase, at the public offering price less the underwriting discounts set forth on the cover page of this prospectus, the number of
shares of common stock listed next to its name in the following table:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="width: 78%; text-align: left">Aegis Capital Corp.</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 18%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;</td><td style="width: 1%; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriter is committed to purchase all the common stock offered by us, other than those shares covered by the over-allotment option
to purchase additional shares of common stock. The obligations of the underwriter may be terminated upon the occurrence of certain events
specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriter&#8217;s obligations are
subject to customary conditions, representations and warranties contained in the underwriting agreement, such as receipt by the underwriter
of officers&#8217; certificates and legal opinions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have agreed to indemnify the underwriter against specified liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriter may be required to make in respect thereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriter is offering the common stock subject to prior sale, when, as and if issued to and accepted by them, subject to approval of
legal matters by its counsel and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw,
cancel or modify offers to the public and to reject orders in whole or in part.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have granted the underwriter an over-allotment option. This option, which is exercisable for up to 45 days after the date of this offering,
permits the underwriter to purchase up to an aggregate of up to &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional shares of common stock sold in the offering, representing
15% of the shares of common stock sold in the offering. The purchase price to be paid per additional share will be equal to the public
offering price of one share of common stock less the underwriting discount. If this option is exercised in full to purchase shares of
common stock, the total price to the public will be $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;and the total net proceeds, before expenses, to us will be $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Discounts,
Commissions and Reimbursement</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes
either no exercise or full exercise by the underwriter of their over-allotment option.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="width: 46%">Public offering price</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Underwriting discounts and commissions to be paid by us (7%):</td><td>&#160;</td>
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    <td style="text-align: left">Non-accountable expense allowance (1.0%)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Proceeds, before expenses, to us</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;&#160;&#160; &#160;</span></td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriter proposes to offer the shares of common stock to the public at the public offering price set forth on the cover of this prospectus.
In addition, the underwriter may offer some of the shares of common stock to other securities dealers at such price less a concession
not in excess of $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;per share of common stock. If all of the common stock offered by us are not sold at the public offering price, the
underwriter may change the offering price and other selling terms by means of a supplement to this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have also agreed to pay up to $75,000 of the underwriter&#8217;s expenses relating to the offering, including for road show, diligence,
and legal expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
estimate that the total expenses of the offering payable by us, excluding the discount and non-accountable expense allowance, will be
approximately $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;, including a 1.0% non-accountable expense allowance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Discretionary
Accounts</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriter does not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lock-Up
Agreements</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to &#8220;lock-up&#8221; agreements, we and our executive officers, directors, and shareholders holding at least 10 percent of the outstanding
common stock have agreed, subject to limited exceptions, without the prior written consent of the underwriter not to directly or indirectly
offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of (or enter into any transaction or device that is designed
to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) our common stock, enter
into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of shares of our common stock, or publicly disclose the intention to do any of the foregoing, subject to customary exceptions,
for a period of 180 days from the date of this prospectus.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Underwriter
Warrants</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has agreed to issue to Aegis or its designees warrants to purchase up to a total of 10.0% of the shares of common stock sold
in this offering (excluding the shares sold through the exercise of the over-allotment option). Such warrants and underlying shares of
common stock are included in this prospectus. The warrants are exercisable at $ &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;per share (125% of the public offering price) commencing
on a date which is six (6) months from the effective date of the offering under this prospectus supplement and expiring on a date which
is no more than five (5) years from the commencement of sales of the offering in compliance with FINRA Rule 5110. The warrants have been
deemed compensation by FINRA and are therefore subject to a 6-month lock-up pursuant to Rule 5110 of FINRA. The underwriter (or their
permitted assignees under the Rule) will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying
these warrants, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective
economic disposition of the warrants or the underlying securities for a period of 180 days from effectiveness. The warrants may be exercised
as to all, or a lesser number of shares of common stock, and will provide for cashless exercise and will contain provisions for &#8220;piggyback&#8221;
registration rights, for a period of no greater than seven (7) years from the effective date of the offering in compliance with FINRA
Rule 5110. The Company will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrants other
than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of
the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary cash dividend or the
Company&#8217;s recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will
not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Right
of First Refusal and Tail Financing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have granted the underwriter a right of first refusal, for a period of eighteen (18) months from the consummation of this offering, to
act as sole book-runner, sole manager, sole placement agent, sole agent, sole book-runner, sole book-running manger and/or sole underwriter,
at the underwriter&#8217;s sole discretion, for each and every future public and private equity or debt offering or debt refinancing,
including all equity linked financings (each, a &#8220;Subject Transaction&#8221;), during such eighteen (18) month period, of the Company,
or any successor to or subsidiary of the Company, on terms and conditions customary to the underwriter for such Subject Transactions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, we have agreed to pay the above cash compensation to the extent that any fund which the underwriter contacted or introduced
to us during the term of our engagement agreement with the underwriter provides financing or capital in any public or private offering
or capital raising transaction during the five (5) month period following expiration or termination of our engagement letter with the
underwriter.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Electronic
Offer, Sale and Distribution of Securities</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
prospectus in electronic format may be made available on the websites maintained by the underwriter or selling group members. The underwriter
may agree to allocate a number of securities to underwriter and selling group members for sale to its online brokerage account holders.
Internet distributions will be allocated by the underwriter and selling group members that will make internet distributions on the same
basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor incorporated
by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed
by us, and should not be relied upon by investors.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Stabilization</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with this offering, the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate-covering
transactions, penalty bids and purchases to cover positions created by short sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stabilizing
transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for
the purpose of preventing or retarding a decline in the market price of the shares while the offering is in progress.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Over-allotment
transactions involve sales by the underwriter of shares in excess of the number of shares the underwriter are obligated to purchase.
This creates a syndicate short position which may be either a covered short position or a naked short position. In a covered short position,
the number of shares over-allotted by the underwriter is not greater than the number of shares that they may purchase in the over-allotment
option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The
underwriter may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Syndicate
covering transactions involve purchases of shares in the open market after the distribution has been completed in order to cover syndicate
short positions. In determining the source of shares to close out the short position, the underwriter will consider, among other things,
the price of shares available for purchase in the open market as compared with the price at which they may purchase shares through exercise
of the over-allotment option. If the underwriter sell more shares than could be covered by exercise of the over-allotment option and,
therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position
is more likely to be created if the underwriter are concerned that after pricing there could be downward pressure on the price of the
shares in the open market that could adversely affect investors who purchase in the offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when the shares originally sold by that syndicate
member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price
of our shares of common stock or preventing or retarding a decline in the market price of our shares of common stock. As a result, the
price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we
nor the underwriter make any representation or prediction as to the effect that the transactions described above may have on the price
of our common stock. These transactions may be effected in the over-the-counter market or otherwise and, if commenced, may be discontinued
at any time.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Passive
market making</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with this offering, underwriter and selling group members may engage in passive market making transactions in our common stock
on the Nasdaq Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement
of offers or sales of the shares and extending through the completion of the distribution. A passive market maker must display its bid
at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive
market maker&#8217;s bid, then that bid must then be lowered when specified purchase limits are exceeded.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Other
Relationships</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
of the underwriter and their affiliates may in the future provide various investment banking, commercial banking and other financial
services for us and our affiliates for which they may in the future receive customary fees.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Offer
restrictions outside the United States</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities offered
by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with
the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result
in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in
any jurisdiction in which such an offer or a solicitation is unlawful.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Offering
Price Determination</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
public offering price was negotiated between Aegis and us. In determining the public offering price of our common shares, Aegis considered:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the
history and prospects for the industry in which we compete;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;&#160;&#160;&#160;&#160;&#160;&#160;&#160;our
financial information;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the
ability of our management and our business potential and earning prospects;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the
prevailing securities markets at the time of this offering; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the
recent market prices of, and the demand for, publicly traded shares of generally comparable companies, as well as the recent market price
of our common shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Securities
Issuance Standstill</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have agreed, for a period of one hundred eighty (180) days after the closing date of this offering, that we will not, without the prior
written consent of the underwriter, issue, enter into any agreement to issue or announce the issuance or proposed issuance of any common
shares or share equivalents except for the adoption of an equity incentive plan and the grant of awards or equity pursuant to any equity
incentive plan, and the filing of a registration statement on Form S-8 and the issuance of equity securities in connection with an acquisition
or a strategic relationship, which may include the sale of equity securities. In no event should any equity transaction within this period
result in the sale of equity at an offering price to the public less than that of the offering referred herein.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span id="a_017"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LEGAL
MATTERS</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sichenzia
Ross Ference LLP, New York, New York, will pass upon the validity of the securities offered hereby. Certain legal matters in connection
with this offering have been passed upon for the underwriter by Kaufman &amp; Canoles, P.C., Richmond, Virginia.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_018"></span>EXPERTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated balance sheets of The Singing Machine Company, Inc. and Subsidiaries as of March 31, 2021 and 2020, and the related consolidated
statements of operations, cash flows and shareholders&#8217; equity for each of the years then ended, have been audited by EisnerAmper
LLP, independent registered public accounting firm, as stated in their report which is incorporated herein. Such financial statements
have been incorporated herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_019"></span>WHERE
YOU CAN FIND MORE INFORMATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 28.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock
offered hereby. The registration statement, including the exhibits and schedules attached to the registration statement and the information
incorporated by reference, contains additional relevant information about us and the securities not included in this Prospectus. Statements
contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration
statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract
or other document filed as an exhibit to the registration statement. The SEC maintains a website that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the SEC. The address is http://www.sec.gov.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 28.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or Exchange Act, and file annual, quarterly
and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement,
over the Internet at the SEC&#8217;s website at http://www.sec.gov. We also maintain a website at http://www.singingmachine.com, at which
you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished
to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus. You may also
request a copy of these filings, at no cost, by writing or telephoning us at: 6301 NW 5th Way, Ste. 2900 Fort Lauderdale Florida 33309,
(954) 596-1000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="SI_006"></span>Financial
Statements</span></p>
<p style="margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: justify">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center">PAGE</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SI_001">Condensed Consolidated Balance Sheets &#8211; December 31, 2021 (Unaudited)and March 31, 2021</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SI_002">Condensed Consolidated Statements of Income &#8211; Three and nine months ended December 31, 2021 and 2020(Unaudited)</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">F-3</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SI_003">Condensed Consolidated Statements of Cash Flows - Nine months ended December 31, 2021 and 2020(Unaudited)</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">F-4</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SI_004">Condensed Consolidated Statements of Shareholders&#8217; Equity &#8211; Three and nine months ended December 31, 2021 and 2020 (Unaudited)</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">F-5</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SI_005">Notes to Condensed Consolidated Financial Statements - December 31, 2021 and 2020 (Unaudited)</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">F-6</td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><a href="#ma_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Report of Independent Registered Public Accounting Firm</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center; width: 0.6in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-19</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><a href="#ma_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Balance Sheets - March 31, 2021 and 2020</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-21</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><a href="#ma_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Statements of Operations - Twelve months ended March 31, 2021 and 2020</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-22</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><a href="#ma_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-23</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><a href="#ma_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Statements of Shareholders&#8217; Equity - Twelve months ended March 31, 2021 and 2020</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-24</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><a href="#ma_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-25</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>





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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SI_001"></span><span></span>CONDENSED
CONSOLIDATED BALANCE SHEETS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_30A_111_zLdu3OQTa4lg" summary="xdx: Statement - Condensed Consolidated Balance Sheets" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="padding-left: 10pt; text-align: left">Accounts receivable related party - Winglight Pacific, Ltd</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--InventoryNet_i02I_maCzYgs_zVGztj2wonS3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_eus-gaap--PrepaidExpenseAndOtherAssetsCurrent_i02I_maCzYgs_z5yxSXdg6RR8" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_403_eus-gaap--DeferredFinanceCostsCurrentNet_i02I_maCzYgs_zl66xnjADbPj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:DeferredFinanceCostsCurrentNet" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">15,359</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--AssetsCurrent_i02TI_mtCzYgs_maCzXO9_zLWiknw7i5mf" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Total
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    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_403_eus-gaap--PropertyPlantAndEquipmentNet_i01I_maCzXO9_zNM40NNyO5Jk" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Property and equipment,
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentNet" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">580,922</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentNet" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">674,153</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_405_eus-gaap--DeferredIncomeTaxAssetsNet_i01I_maCzXO9_zOP59n6bg3ed" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Deferred tax assets</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:DeferredIncomeTaxAssetsNet" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">887,164</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--OperatingLeaseRightOfUseAsset_i01I_maCzXO9_znOqhVx2UXYg" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Operating Leases - right
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,488,258</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_40A_eus-gaap--OtherAssetsNoncurrent_i01I_maCzXO9_z2f8ZS9erdI1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Other
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OtherAssetsNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">136,885</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OtherAssetsNoncurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">147,173</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_400_eus-gaap--Assets_iTI_mtCzXO9_zAlwsKuHszIl" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40C_eus-gaap--LiabilitiesAndStockholdersEquityAbstract_iB" style="vertical-align: bottom; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline">Liabilities and Shareholders&#8217;
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--LiabilitiesCurrentAbstract_i01B_zgRXxUdmrEid" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Current Liabilities</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40E_eus-gaap--AccountsPayableCurrent_i02I_maCzOaQ_zc3whWFbyTCd" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Accounts payable</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AccountsPayableCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,982,552</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AccountsPayableCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,461,103</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40A_eus-gaap--AccruedLiabilitiesCurrent_i02I_maCzOaQ_zL4E6eLwXbQ7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Accrued expenses</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,417,409</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,659,499</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_403_ecustom--DueToRelatedPartyStarlightConsumer_i02I_maCzOaQ_zVx4trOCIZRk" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Due to related party -
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:DueToRelatedPartyStarlightConsumer" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">14,400</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40C_ecustom--DueToRelatedPartyStarlightElectronicsCoLtd_i02I_maCzOaQ_zUkbDD5vS0Be" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Due to related party - Starlight Electronics Co., Ltd</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_ecustom--DueToRelatedPartyStarlightRdLtd._i02I_maCzOaQ_zm6CxhhhxgE3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Due to related party -
    Starlight R&amp;D, Ltd.</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:DueToRelatedPartyStarlightRdLtd." contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">48,650</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:DueToRelatedPartyStarlightRdLtd." contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">48,650</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40B_eus-gaap--LinesOfCreditCurrent_i02I_pp0p0_maLCzMMp_maCzOaQ_z4zZ6YZ2zlze" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LinesOfCreditCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">64,915</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--ContractWithCustomerLiabilityCurrent_i02I_maCzOaQ_zDXPovrza6Sb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Customer deposits</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,520</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">139,064</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--ContractWithCustomerRefundLiability_i02I_maCzOaQ_zP5eovtcBIg9" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Refunds due to customers</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">90,075</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">145,408</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_407_ecustom--ReserveForSalesReturns_i02I_maCzOaQ_zFehrO2mNu14" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Reserve for sales returns</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ReserveForSalesReturns" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,922,457</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ReserveForSalesReturns" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">960,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_406_eus-gaap--FinanceLeaseLiabilityCurrent_i02I_maCzOaQ_zKTfTPXnvJK5" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Current portion of finance
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,421</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,546</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_ecustom--InstallmentNoteCurrent_i02I_maCzOaQ_zQYB4IK64jRd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Current portion of installment
    notes</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:InstallmentNoteCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">72,760</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:InstallmentNoteCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">68,332</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40F_eus-gaap--NotesPayableCurrent_i02I_maCzOaQ_zZReglIwt2Z2" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Current portion of note
    payable - Paycheck Protection Program</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0134">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:NotesPayableCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">172,685</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40C_eus-gaap--OperatingLeaseLiabilityCurrent_i02I_maCzOaQ_zYcstLbjvHg9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Current portion of operating
    lease liabilities</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">860,528</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">794,938</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_408_eus-gaap--SubordinatedDebtCurrent_i02I_maCzOaQ_zN4qh6bEC2P5" style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Subordinated
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:SubordinatedDebtCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">352,659</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:SubordinatedDebtCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">502,659</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--LiabilitiesCurrent_i02TI_mtCzOaQ_maCz3wt_zquRw59voNGk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Total
    Current Liabilities</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LiabilitiesCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">21,405,271</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LiabilitiesCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,034,199</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_408_eus-gaap--FinanceLeaseLiabilityNoncurrent_i01I_maCz3wt_zIXsMnz5WHg8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Finance leases, net of current
    portion</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">12,592</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0147">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_ecustom--InstallmentNoteNonCurrent_i01I_maCz3wt_zWT6X1dk0It1" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Installment notes, net of
    current portion</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:InstallmentNoteNonCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">157,812</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:InstallmentNoteNonCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">212,949</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_405_eus-gaap--LongTermNotesPayable_i01I_maCz3wt_zeSQ3jRnIOMh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Note payable - Payroll Protection
    Program, net of current portion</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0152">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LongTermNotesPayable" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">271,215</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_402_eus-gaap--OperatingLeaseLiabilityNoncurrent_i01I_maCz3wt_z4CW4k8JMLTf" style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Operating
    lease liabilities, net of current portion</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">685,304</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,334,010</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_403_eus-gaap--DueToRelatedPartiesNoncurrent_i01I_maCz3wt_zHQKHs6mOJ92" style="display: none; vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">Subordinated related party debt - Starlight Marketing Development, Ltd., net of current portion</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--Liabilities_i01TI_mtCz3wt_maLASEzrQl_zYfdDZZoo2qa" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 20pt; font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Total
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  <tr id="xdx_402_eus-gaap--StockholdersEquityAbstract_i01B" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40D_eus-gaap--PreferredStockValue_i02I_pp0p0_maSEzEDL_z53XkYS9iIde" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0171">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_407_eus-gaap--CommonStockValue_i02I_pp0p0_hus-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_maSEzEDL_zRaYdFtnRtp1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_401_eus-gaap--CommonStockValue_i02I_pp0p0_hus-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_maSEzEDL_zlmR5BbPnfi8" style="vertical-align: bottom; background-color: White">
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    $<span id="xdx_901_eus-gaap--CommonStockParOrStatedValuePerShare_iI_c20211231__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zVCvn96f1mNg" title="Common stock, par value"><span id="xdx_906_eus-gaap--CommonStockParOrStatedValuePerShare_iI_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zlBNSVZSxh7h" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-12-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></ix:nonFraction></span></span> par value; <span id="xdx_907_eus-gaap--CommonStockSharesAuthorized_iI_c20211231__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zqXyfs5PlAfc" title="Common stock, shares authorized"><span id="xdx_90A_eus-gaap--CommonStockSharesAuthorized_iI_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_z9uwPVjgPzCc" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-12-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000,000</ix:nonFraction></ix:nonFraction></span></span> shares authorized;<span id="xdx_90E_eus-gaap--CommonStockSharesIssued_iI_c20211231__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_ztvbuIj55xTe" title="Common stock, shares issued"><span id="xdx_907_eus-gaap--CommonStockSharesOutstanding_iI_c20211231__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zIybWJRtndjf" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-12-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-12-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">36,636,264</ix:nonFraction></ix:nonFraction></span></span> and <span id="xdx_901_eus-gaap--CommonStockSharesIssued_iI_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zpCOCuGF2sx" title="Common stock, shares issued"><span id="xdx_903_eus-gaap--CommonStockSharesOutstanding_iI_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zNecFZ91FHKd" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">39,040,748</ix:nonFraction></ix:nonFraction></span></span> shares issued and outstanding, respectively</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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<tr id="xdx_40C_eus-gaap--AdditionalPaidInCapital_i02I_maSEzEDL_z6obSkMQ1Kac" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40F_eus-gaap--RetainedEarningsAccumulatedDeficit_i02I_maSEzEDL_zMVzfoQVfH9l" style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:RetainedEarningsAccumulatedDeficit" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">12,254,191</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_405_eus-gaap--StockholdersEquity_i02TI_pp0p0_maLASEzrQl_mtSEzEDL_zDECRtIhawb7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the condensed consolidated financial statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SI_002"></span><span></span>CONDENSED
CONSOLIDATED STATEMENTS OF INCOME</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_eus-gaap--SellingExpense_i01_maCzpmG_zkPBlcDwH4C4" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:SellingExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,490,560</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:SellingExpense" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,264,364</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40B_eus-gaap--GeneralAndAdministrativeExpense_i01_maCzpmG_zXw2f8FKmdb5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">General and administrative
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:GeneralAndAdministrativeExpense" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,154,553</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:GeneralAndAdministrativeExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,925,233</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:GeneralAndAdministrativeExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,352,902</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:GeneralAndAdministrativeExpense" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,130,396</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr id="xdx_405_ecustom--BadDebtExpense_i01_maCzpmG_zblb2AcuTwzk" style="display: none; vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
<tr id="xdx_40C_eus-gaap--Depreciation_i01_maCzpmG_zEtMIhjnWvuh" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Depreciation</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">65,465</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">190,087</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">204,353</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_408_eus-gaap--OperatingExpenses_i01T_mtCzpmG_msCz31k_msOILz9mW_zFDwE1MwXcne" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Total
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingExpenses" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,481,258</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingExpenses" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">8,260,631</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingExpenses" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">8,599,113</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_408_eus-gaap--OperatingIncomeLoss_iT_pp0p0_mtOILz9mW_maILFCOzKi3_zibs1Lx1uhRj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Income From Operations</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingIncomeLoss" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,693,729</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingIncomeLoss" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,492,705</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingIncomeLoss" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,954,007</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingIncomeLoss" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,160,306</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_eus-gaap--NonoperatingIncomeExpenseAbstract_iB_z7oCdwzsLQYi" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Other Income (Expenses)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_ecustom--GainFromPaycheckProtectionPlanLoanForgiveness_i01_maCz6VT_zgFHEuRtMJ1j" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Gain from Paycheck Protection
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  <tr id="xdx_401_ecustom--GainFromRelatedPartyDebt_i01_maCz6VT_zNRjk4YM5Iwi" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_402_ecustom--GainFromDamagedGoodsInsuranceClaim_i01_maCz6VT_zPFD1P6CRG3c" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40F_eus-gaap--GainsLossesOnExtinguishmentOfDebt_i01_maCz6VT_zQlMzVHUJKKd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_ecustom--GainFromRelatedPartiesDebt_i01_maCz6VT_zEsgTvQyMGUg" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gain -
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_ecustom--GainFromSettlementOfAccountsPayable_i01_maCz6VT_zkSeZCtaPXI2" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Gain from settlement of
    accounts payable</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--InterestExpenseDebtExcludingAmortization_i01N_di_msCz6VT_zfMWgEyUnK8k" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:InterestExpenseDebtExcludingAmortization" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">231,034</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:InterestExpenseDebtExcludingAmortization" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">365,966</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_40B_eus-gaap--AmortizationOfFinancingCosts_i01N_di_msCz6VT_zRBVmkc6EeE7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Finance
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:AmortizationOfFinancingCosts" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,375</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:AmortizationOfFinancingCosts" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">18,432</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:AmortizationOfFinancingCosts" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">35,672</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:AmortizationOfFinancingCosts" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">43,268</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_401_eus-gaap--OtherNonoperatingIncomeExpense_i01T_mtCz6VT_maILFCOzKi3_zNXqMYM1vmmb" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Total
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:OtherNonoperatingIncomeExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">61,478</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OtherNonoperatingIncomeExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">294,312</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OtherNonoperatingIncomeExpense" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,214,194</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
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    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest_iT_maCzXvb_mtILFCOzKi3_z3yBeuK9wnXl" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,528,781</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,431,227</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,248,319</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_402_eus-gaap--NetIncomeLoss_iT_mtCzXvb_zGBKi5LjgRt9" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_eus-gaap--EarningsPerShareAbstract_iB_zxSxZyFhXs7g" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_407_eus-gaap--EarningsPerShareBasic_i01_zfYlm8a3OHQd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif">Basic</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_406_eus-gaap--EarningsPerShareDiluted_i01_zygQATlr1Qke" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif">Diluted</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_408_eus-gaap--EarningsPerShareBasicAndDilutedOtherDisclosuresAbstract_iB_zQeSO1yu2Es4" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_407_eus-gaap--WeightedAverageNumberOfSharesOutstandingBasic_i01_zlhNEKmSRnQb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the condensed consolidated financial statements</i></b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 35pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 5pt"></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
</tr></table>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SI_003"></span>CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_30C_112_zuJnK1rpMr5a" summary="xdx: Statement - Condensed Consolidated Statements of Cash Flows" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_401_eus-gaap--AdjustmentsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstract_i01B_zyemj9wAygTl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_eus-gaap--Depreciation_i02_maNCPBUzsBj_zagaNXs5Pc28" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">190,087</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">204,353</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_eus-gaap--AmortizationOfFinancingCosts_i02_maNCPBUzsBj_zXnDUdYmA4N3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Amortization of deferred
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  <tr id="xdx_402_eus-gaap--InventoryWriteDown_i02_maNCPBUzsBj_zIvhPsmGllli" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:InventoryWriteDown" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">482,926</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_402_eus-gaap--ProvisionForDoubtfulAccounts_i02_maNCPBUzsBj_zDorKLeZFoni" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Change in allowance for
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    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Loss from disposal of property
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  <tr id="xdx_40A_eus-gaap--ShareBasedCompensation_i02_maNCPBUzsBj_zqPsc5V93Yof" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">38,376</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_405_eus-gaap--DeferredIncomeTaxExpenseBenefit_i02_maNCPBUzsBj_z5ShQozfcR75" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:DeferredIncomeTaxExpenseBenefit" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">248,773</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_407_ecustom--GainFromPaycheckProtectionPlanLoanForgiveness_i02N_di_msNCPBUzsBj_zCZzkTvrwffk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Gain from Paycheck Protection
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:GainFromPaycheckProtectionPlanLoanForgiveness" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">448,242</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0418">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40C_ecustom--GainFromRelatedPartyDebt_i02N_di_msNCPBUzsBj_z4FJ6V94LP57" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Gain - related party</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:GainFromRelatedPartyDebt" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">11,236</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:GainFromRelatedPartyDebt" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">187,988</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_40B_ecustom--GainFromRelatedPartiesDebt_i02_pp0p0_msNCPBUzsBj_zjebEa82A5Ld" style="display: none; vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Gain - related party</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_402_eus-gaap--GainsLossesOnExtinguishmentOfDebt_i02N_di_msNCPBUzsBj_z1iPOPDUNWKk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Gain from extinguishment
    of accounts payable</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:GainsLossesOnExtinguishmentOfDebt" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">236,472</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:GainsLossesOnExtinguishmentOfDebt" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">390,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_408_ecustom--GainFromSettlementOfAccountsPayable_i02_pp0p0_msNCPBUzsBj_zd5OzPaCmA9a" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Gain from settlement of accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_405_eus-gaap--IncreaseDecreaseInOperatingCapitalAbstract_i02B_zcwQ8bdvHZzc" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Changes in operating assets
    and liabilities:</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_406_eus-gaap--IncreaseDecreaseInAccountsReceivable_i03N_di_msNCPBUzsBj_zq0OmN053qI6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Accounts receivable</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivable" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">10,123,571</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivable" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,055,589</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_402_eus-gaap--IncreaseDecreaseDueFromAffiliates_i03N_di_msNCPBUzsBj_zhTcjrnPabCj" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Due from banks</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseDueFromAffiliates" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">4,557,120</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseDueFromAffiliates" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,172,374</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_402_eus-gaap--IncreaseDecreaseInAccountsReceivableRelatedParties_i03N_di_msNCPBUzsBj_z7dpe3NxCCU7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Accounts receivable - related
    parties</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivableRelatedParties" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">159,125</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivableRelatedParties" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">100,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_405_eus-gaap--IncreaseDecreaseInInsuranceSettlementsReceivable_i03N_di_msNCPBUzsBj_zINhA3yOpCOg" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Insurance receivable</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0444">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInInsuranceSettlementsReceivable" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,268,463</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_403_eus-gaap--IncreaseDecreaseInInventories_i03N_di_msNCPBUzsBj_zyY5ajbpwjW4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt"><span style="font-family: Times New Roman, Times, Serif">Inventories</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInInventories" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,933,704</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInInventories" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,781,439</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_407_eus-gaap--IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets_i03N_di_msNCPBUzsBj_zRHJVunDoOPe" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Prepaid expenses and other
    current assets</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">63,135</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">111,305</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_406_eus-gaap--IncreaseDecreaseInOtherNoncurrentAssets_i03N_di_msNCPBUzsBj_zHglr9g9JM91" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Other non-current assets</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInOtherNoncurrentAssets" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">10,288</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInOtherNoncurrentAssets" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">52,712</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40F_eus-gaap--IncreaseDecreaseInAccountsPayable_i03_maNCPBUzsBj_zHhzcBFLqA79" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Accounts payable</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayable" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,769,157</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayable" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">689,770</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_401_eus-gaap--IncreaseDecreaseInAccruedIncomeTaxesPayable_i03_maNCPBUzsBj_z5rmpxdH9nb1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="display: none; padding-left: 20pt; text-align: left">Income Taxes Payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_408_eus-gaap--IncreaseDecreaseInAccruedLiabilities_i03_maNCPBUzsBj_zwxyI7RJYaef" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Accrued expenses</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">762,252</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">579,732</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_403_eus-gaap--IncreaseDecreaseInDueToRelatedParties_i03_maNCPBUzsBj_ztYxmKHrogu" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Due to related parties</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0465">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInDueToRelatedParties" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">184,312</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_40D_eus-gaap--IncreaseDecreaseInContractWithCustomerLiability_i03_maNCPBUzsBj_z4OluZ7iym37" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Customer deposits</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInContractWithCustomerLiability" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">129,544</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0469">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_401_ecustom--IncreaseDecreaseInRefundsDueToCustomers_i03_maNCPBUzsBj_zA0lIH7pLaM2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Refunds due to customers</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:IncreaseDecreaseInRefundsDueToCustomers" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">55,333</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:IncreaseDecreaseInRefundsDueToCustomers" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">704,744</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_40F_ecustom--IncreaseDecreaseInReserveForSalesReturns_i03_maNCPBUzsBj_zs9dOXJAko4d" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Reserve for sales returns</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:IncreaseDecreaseInReserveForSalesReturns" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,742,434</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40A_ecustom--IncreaseDecreaseInOperatingLeaseLiabilitiesNetOfOperatingLeasesRightOfUseAssets_i03_maNCPBUzsBj_z0uTJe7Xn2Bj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Operating
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:IncreaseDecreaseInOperatingLeaseLiabilitiesNetOfOperatingLeasesRightOfUseAssets" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">18,755</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_408_eus-gaap--NetCashProvidedByUsedInOperatingActivities_i01T_mtNCPBUzsBj_maCCERCzPyK_zgVFnQqUhozl" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Net
    cash (used in) provided by operating activities</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">3,113,334</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">165,496</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_402_eus-gaap--NetCashProvidedByUsedInInvestingActivitiesAbstract_iB_zzR7YsKaNmVl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Cash flows from investing
    activities</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_405_eus-gaap--PaymentsToAcquirePropertyPlantAndEquipment_i01N_di_msNCPBUzHH0_zSQpwoyAJHk2" style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Purchase
    of property and equipment</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">77,599</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">88,843</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_403_eus-gaap--NetCashProvidedByUsedInInvestingActivities_i01T_mtNCPBUzHH0_maCCERCzPyK_zc5tEsPWEa6i" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 30pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Net
    cash used in investing activities</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInInvestingActivities" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">77,599</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInInvestingActivities" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">88,843</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_40A_eus-gaap--NetCashProvidedByUsedInFinancingActivitiesAbstract_iB_z167v6fQ7Yxj" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Cash flows from financing
    activities</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40D_eus-gaap--ProceedsFromIssuanceOfCommonStock_i01_maNCPBUzR0N_z5qilNcIFTfg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Proceeds from Issuance
    of stock - net of transaction expenses</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfCommonStock" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,000,580</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0496">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40B_ecustom--PaymentOfRedemptionAndRetirementOfTreasuryStock_i01N_di_msNCPBUzR0N_zKqgIq0H1528" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Payment of redemption and
    retirement of treasury stock</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:PaymentOfRedemptionAndRetirementOfTreasuryStock" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,162,452</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0499">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_401_ecustom--NetProceedsFromRevolvingLinesOfCredit_i01_maNCPBUzR0N_zXK8SwAEjzB2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Net proceeds from revolving
    lines of credit</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:NetProceedsFromRevolvingLinesOfCredit" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">8,561,925</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:NetProceedsFromRevolvingLinesOfCredit" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">64,915</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_405_eus-gaap--ProceedsFromNotesPayable_i01_maNCPBUzR0N_zp9gVZvRqc81" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Proceeds from note payable
    - Paycheck Protection Program</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0504">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ProceedsFromNotesPayable" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">443,900</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_409_ecustom--PaymentOfDeferredFinancingCharges_i01N_di_msNCPBUzR0N_zFOS2OFG0sR7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Payment of deferred financing
    charges</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:PaymentOfDeferredFinancingCharges" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">37,501</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:PaymentOfDeferredFinancingCharges" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">73,726</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_40D_ecustom--PaymentsOnInstallmentNote_i01N_di_msNCPBUzR0N_zZaWw0y3VK9e" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Payments on installment
    notes</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:PaymentsOnInstallmentNote" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">50,709</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:PaymentsOnInstallmentNote" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">48,802</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr id="xdx_40F_eus-gaap--ProceedsFromStockOptionsExercised_i01_maNCPBUzR0N_z5TPPOPPQRg4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Proceeds from exercise
    of stock options</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ProceedsFromStockOptionsExercised" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">14,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ProceedsFromStockOptionsExercised" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">26,400</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40F_eus-gaap--RepaymentsOfSubordinatedDebt_i01N_di_msNCPBUzR0N_zBGmRiVcnzj8" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Payment on subordinated
    debt - related party</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:RepaymentsOfSubordinatedDebt" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">150,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0517">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40A_eus-gaap--RepaymentsOfDebtAndCapitalLeaseObligations_i01N_di_msNCPBUzR0N_zl7xmTXt4vUf" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Payments
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  <tr id="xdx_404_eus-gaap--CapitalLeaseObligationsIncurred_i01_zSJsTLwD3OX7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0550">-</span></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_402_eus-gaap--StockIssued1_i01_zfAfKMocDIdb" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance
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    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0553">-</span></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
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    <td style="padding-left: 10pt; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Operating
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the condensed consolidated financial statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SI_004"></span>CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#8217; EQUITY </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended December 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_30C_114_zYMq3K8DSlOd" summary="xdx: Statement - Condensed Consolidated Statements of Shareholders&apos; Equity" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="width: 1%">&#160;</td>
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    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_z2kV1YIuVqJ2" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of stock</span>, shares</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span>&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0586">-</span></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--AdjustmentsToAdditionalPaidInCapitalWarrantIssued_zQC3YbCASW1j" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of pre-funded warrants</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;-</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--AdjustmentsToAdditionalPaidInCapitalStockIssuedIssuanceCosts_iN_di_zSqW8brLTAJ3" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Payment of stock issuance expenses</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;-</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--StockIssuedDuringPeriodValueOther_zweYNwTIBry8" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of stock for stock issuance expenses</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--StockIssuedDuringPeriodSharesOther_zO7KoUqQ7Ja3" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of stock for stock issuance expenses, shares</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--TreasuryStockRetiredCostMethodAmount_iN_di_zTDRGK8cQh2a" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Redemption and retirement of treasury shares</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--TreasuryStockSharesRetired_iN_di_z2NiDRpGIJyh" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Redemption and retirement of treasury
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    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_404_ecustom--IssuanceOfCommonStockDirectors_zVIbD1VOWaoa" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of common stock - directors</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_ecustom--IssuanceOfCommonStockDirectorsShares_z3KpMRRMe04k" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of common stock - directors</span>, shares</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_ecustom--IssuanceOfCommonStockNonemployee_z9xuEY26Qk16" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of common stock - non-employee</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_404_ecustom--IssuanceOfCommonStockNonemployeeShares_zb2OR3Lsm0x1" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of common stock -
    non-employee</span>, shares</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue_zllDuoHRFMq1" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Employee compensation-stock option</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0661">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue" contextRef="From2021-10-012021-12-31_us-gaap_AdditionalPaidInCapitalMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,649</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: center"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0663">-</span></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0664">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,649</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40A_ecustom--IssuanceOfCommonStockDirectors_zcmCnRGIFSU2" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif">Issuance of common stock - directors</span></td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td title="Balance, shares" style="font-weight: bold; text-align: right">&#160;</td><td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl0667">&#160;</span></td><td style="font-weight: bold; text-align: right">-</td><td style="font-weight: bold; text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td title="Balance, shares" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="-sec-ix-hidden: xdx2ixbrl0670">-</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_ecustom--IssuanceOfCommonStockDirectorsShares_zdFc3y3dmIua" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40B_eus-gaap--StockIssuedDuringPeriodValueStockOptionsExercised_zqoC2Pxpfbdd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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  <tr id="xdx_432_c20201001__20201231_eus-gaap--StockholdersEquity_iS_zdcIQ8lK70pd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_ecustom--IssuanceOfCommonStockDirectors_zazeUyOjE3jc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--StockIssuedDuringPeriodValueStockOptionsExercised_zCAF1VB8aZ4i" style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#8217; EQUITY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the nine months ended December 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" summary="xdx: Statement - Condensed Consolidated Statements Of Shareholders&apos; Equity (Unaudited)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
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    <td style="width: 1%">&#160;</td>
    <td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_407_eus-gaap--NetIncomeLoss_zKFP1LmZ4wod" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_eus-gaap--StockIssuedDuringPeriodValueNewIssues_zf9FRwTEXr85" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_403_eus-gaap--AdjustmentsToAdditionalPaidInCapitalWarrantIssued_zLccJB9akPOa" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of pre-funded warrants</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: center"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0786">-</span></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AdjustmentsToAdditionalPaidInCapitalWarrantIssued" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,881,667</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_40F_eus-gaap--AdjustmentsToAdditionalPaidInCapitalStockIssuedIssuanceCosts_iN_di_zK9ns0HOODl3" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Payment of stock issuance expenses</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: center"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0793">-</span></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0794">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_406_eus-gaap--StockIssuedDuringPeriodValueOther_ztmoDShb0bF" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Issuance of stock for stock issuance expenses</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td title="Balance, shares" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: center"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: xdx2ixbrl0800">-</span></span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0801">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl0802">&#160;</span></span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_407_eus-gaap--TreasuryStockRetiredCostMethodAmount_iN_di_z2wSSWGfxjMh" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_409_ecustom--IssuanceOfCommonStockNonemployee_zNOmAkLtUU9b" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td>&#160;</td>
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  <tr id="xdx_439_c20200401__20201231_eus-gaap--StockholdersEquity_iS_zFEE0xLgsj08" style="vertical-align: bottom; background-color: White">
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    <td>&#160;</td>
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  <tr id="xdx_407_eus-gaap--StockIssuedDuringPeriodValueStockOptionsExercised_zwJdQhBM45Gb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the condensed consolidated financial statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SI_005"></span>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:BasisOfAccounting"><p id="xdx_800_eus-gaap--BasisOfAccounting_zjygPcgEuhqj" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
1 &#8211; <span id="xdx_824_zems1qTuL9h6">BASIS OF PRESENTATION </span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>OVERVIEW
</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine Company, Inc., a Delaware corporation (the &#8220;Company&#8221;, &#8220;SMC&#8221;, &#8220;The Singing Machine&#8221;)
and its three wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (&#8220;Macau Subsidiary&#8221;), SMC Logistics, Inc.
(&#8220;SMC-L&#8221;) and SMC-Music, Inc.(&#8220;SMC-M&#8221;) are primarily engaged in the development, marketing, and sale of consumer
karaoke audio systems, accessories, musical instruments and musical recordings. The products are sold by SMC to retailers and distributors
for resale to consumers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:LiquidityTextBlock"><p id="xdx_800_ecustom--LiquidityTextBlock_zTlW1Q3u0cak" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; <span id="xdx_824_z3uo00cMRWie">LIQUIDITY AND RECENT EQUITY EVENTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company for the nine months ended December 31, 2021 reported net income of approximately $<span id="xdx_90A_eus-gaap--NetIncomeLoss_pn3p0_c20210401__20211231_zoiAu1kdMrl" title="Net loss"><ix:nonFraction name="us-gaap:NetIncomeLoss" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD">2,000,000</ix:nonFraction></span> and used cash in operating activities
of approximately $<span id="xdx_90F_eus-gaap--NetCashProvidedByUsedInOperatingActivities_iN_pn3d_di_c20210401__20211231_zElLIgHA0Ph3" title="Cash used in operating activities"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" sign="-" unitRef="USD">3,113,000</ix:nonFraction></span>. In May, 2020 the Company received loan proceeds from Crestmark Bank in the amount of approximately $<span><span id="xdx_90F_eus-gaap--ProceedsFromLoanOriginations1_pp0p0_c20200504__20200505__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zWXiSUxYqF5l" title="Proceeds from loan"><ix:nonFraction name="us-gaap:ProceedsFromLoanOriginations1" contextRef="From2020-05-042020-05-05_custom_PaycheckProtectionProgramMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">444,000</ix:nonFraction></span></span>
under the Paycheck Protection Program (&#8220;PPP&#8221;) established by the government to assist companies with financial relief due
to COVID-19. The Company used the loan proceeds for loan forgiveness eligible purposes, including payroll, benefits, rent and utilities,
and maintained its existing payroll levels during the forgiveness eligible period. In June 2021 the Company received notification from
the SBA that the loan had been forgiven in its entirety. For the nine months ended December 31, 2021, a gain of approximately $<span id="xdx_905_eus-gaap--DebtInstrumentDecreaseForgiveness_c20210401__20211231_zhZJrV1VwH1" title="Debt forgiveness"><ix:nonFraction name="us-gaap:DebtInstrumentDecreaseForgiveness" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">448,000</ix:nonFraction></span>
(including principal and interest) from the forgiveness of the loan was included in other income and expenses in the accompanying condensed
consolidated statements of income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2021, the Company entered into a stock redemption agreement (the &#8220;Redemption Agreement&#8221;) with its majority shareholders,
Koncepts International Limited (&#8220;Koncepts&#8221;) and Treasure Green Holdings, Ltd. (&#8220;Treasure Green&#8221;), pursuant to
which the Company redeemed <span id="xdx_909_eus-gaap--StockRedeemedOrCalledDuringPeriodShares_pp0p0_c20210801__20210831__us-gaap--TypeOfArrangementAxis__custom--RedemptionAgreementMember_zXCcd4dJhCM9" title="Shares redeemed"><ix:nonFraction name="us-gaap:StockRedeemedOrCalledDuringPeriodShares" contextRef="From2021-08-012021-08-31_custom_RedemptionAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="Shares">19,623,155</ix:nonFraction></span> shares of common stock of the Company (the &#8220;Redeemed Shares&#8221;). The closing of the transactions
set forth in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were assigned and transferred
back to the Company and retired.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2021, the Company entered into a securities purchase agreement (the &#8220;Purchase Agreement&#8221;) with large institutional
investors and a strategic investor for private placement of (i) <span id="xdx_907_eus-gaap--CommonStockSharesIssued_iI_c20210805__us-gaap--TypeOfArrangementAxis__custom--PurchaseAgreementMember_zyYWHiWoJQJl" title="Common stock, shares, issued"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-08-05_custom_PurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,500,001</ix:nonFraction></span> shares of its common stock (the &#8220;Shares&#8221;) together
with common warrants to purchase up to <span id="xdx_90B_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_pp0p0_c20210805__us-gaap--TypeOfArrangementAxis__custom--PurchaseAgreementMember_zlnTEvol84a2" title="Warrants to purchase common stock"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" contextRef="AsOf2021-08-05_custom_PurchaseAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="Shares">16,500,000</ix:nonFraction></span> shares of common stock with an exercise price of $<span id="xdx_90E_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_c20210805__us-gaap--TypeOfArrangementAxis__custom--PurchaseAgreementMember_zZrxiM6lxad9" title="Class of warrant or right, exercise price of warrants or rights"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2021-08-05_custom_PurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.35</ix:nonFraction></span> per share, and (ii) <span id="xdx_901_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_c20210805__us-gaap--StatementEquityComponentsAxis__custom--PreFundedWarrantsMember_zWMucqjIzjlg" title="Issuance of warrant shares"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2021-08-05_custom_PreFundedWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,833,333</ix:nonFraction></span>
pre-funded warrants (&#8220;Pre-Funded Warrants&#8221;) with each Pre-Funded Warrant exercisable for one share of common stock at an
exercise price of $<span id="xdx_90C_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20210805__us-gaap--StatementEquityComponentsAxis__custom--PreFundedWarrantsMember_zl5TpSdlkHdd" title="Exercise price of warrants"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2021-08-05_custom_PreFundedWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></span> per share, together with Common Warrants to purchase up to <span id="xdx_905_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_c20210805__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_zE2de70P0W8b" title="Issuance of warrant shares"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" contextRef="AsOf2021-08-05_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,833,333</ix:nonFraction></span> shares of common stock at an exercise price
of $<span id="xdx_908_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_c20210805__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_zrjXfnBsmCm5" title="Exercise price of warrants"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2021-08-05_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.35</ix:nonFraction></span> per share (the &#8220;Private Placement&#8221;). Shares issuable upon the exercise of the Pre-Funded Warrants and Common Warrants
are hereinafter referred to as the &#8220;Warrant Shares&#8221;. The closing of the Private Placement took place on August 10, 2021,
when the Shares, Common Warrants, and Pre-Funded Warrants were delivered to the purchasers and funds, in the amount of approximately
$<span id="xdx_904_eus-gaap--ProceedsFromIssuanceOrSaleOfEquity_pp0p0_c20210801__20210831_zcPy4yszAZh6" title="Proceeds from equity"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOrSaleOfEquity" contextRef="From2021-08-012021-08-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,832,000</ix:nonFraction></span>, were received by the Company. Approximately $<span id="xdx_904_eus-gaap--ProceedsFromIssuanceOrSaleOfEquity_pp0p0_c20210801__20210831__us-gaap--TypeOfArrangementAxis__custom--RedemptionAgreementMember_zZzJOcTFhPsh"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOrSaleOfEquity" contextRef="From2021-08-012021-08-31_custom_RedemptionAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,162,000</ix:nonFraction></span> of the funds received were used to execute the Redemption Agreement
and the Company paid approximately $<span id="xdx_90F_ecustom--PaymentsOnRedeemedShares_pp0p0_c20210801__20210831_zifMY6tRE4s5" title="Payments on redeemed shares"><ix:nonFraction name="SMDM:PaymentsOnRedeemedShares" contextRef="From2021-08-012021-08-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,162,000</ix:nonFraction></span> to Koncepts and Treasure Green. The Redeemed Shares were retired and are available for
reissuance in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that current working capital, cash expected to be generated from our operating forecast, along with the availability of cash
from our credit facilities (See Note 6 &#8211; BANK FINANCING) assuming that they are revised and or extended, will be adequate to meet
the Company&#8217;s liquidity requirements for at least twelve months from the filing of this report. As both the Crestmark Bank (&#8220;Crestmark
Facility&#8221;) and the Iron Horse Credit (&#8220;IHC&#8221;) Facility (&#8220;IHC Facility&#8221;) are set to expire on June 15, 2022,
the Company expects to negotiate a revision or extension of these debt facilities upon their maturity, however, there can be no assurance
that such revision or extension will occur or at what terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_80E_eus-gaap--SignificantAccountingPoliciesTextBlock_zOhlv4yBcMtc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
3 - <span id="xdx_82E_zwPmvFoZiUnl">SUMMARY OF ACCOUNTING POLICIES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p id="xdx_845_eus-gaap--ConsolidationPolicyTextBlock_zDoOvPlz0EE7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zbUyRUXYxCdl">PRINCIPLES
OF CONSOLIDATION AND BASIS OF PRESENTATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company
accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial
statements for the three months and nine months ended December 31, 2021 and 2020 have been prepared in accordance with accounting principles
generally accepted in the United States of America (&#8220;US GAAP&#8221;) applicable to interim financial information and the requirements
of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the
information and disclosures required by US GAAP for complete consolidated financial statements. In the opinion of management, such condensed
consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation
of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results
of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 48 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
condensed consolidated balance sheet information as of March 31, 2021 was derived from the audited consolidated financial statements
included in the Company&#8217;s Annual Report on Form 10-K for the year ended March 31, 2021. The interim condensed consolidated financial
statements should be read in conjunction with that report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_844_eus-gaap--UseOfEstimates_zggaFuzySski" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zYQc6GU6im04">USE
OF ESTIMATES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty
reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination
of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company&#8217;s
financial condition. However, circumstances could change which may alter future expectations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:TradeAndOtherAccountsReceivablePolicy"><p id="xdx_840_eus-gaap--TradeAndOtherAccountsReceivablePolicy_zOE9TJT3GN8f" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_zojMFrRn9yX4">COLLECTABILITY
OF ACCOUNTS RECEIVABLE</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine&#8217;s allowance for doubtful accounts is based on management&#8217;s estimates of the creditworthiness of its customers,
current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient
to respond to normal business conditions. Management sets 100% reserves for customers in bankruptcy and other reserves based upon historical
collection experience. Should business conditions deteriorate or any major customer default on its obligations to the Company, this allowance
may need to be significantly increased, which would have a negative impact on operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is subject to chargebacks from customers for co-op program incentives, defective returns, return freight and handling charges
that are deducted from open invoices and reduce collectability of open invoices.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><p id="xdx_840_eus-gaap--ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock_zupuSzGZxDYg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_869_zsljKYEl7rse">FOREIGN
CURRENCY TRANSLATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S.
dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs,
and expenses. Net gains and losses resulting from foreign exchange transactions are recorded in the condensed consolidated statements
of income and translations are recorded in a separate component of shareholders&#8217; equity. Any such amounts were not material during
the periods presented.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ConcentrationRiskCreditRisk"><p id="xdx_84E_eus-gaap--ConcentrationRiskCreditRisk_zGRpHmCAaqSh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b><span id="xdx_864_zECSClCKIWRj">CONCENTRATION
OF CREDIT RISK</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
times, the Company maintains cash in United States bank accounts that are more than the Federal Deposit Insurance Corporation insured
amounts. The Company also maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at
December 31, 2021 and March 31, 2021 are approximately $<span id="xdx_90A_eus-gaap--ForeignFinancialInstitutionsActualDeposits_iI_pp0p0_c20211231_ziY8QpinOXvg" title="Foreign financial institutions actual deposits"><ix:nonFraction name="us-gaap:ForeignFinancialInstitutionsActualDeposits" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">125,000</ix:nonFraction></span> and $<span id="xdx_900_eus-gaap--ForeignFinancialInstitutionsActualDeposits_iI_pp0p0_c20210331_zcuwzybko0cd" title="Foreign financial institutions actual deposits"><ix:nonFraction name="us-gaap:ForeignFinancialInstitutionsActualDeposits" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">225,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:InventoryPolicyTextBlock"><p id="xdx_847_eus-gaap--InventoryPolicyTextBlock_zJvn5xDCquvk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_zrrUTjplMdEl">INVENTORY</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable
value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected
future inventory returns due to warranty and allowance programs. As of December 31, 2021 and March 31, 2021 the estimated amounts for
these future inventory returns were approximately $<span id="xdx_907_ecustom--FutureInventoryReturns_iI_pp0p0_c20211231_znm7C4sIM6ib" title="Future inventory returns"><ix:nonFraction name="SMDM:FutureInventoryReturns" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,978,000</ix:nonFraction></span> and $<span id="xdx_900_ecustom--FutureInventoryReturns_iI_pp0p0_c20210331_zOUJuYXt99Mb" title="Future inventory returns"><ix:nonFraction name="SMDM:FutureInventoryReturns" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">528,000</ix:nonFraction></span>, respectively. The Company reduces inventory on hand to its
net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below
its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below
cost. Management regularly reviews the Company&#8217;s investment in inventories for such declines in value. As of December 31, 2021
and March 31, 2021 the Company had inventory reserves of approximately $<span id="xdx_901_ecustom--InventoryReserves_iI_pp0p0_c20211231_z7YZgT7w5QGl" title="Inventory reserves"><ix:nonFraction name="SMDM:InventoryReserves" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">934,000</ix:nonFraction></span> and $<span id="xdx_909_ecustom--InventoryReserves_iI_pp0p0_c20210331_zvZFvQ57pbn8" title="Inventory reserves"><ix:nonFraction name="SMDM:InventoryReserves" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">636,000</ix:nonFraction></span>, respectively for estimated excess and obsolete
inventory.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:FinanceLoansAndLeasesReceivablePolicy"><p id="xdx_84E_eus-gaap--FinanceLoansAndLeasesReceivablePolicy_zqCF2KZguBj5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zhQZK7HyDCI6">DEFERRED
FINANCING COSTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company classifies deferred financing costs incurred when obtaining or renewing revolving credit facilities as assets in the accompanying
condensed consolidated balance sheets as it is likely that during certain periods during non-peak season there will be no balance due
on these credit facilities to offset the deferred financing costs. In June 2021, the Company incurred approximately $<span id="xdx_903_eus-gaap--DeferredFinanceCostsNet_iI_pp0p0_c20210630_zSf8o7f2fQ9b" title="Deferred financing costs"><ix:nonFraction name="us-gaap:DeferredFinanceCostsNet" contextRef="AsOf2021-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">38,000</ix:nonFraction></span> in deferred
financing costs associated with the one-year renewal of the IHC Facility which are being amortized over twelve months and were classified
as current assets on the accompanying condensed consolidated balance sheets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock"><p id="xdx_84D_eus-gaap--ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock_zxFssTHnOlo3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_z4XuQNjuPP26">LONG-LIVED
ASSETS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the
carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying
amount, </span><span style="font-family: Times New Roman, Times, Serif">the carrying amounts are reduced to fair value and an impairment
loss is recognized in accordance with Financial Accounting Standards Board (&#8220;FASB&#8221;) Accounting Standards Codification (&#8220;ASC&#8221;)
360-10-05, &#8220;Accounting for the Impairment or Disposal of Long-Lived Assets.&#8221; No <span style="font-size: 10pt">impairment
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 49 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December,
2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:LesseeLeasesPolicyTextBlock"><p id="xdx_847_eus-gaap--LesseeLeasesPolicyTextBlock_z2a1cUA62xAk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zyF5lWISZi1i">LEASES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows FASB ASC 842, &#8220;Leases&#8221;. The ASC requires lessees to recognize leases on the balance sheet and disclose key
information about leasing arrangements. The standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU
asset and lease liability on the balance sheet for all leases with a term longer than twelve months. Leases are classified as finance
or operating, with classification affecting the pattern and classification of expense recognition in the income statement. (See Note
7&#8211; LEASES).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company&#8217;s
right to use an underlying asset for the lease term and lease liabilities represent the Company&#8217;s obligation to make lease payments
arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date. The liability is equal to
the present value of the remaining minimum lease payments. The asset is based on the liability, subject to certain adjustments. Operating
leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result
in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). As the interest rate implicit in the
Company&#8217;s operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease
payments. The Company utilizes the financing interest rate for its finance leases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock"><p id="xdx_844_eus-gaap--PropertyPlantAndEquipmentPolicyTextBlock_z4MqSd4mBhNl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86E_zIr5Ee2ZgZC3">PROPERTY
AND EQUIPMENT </span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property
and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred.
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated
and straight-line methods.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy"><p id="xdx_844_eus-gaap--FairValueOfFinancialInstrumentsPolicy_zhX58p2S65Fg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_867_zREHx7XkL1R">FAIR
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
follow FASB ASC 825, &#8220;Financial Instruments&#8221;, which requires disclosures of information about the fair value of certain financial
instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument
is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale
or liquidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
carrying amounts of the Company&#8217;s short-term financial instruments, including accounts receivable, due from related parties, accounts
payable, accrued expenses, customer deposits, refunds due to customers, and due to related parties approximates fair value due to the
relatively short period to maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment
notes approximate fair value either due to the relatively short period to maturity or the related interest is accrued at a rate similar
to market rates. The carrying amounts on the revolving line of credit approximates fair value due the relatively short period to maturity
and related interest accrued at market rates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes revenue in accordance with FASB ASC 606, &#8220;Revenue from Contracts with Customers&#8221;. All revenue is generated
from contracts with customers. The Company recognizes revenue when the goods are delivered and control of the goods sold is transferred
to the customer, in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected
to be entitled in exchange for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification
of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are
distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5)
recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s contracts with customers consist of one performance obligation (the sale of the Company&#8217;s products). The Company&#8217;s
contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations
once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive
for the sale of these goods.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font: normal 10pt Times New Roman, Times, Serif">The
Company selectively participates in a retailer&#8217;s co-op promotion incentives to maximize sales of the Company&#8217;s products on
the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our
customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair
value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers
are recorded as a reduction to net sales. For the three months ended December 31, 2021 and 2020 co-op promotion incentives were approximately
$<span id="xdx_909_eus-gaap--AdvertisingExpense_pp0p0_c20211001__20211231_z66Jm7TBZq0d" title="Co-op promotion incentives"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">796,000</ix:nonFraction></span> and $<span id="xdx_904_eus-gaap--AdvertisingExpense_pp0p0_c20201001__20201231_zhrfGl4AF457" title="Co-op promotion incentives"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">858,000</ix:nonFraction></span>, respectively. For the nine months ended December 31, 2021 and 2020 co-op promotion incentives were approximately
$<span id="xdx_90A_eus-gaap--AdvertisingExpense_pp0p0_c20210401__20211231_zp1KYkvJ3Pra" title="Co-op promotion incentives"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,805,000</ix:nonFraction></span> and $<span id="xdx_90A_eus-gaap--AdvertisingExpense_pp0p0_c20200401__20201231_zE4jpZSDANpa" title="Co-op promotion incentives"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,032,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Costs
incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in
general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions
are included in selling expenses in the accompanying condensed consolidated statements of income as our underlying customer agreements
are less than one year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke
hardware and the Company has no other material business segments (See Note 11 &#8211; Geographical Information).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 50 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the
occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending
on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant
reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
The Company estimates variable consideration under our return allowance programs for goods returned from our customers for various reasons,
whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:DisaggregationOfRevenueTableTextBlock"><p id="xdx_89F_eus-gaap--DisaggregationOfRevenueTableTextBlock_zU27KA3rnMH7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
is derived from five different major product lines. Disaggregated revenue from these product lines for the three and nine months ended
December 31, 2021 and 2020 consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B7_zW2fPxGTWYd8" style="display: none">SCHEDULE
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_49D_20211001__20211231_znslIqwKWRAc" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_49B_20201001__20201231_zqkVDfq4NvYg" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_49D_20210401__20211231_zUJLIVRj8mId" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_490_20200401__20201231_zOjY4V3JGL8i" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom">
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    Months Ended</span></td><td style="padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    Months Ended</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
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</ix:nonNumeric><p id="xdx_8A7_zJRHf60ftDLa" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:ShippingAndHandlingCostsPolicyTextBlock"><p id="xdx_841_ecustom--ShippingAndHandlingCostsPolicyTextBlock_zyBSViRy29cb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zHcuutzLiIS6">SHIPPING
AND HANDLING COSTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shipping
and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to
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expenses were approximately $<span id="xdx_90B_ecustom--ShippingAndHandlingExpenses_pp0p0_c20210401__20211231_zLKssaWyJuTf" title="Shipping and handling expenses"><ix:nonFraction name="SMDM:ShippingAndHandlingExpenses" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">654,000</ix:nonFraction></span> and $<span id="xdx_908_ecustom--ShippingAndHandlingExpenses_pp0p0_c20200401__20201231_zVjY3HXsUOqj" title="Shipping and handling expenses"><ix:nonFraction name="SMDM:ShippingAndHandlingExpenses" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">900,000</ix:nonFraction></span>, respectively. These expenses are classified as a component of selling expenses in
the accompanying condensed consolidated statements of income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><p id="xdx_84A_eus-gaap--ShareBasedCompensationOptionAndIncentivePlansPolicy_zp2LnccoshDl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zxNliXwFvTxk">STOCK
BASED COMPENSATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the provisions of the FASB ASC 718-20, &#8220;Compensation &#8211; Stock Compensation Awards Classified as Equity&#8221;.
ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed
in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes
option valuation model to value stock options. Employee stock option compensation expense for the three and nine months ended December
31, 2021 and 2020 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service
period for the entire portion of the award. For the three months ended December 31, 2021 and 2020, the stock option expense was approximately
$<span id="xdx_90D_eus-gaap--StockOptionPlanExpense_pp0p0_c20211001__20211231_z7H4QZJlH6Lg" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,000</ix:nonFraction></span> and $<span id="xdx_904_eus-gaap--StockOptionPlanExpense_pp0p0_c20201001__20201231_zBTA7QCBxdm2" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,000</ix:nonFraction></span>, respectively. For the nine months ended December 31, 2021 and 2020, the stock option expense was approximately $<span id="xdx_901_eus-gaap--StockOptionPlanExpense_pp0p0_c20210401__20211231_zLkQ8OSieGWk" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">16,000</ix:nonFraction></span>
and $<span id="xdx_90C_eus-gaap--StockOptionPlanExpense_pp0p0_c20200401__20201231_zWutmpDXyZK2" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ResearchAndDevelopmentExpensePolicy"><p id="xdx_842_eus-gaap--ResearchAndDevelopmentExpensePolicy_zBNzcn9qTMx2" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_867_z653C606e2c4">RESEARCH
AND DEVELOPMENT COSTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research
and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative
expenses in the condensed consolidated statements of income. For the three months ended December 31, 2021 and 2020, these amounts totaled
approximately $<span id="xdx_908_eus-gaap--ResearchAndDevelopmentExpense_pp0p0_c20211001__20211231_zCRPZItAgjqg" title="Research and development costs"><ix:nonFraction name="us-gaap:ResearchAndDevelopmentExpense" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">11,000</ix:nonFraction></span> and $<span id="xdx_90F_eus-gaap--ResearchAndDevelopmentExpense_pp0p0_c20201001__20201231_zsOCHyFUvIF2" title="Research and development costs"><ix:nonFraction name="us-gaap:ResearchAndDevelopmentExpense" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">33,000</ix:nonFraction></span>, respectively. For the nine months ended December 31, 2021 and 2020, these amounts totaled $<span id="xdx_902_eus-gaap--ResearchAndDevelopmentExpense_pp0p0_c20210401__20211231_zEldVqppX252" title="Research and development costs"><ix:nonFraction name="us-gaap:ResearchAndDevelopmentExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">61,000</ix:nonFraction></span>
and $<span id="xdx_906_eus-gaap--ResearchAndDevelopmentExpense_pp0p0_c20200401__20201231_zt74FyGybfxg" title="Research and development costs"><ix:nonFraction name="us-gaap:ResearchAndDevelopmentExpense" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">48,000</ix:nonFraction></span> respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_84C_eus-gaap--IncomeTaxPolicyTextBlock_zGBnbXTJrLeg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_865_zLdaW0sgOSja">INCOME
TAXES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the provisions of FASB ASC 740 &#8220;Accounting for Income Taxes.&#8221; Under the asset and liability method of ASC
740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized,
a valuation allowance is recognized.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management&#8217;s best estimate
of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. For the nine months
ended December 31, 2021 and 2020 we estimated our effective tax rate to be approximately <span id="xdx_90F_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_dp_c20210401__20211231_zES2i1UhGOye" title="Effective income tax rate, percentage"><ix:nonFraction name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11</ix:nonFraction></span>% and <span id="xdx_90F_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_dp_c20200401__20201231_zR6dada5LV81" title="Effective income tax rate, percentage"><ix:nonFraction name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">23</ix:nonFraction></span>%, respectively. As of December 31,
2021 and March 31, 2021 the Singing Machine had net deferred tax assets of approximately $<span id="xdx_903_ecustom--NetDeferredTaxAssets_iI_c20211231_zxXlFFl05eBb" title="Deferred tax assets"><ix:nonFraction name="SMDM:NetDeferredTaxAssets" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">638,000</ix:nonFraction></span> and $<span id="xdx_90F_ecustom--NetDeferredTaxAssets_iI_c20210331_ztmCEVUq8ov7" title="Deferred tax assets"><ix:nonFraction name="SMDM:NetDeferredTaxAssets" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">887,000</ix:nonFraction></span>, respectively. The Company
recorded an income tax provision of approximately $<span id="xdx_909_eus-gaap--IncomeTaxExpenseBenefit_pn3p0_c20211001__20211231_zgsWUqzg2my2" title="Income tax provision"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD">103,000</ix:nonFraction></span> and $<span id="xdx_908_eus-gaap--IncomeTaxExpenseBenefit_pn3d_c20201001__20201231_zJkYAuK3ws3k" title="Income tax provision"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="-3" unitRef="USD">264,000</ix:nonFraction></span> for the three months ended December 31, 2021 and 2020, respectively.
The Company recorded an income tax provision of approximately $<span id="xdx_903_eus-gaap--IncomeTaxExpenseBenefit_pn3d_c20210401__20211231_zfVZ4aPATPMj" title="Income tax provision"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" unitRef="USD">249,000</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--IncomeTaxExpenseBenefit_pn3d_c20200401__20201231_zmBpzCtEjecl" title="Income tax provision"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="-3" unitRef="USD">1,006,000</ix:nonFraction></span> for the nine months ended December 31, 2021 and
2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 51 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed
tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is
reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the
largest benefit that has a <span id="xdx_90C_eus-gaap--IncomeTaxExaminationLikelihoodOfUnfavorableSettlement_c20210401__20211231_zIF0phRCA1Q2" title="Percentage of tax benefits recognized likelihood of being realized"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" name="us-gaap:IncomeTaxExaminationLikelihoodOfUnfavorableSettlement">greater than 50%</ix:nonNumeric></span> likelihood of being realized upon ultimate resolution. As of December 31, 2021, there were
no uncertain tax positions that resulted in any adjustment to the Company&#8217;s provision for income taxes. The Company recognizes
interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities
recorded for accrued interest or penalties related to uncertain tax provisions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:EarningsPerSharePolicyTextBlock"><p id="xdx_84C_eus-gaap--EarningsPerSharePolicyTextBlock_zO1NikeO41jc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_863_zy6H1P4Tex81">COMPUTATION
OF EARNINGS PER SHARE</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfAntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareTextBlock"><p id="xdx_896_eus-gaap--ScheduleOfAntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareTextBlock_ztk72iQm456c" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Computation
of dilutive shares for the three and nine months ended December 31, 2021 and 2020 are as follows:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif"><span style="font: 10pt Times New Roman, Times, Serif">&#160;<span id="xdx_8B2_zMX9cyheudya" style="display: none">SCHEDULE
OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE</span></span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 7pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td colspan="2" id="xdx_496_20211001__20211231_z8KsLWnaNiD4" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">For
                                            the three</span></p>
                                                                                                                          <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">months
                                            ended</span></p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">December
                                            31, 2021</span></p></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td colspan="2" id="xdx_492_20201001__20201231_zsTC0PpsOOZe" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">For
                                            the three</span></p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">months
                                            ended December 31, 2020</span></p></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td colspan="2" id="xdx_490_20210401__20211231_zobs6obfB7Hg" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">For
                                            the nine</span></p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">months
                                            ended December 31, 2021</span></p></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
    <td colspan="2" id="xdx_49E_20200401__20201231_zPGoGTM65po4" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">For
                                            the nine</span></p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">months
                                            ended December 31, 2020</span></p></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td></tr>
  <tr id="xdx_407_eus-gaap--WeightedAverageNumberOfSharesOutstandingBasic_zHDVTF54RiBl" style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 7pt Times New Roman, Times, Serif; width: 35%"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">Basic
    weighted average common shares outstanding</span></td><td style="font: 7pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#160;</span></td>
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</ix:nonNumeric><p id="xdx_8AF_zDggyBLtJtIh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Basic
net income per share is based on the weighted average number of shares of common stock outstanding during the period. Pre-funded warrants
to purchase <span id="xdx_906_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_c20210805__us-gaap--StatementEquityComponentsAxis__custom--PreFundedWarrantsMember_zd95LqCKMbWj" title="Warrants to purchase"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" contextRef="AsOf2021-08-05_custom_PreFundedWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,833,333</ix:nonFraction> </span>shares of common stock are included in basic weighted average shares outstanding as deemed outstanding. Diluted
net income per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money
options and the proceeds thereof were used to purchase shares of the Company&#8217;s common stock at the average market price during
the period using the treasury stock method. For the three and nine months ended December 31, 2021, options to purchase approximately
<span id="xdx_907_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20211001__20211231_zjh52CrDD1Sa" title="Potentially dilutive securities"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">225,000</ix:nonFraction></span> and <span id="xdx_907_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20210401__20211231_zTzHbfRPVPml" title="Potentially dilutive securities"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">322,000</ix:nonFraction></span> shares of common stock, respectively, have been included in the calculation of diluted net income per share as compared
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per share for the three and nine months ended December 31, 2020. For the three and nine months ended December 31, 2021, options and warrants
to purchase approximately <span id="xdx_901_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20211001__20211231__us-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareByAntidilutiveSecuritiesAxis__custom--OptionsAndWarrantsMember_znCz6vWWVXag" title="Potentially dilutive securities"><span id="xdx_90E_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20210401__20211231__us-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareByAntidilutiveSecuritiesAxis__custom--OptionsAndWarrantsMember_z00jUVDRaGJ1" title="Potentially dilutive securities"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2021-10-012021-12-31_custom_OptionsAndWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2021-04-012021-12-31_custom_OptionsAndWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">35,416,667</ix:nonFraction></ix:nonFraction></span></span> shares of common stock, have been excluded in the calculation of diluted net income per share as
compared to approximately <span id="xdx_90F_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20201001__20201231__us-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareByAntidilutiveSecuritiesAxis__custom--OptionsAndWarrantsMember_zrpfeBre2v88" title="Potentially dilutive securities"><span id="xdx_900_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20200401__20201231__us-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareByAntidilutiveSecuritiesAxis__custom--OptionsAndWarrantsMember_zCtQeqC3Iv76" title="Potentially dilutive securities"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2020-10-012020-12-31_custom_OptionsAndWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2020-04-012020-12-31_custom_OptionsAndWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">730,000</ix:nonFraction></ix:nonFraction></span></span> shares that were excluded in the calculation of diluted net income per share for the three and nine
months ended December 31, 2020 as the result would have been anti-dilutive. </span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_842_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_ziSEtqM2iR98" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_zSj0NDay7k1c">RECENT
ACCOUNTING PRONOUNCEMENTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
June 2016, the FASB issued ASU 2016-13, &#8220;Financial Instruments&#8212;Credit Losses&#8221; <i>(Topic 326)</i>. This ASU represents
a significant change in the current accounting model by requiring immediate recognition of management&#8217;s estimates of current expected
credit losses. Under the prior model, losses were recognized only as they were incurred, which delayed recognition of expected losses
that might not yet have met the threshold of being probable. </span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
amendments in ASU 2016-03 for smaller reporting companies are effective for the Company beginning April 1, 2023, including interim periods
within that fiscal year. Early adoption is permitted. We are currently evaluating the potential effects of this updated guidance on our
condensed consolidated financial statements and related disclosures.</span></p>
<!-- Field: Split-Segment; Name: 001 -->
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:InventoryDisclosureTextBlock"><p id="xdx_802_eus-gaap--InventoryDisclosureTextBlock_z01kOshZOPCb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
4 - <span id="xdx_822_zDNu8whzadn3">INVENTORIES, NET</span> </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfInventoryCurrentTableTextBlock"><p id="xdx_89D_eus-gaap--ScheduleOfInventoryCurrentTableTextBlock_z5lVuxqtnzx2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
are comprised of the following components:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;<span id="xdx_8B2_zHB8LlIOAft9" style="display: none">SCHEDULE
OF INVENTORY</span></b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 70%">
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  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr id="xdx_404_eus-gaap--InventoryValuationReserves_iI_pp0p0_msINz1sZ_zpEsseMG7DJ8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:InventoryValuationReserves" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">636,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr id="xdx_402_eus-gaap--OtherInventoryNetOfReserves_iTI_pp0p0_mtINz1sZ_zOo34Zr1JIXd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">Inventories, net</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OtherInventoryNetOfReserves" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">11,126,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OtherInventoryNetOfReserves" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,490,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
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</ix:nonNumeric><p id="xdx_8AA_z4mgNaQh066d" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 52 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p id="xdx_80F_eus-gaap--PropertyPlantAndEquipmentDisclosureTextBlock_zehzRldCrzP7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
5 &#8211; <span id="xdx_829_zql2HcdAPOwa">PROPERTY AND EQUIPMENT</span> </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><p id="xdx_89E_eus-gaap--PropertyPlantAndEquipmentTextBlock_zONOMrIqIOZ4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
summary of property and equipment is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B4_zVWZQyEy2hdc" style="display: none">SUMMARY OF PROPERTY AND EQUIPMENT</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif">USEFUL</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif">December 31,</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif">March 31,</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">LIFE</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_905_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20210401__20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--ComputerAndOfficeEquipmentMember__srt--RangeAxis__srt--MinimumMember_z5Y3fC2OCfta" title="Average useful life (in years)"><ix:nonNumeric contextRef="From2021-04-012021-12-31_custom_ComputerAndOfficeEquipmentMember_srt_MinimumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span>-<span id="xdx_90C_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20210401__20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--ComputerAndOfficeEquipmentMember__srt--RangeAxis__srt--MaximumMember_zH9bBn85txHh" title="Average useful life (in years)"><ix:nonNumeric contextRef="From2021-04-012021-12-31_custom_ComputerAndOfficeEquipmentMember_srt_MaximumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">7</ix:nonNumeric></span>
                                            years</span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_983_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--ComputerAndOfficeEquipmentMember_z0XIDbWQGAn8" title="Property and equipment, gross" style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-12-31_custom_ComputerAndOfficeEquipmentMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">440,000</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98B_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20210331__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--ComputerAndOfficeEquipmentMember_zWYbqDw2XvZ4" title="Property and equipment, gross" style="width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-03-31_custom_ComputerAndOfficeEquipmentMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">445,000</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Furniture and fixtures</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_901_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20210401__20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--FurnitureAndFixturesMember_zZfxjiVsYGgl" title="Average useful life (in years)"><ix:nonNumeric contextRef="From2021-04-012021-12-31_us-gaap_FurnitureAndFixturesMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">7</ix:nonNumeric></span>
                                            years</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_984_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--FurnitureAndFixturesMember_zC1TSHrxdKp3" title="Property and equipment, gross" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-12-31_us-gaap_FurnitureAndFixturesMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">98,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_982_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20210331__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--FurnitureAndFixturesMember_z1yLnEQZQYdh" title="Property and equipment, gross" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-03-31_us-gaap_FurnitureAndFixturesMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">98,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Warehouse equipment</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_900_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20210401__20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--WarehouseEquipmentMember_zw654yHhsBOl" title="Average useful life (in years)"><ix:nonNumeric contextRef="From2021-04-012021-12-31_custom_WarehouseEquipmentMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">7</ix:nonNumeric></span>
                                            years</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_983_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--WarehouseEquipmentMember_zDEcJNPyWJtl" title="Property and equipment, gross" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-12-31_custom_WarehouseEquipmentMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">210,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98B_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20210331__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--WarehouseEquipmentMember_zcnwRmJwKjle" title="Property and equipment, gross" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-03-31_custom_WarehouseEquipmentMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">199,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Molds and tooling</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_905_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20210401__20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--MoldsAndToolingMember__srt--RangeAxis__srt--MinimumMember_zi2SbumeJmC6" title="Average useful life (in years)"><ix:nonNumeric contextRef="From2021-04-012021-12-31_custom_MoldsAndToolingMember_srt_MinimumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">3</ix:nonNumeric></span>-<span id="xdx_904_eus-gaap--PropertyPlantAndEquipmentUsefulLife_dtY_c20210401__20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--MoldsAndToolingMember__srt--RangeAxis__srt--MaximumMember_zm6u4G4nojpd" title="Average useful life (in years)"><ix:nonNumeric contextRef="From2021-04-012021-12-31_custom_MoldsAndToolingMember_srt_MaximumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span>
                                            years</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98C_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20211231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--MoldsAndToolingMember_z64bVMglZeVd" title="Property and equipment, gross" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-12-31_custom_MoldsAndToolingMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,946,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_985_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20210331__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--MoldsAndToolingMember_zpiYbKMD7J1e" title="Property and equipment, gross" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-03-31_custom_MoldsAndToolingMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,878,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98F_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20211231_z7V8HzTPEUZd" title="Property and equipment, gross" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,694,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98E_eus-gaap--PropertyPlantAndEquipmentGross_iI_pp0p0_c20210331_zvk8M7zkw70f" title="Property and equipment, gross" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,620,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Less: Accumulated depreciation</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_984_eus-gaap--AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment_iI_pp0p0_c20211231_zBaJeczVbVzb" title="Less: Accumulated depreciation" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,113,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98B_eus-gaap--AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment_c20210331_pp0p0" title="Less: Accumulated depreciation" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,946,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98E_eus-gaap--PropertyPlantAndEquipmentOtherNet_iI_pp0p0_c20211231_zfdM49dlziQl" title="Property and equipment, net" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentOtherNet" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">581,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_986_eus-gaap--PropertyPlantAndEquipmentOtherNet_iI_pp0p0_c20210331_zp0rJMpyUXYd" title="Property and equipment, net" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentOtherNet" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">674,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A5_zaaaKCvSJIQ2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depreciation
expense for the three months ended December 31, 2021 and 2020 was approximately $<span id="xdx_901_eus-gaap--Depreciation_pn3p0_c20211001__20211231_zYfQkVB0PBV3" title="Depreciation expense"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD">55,000</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--Depreciation_pn3p0_c20201001__20201231_zS4TSEuwWvs3" title="Depreciation expense"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD">65,000</ix:nonFraction></span>, respectively. Depreciation expense
for the nine months ended December 31, 2021 and 2020 was approximately $<span id="xdx_90B_eus-gaap--Depreciation_pn3p0_c20210401__20211231_zWvsiyDAlqn4" title="Depreciation expense"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD">190,000</ix:nonFraction></span> and $<span id="xdx_90A_eus-gaap--DepreciationAndAmortization_pn3p0_c20200401__20201231_zzlzGZTihFs" title="Depreciation expense"><span id="xdx_902_eus-gaap--Depreciation_pn3p0_c20200401__20201231_zo4LjiURXrv9" title="Depreciation expense"><ix:nonFraction name="us-gaap:DepreciationAndAmortization" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="-3" scale="0" unitRef="USD">204,000</ix:nonFraction></ix:nonFraction></span></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:DebtDisclosureTextBlock"><p id="xdx_807_eus-gaap--DebtDisclosureTextBlock_zUZIaCu1Hhs6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
6 &#8211; <span id="xdx_820_zQjCSxW8i1x8">BANK FINANCING</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Intercreditor
Revolving Credit Facility Crestmark Bank and Iron Horse Credit</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility on eligible accounts receivable and inventory which replaced
the Company&#8217;s previous revolving credit facility with PNC Bank which was terminated on June 16, 2020. The Company signed a two-year
Loan and Security Agreement for a $<span id="xdx_908_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn5n6_c20200616__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zmGP6FDd4zqj" title="Line of credit facility, maximum borrowing amount"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2020-06-16_custom_TwoYearLoanAndSecurityAgreementMember_us-gaap_RevolvingCreditFacilityMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">10.0</ix:nonFraction></span> million financing facility under the Crestmark Facility on eligible accounts receivable. The
outstanding loan balance cannot exceed $<span id="xdx_907_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_pn5n6_c20200613__20200616__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember__srt--RangeAxis__srt--MaximumMember_z2K4cnBvU0Q8" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2020-06-132020-06-16_us-gaap_RevolvingCreditFacilityMember_srt_MaximumMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">10.0</ix:nonFraction></span> million during peak selling season between July 1 and December 31and is reduced to a maximum
of $<span id="xdx_90F_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__srt--StatementScenarioAxis__custom--PeakSellingSeasonBetweenJanuaryOneAndJulyThirtyOneMember_pn5n6" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember_custom_PeakSellingSeasonBetweenJanuaryOneAndJulyThirtyOneMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.0</ix:nonFraction></span> million between January 1 and July 31 with the ability to exceed when required. Costs associated with closing of the Intercreditor
Revolving Credit Facility of approximately $<span id="xdx_906_ecustom--CostAssociatedWithRevolvingCreditFacilityDeferred_c20200613__20200616__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember__srt--StatementScenarioAxis__custom--AmortizedOverOneYearMember_ztTOr8yyroW3" title="Cost associated with Revolving credit facility deferred"><ix:nonFraction name="SMDM:CostAssociatedWithRevolvingCreditFacilityDeferred" contextRef="From2020-06-132020-06-16_us-gaap_RevolvingCreditFacilityMember_custom_AmortizedOverOneYearMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">74,000</ix:nonFraction></span> were deferred and were amortized over one year. During the three months ended December
31, 2021 and 2020 the Company incurred amortization expense of approximately $<span id="xdx_90A_eus-gaap--AdjustmentForAmortization_c20211001__20211231_zCZs5ier0apb" title="Amortization expense"><ix:nonFraction name="us-gaap:AdjustmentForAmortization" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">10,000</ix:nonFraction></span> and $<span id="xdx_902_eus-gaap--AdjustmentForAmortization_c20201001__20201231_zzfOaeLuD8yi" title="Amortization expense"><ix:nonFraction name="us-gaap:AdjustmentForAmortization" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">19,000</ix:nonFraction></span>, respectively associated with the amortization
of deferred financing costs from the Intercreditor Revolving Credit Facility. During the nine months ended December 31, 2021 and 2020
the Company incurred amortization expense of approximately $<span id="xdx_906_eus-gaap--AdjustmentForAmortization_c20210401__20211231_zqEMdeky78O8" title="Amortization expense"><ix:nonFraction name="us-gaap:AdjustmentForAmortization" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">36,000</ix:nonFraction></span> and $<span id="xdx_90D_eus-gaap--AdjustmentForAmortization_c20200401__20201231_zrllXuYJAa5l" title="Amortization expense"><ix:nonFraction name="us-gaap:AdjustmentForAmortization" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">40,000</ix:nonFraction></span>, respectively associated with the amortization of deferred
financing costs from the Intercreditor Revolving Credit Facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Crestmark Facility:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
    rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date. </span></td>
    </tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crestmark
    shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%.</span></td>
    </tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crestmark
    will implement an availability block of 20% of amounts due on Iron Horse Credit Intercreditor Revolving Credit Facility. </span></td>
    </tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable
and Inventory. Notwithstanding the foregoing, Crestmark shall subordinate its first security interest in inventory to IHC as agreed between
all parties. The Crestmark Facility bears interest at the Wall Street Journal Prime Rate plus <span id="xdx_90A_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__us-gaap--VariableRateAxis__us-gaap--PrimeRateMember_zRQQhJobZSRk" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember_us-gaap_PrimeRateMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.50</ix:nonFraction></span>% with a floor of <span id="xdx_901_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__us-gaap--DerivativeInstrumentRiskAxis__us-gaap--InterestRateFloorMember_zX1oO5x7XkIj" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember_us-gaap_InterestRateFloorMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8.75</ix:nonFraction></span>%. Interest and
Maintenance Fees shall be calculated on the higher of the actual average monthly loan balance from the prior month or a minimum average
loan balance of $<span id="xdx_901_eus-gaap--PrincipalAmountOutstandingOnLoansSecuritized_iI_c20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zRC2VzSddbf4" title="Average loan balance"><ix:nonFraction name="us-gaap:PrincipalAmountOutstandingOnLoansSecuritized" contextRef="AsOf2020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,000,000</ix:nonFraction></span>. For the three months ended December 31, 2021 and 2020 the Company recorded interest expense of approximately
$<span id="xdx_90D_eus-gaap--InterestExpense_c20211001__20211231__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zbfBBBy6EyOk" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-10-012021-12-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">106,000</ix:nonFraction></span> and $<span id="xdx_90B_eus-gaap--InterestExpense_c20201001__20201231__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_z4ll14hYpNd9" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-10-012020-12-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">100,000</ix:nonFraction></span>, respectively. For the nine months ended December 31, 2021 and 2020 the Company recorded interest expense of approximately
$<span id="xdx_905_eus-gaap--InterestExpense_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zZqTiccT7Yhd" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-04-012021-12-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">202,000</ix:nonFraction></span> and $<span id="xdx_901_eus-gaap--InterestExpense_c20200401__20201231__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zTkqsn0RgvLb" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012020-12-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">151,000</ix:nonFraction></span>, respectively. The Crestmark Facility expires on <span id="xdx_909_eus-gaap--LineOfCreditFacilityExpirationDate1_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zH4ncbPhtwN9" title="Credit facility expiry date"><ix:nonNumeric contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:datemonthdayyearen" name="us-gaap:LineOfCreditFacilityExpirationDate1">June 15, 2022</ix:nonNumeric></span>. As of December 31, 2021, the Company had an outstanding
balance of approximately $<span id="xdx_901_eus-gaap--LineOfCredit_iI_pp0d_c20211231__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zIzY8DxU6suh" title="Line of credit"><ix:nonFraction name="us-gaap:LineOfCredit" contextRef="AsOf2021-12-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,637,000</ix:nonFraction> </span>on the Crestmark Facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Company executed a two-year Loan and Security Agreement with Iron Horse Credit for up to $<span id="xdx_907_ecustom--InventoryFinancing_iI_c20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember__srt--RangeAxis__srt--MaximumMember_zUpqQVfPFFXk" title="Inventory financing"><ix:nonFraction name="SMDM:InventoryFinancing" contextRef="AsOf2021-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember_srt_MaximumMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,500,000</ix:nonFraction></span> in inventory financing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the IHC Facility:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
    rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined
    by an independent third-party appraiser engaged by IHC.</span></td>
    </tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before
    interest, taxes, depreciation and amortization (&#8220;EBITDA&#8221;) less non-financed capital expenditures, cash dividends and
    distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. The Company was not in
    compliance with this covenant as of October 31, 2021 and November 30, 2021; however, waivers from default were obtained from IHC
    for these months. As of December 31, 2021, the Company was in compliance with this covenant.</span></td>
    </tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 53 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
IHC Facility is secured by a perfected security interest in the Company&#8217;s inventory. The IHC Facility bears interest at <span id="xdx_90D_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember__srt--StatementScenarioAxis__custom--InterestRatePerMonthMember_zbdoAIciUXAe" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember_custom_InterestRatePerMonthMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.292</ix:nonFraction></span>%
per month or <span id="xdx_90F_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember__srt--StatementScenarioAxis__custom--InterestRateAnnuallyMember_zy4OA2Gmdc4c" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember_custom_InterestRateAnnuallyMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15.51</ix:nonFraction></span>% annually. Interest shall be calculated on the higher of the actual average monthly loan balance from the prior month
or a minimum average loan balance of $<span id="xdx_908_eus-gaap--InterestExpense_c20200613__20200616__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_zyPz2hqQlg8f" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-06-132020-06-16_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,000,000</ix:nonFraction></span>. Costs associated with the renewal of the IHC Facility of approximately $<span id="xdx_908_eus-gaap--DeferredCostsCurrentAndNoncurrent_iI_pp0p0_c20200616__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_zMrtx4zq1J69" title="Deferred cost"><ix:nonFraction name="us-gaap:DeferredCostsCurrentAndNoncurrent" contextRef="AsOf2020-06-16_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">38,000</ix:nonFraction></span> were
deferred and are being amortized over one year. Interest expense for the three months ended December 31, 2021 and 2020 were approximately
$<span id="xdx_90F_eus-gaap--InterestExpense_pp0p0_c20211001__20211231__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_zJPYjkbYHYlh" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-10-012021-12-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">34,000</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--InterestExpense_pp0p0_c20201001__20201231__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_zlaP2XDiTOhb" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-10-012020-12-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">41,000</ix:nonFraction></span>, respectively. Interest expense for the nine months ended December 31, 2021 and 2020 were approximately $<span id="xdx_907_eus-gaap--InterestExpense_pp0p0_c20210401__20211231__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_zyL3q05fRUi" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-04-012021-12-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">120,000</ix:nonFraction></span>
and $<span id="xdx_908_eus-gaap--InterestExpense_pp0p0_c20200401__20201231__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_z71CWsoFheti" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012020-12-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">103,000</ix:nonFraction></span>, respectively. The IHC Facility expires on <span id="xdx_90C_eus-gaap--LineOfCreditFacilityExpirationDate1_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_zzcisoRNLIu7" title="Credit facility expiry date"><ix:nonNumeric contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_IHCFacilityMember" format="ixt:datemonthdayyearen" name="us-gaap:LineOfCreditFacilityExpirationDate1">June 15, 2022</ix:nonNumeric></span>. As of December 31, 2021 and March 31, 2021, there was an outstanding
balance of approximately $<span id="xdx_90A_eus-gaap--LoansPayable_iI_pp0p0_c20211231__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_zeU0oejZ06T9" title="Loan balance"><ix:nonFraction name="us-gaap:LoansPayable" contextRef="AsOf2021-12-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,990,000</ix:nonFraction></span> and $<span id="xdx_90C_eus-gaap--LoansPayable_iI_pp0p0_c20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_zYJ8LL2ESFp5" title="Loan balance"><ix:nonFraction name="us-gaap:LoansPayable" contextRef="AsOf2021-03-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 there was approximately $<span id="xdx_900_eus-gaap--OtherBorrowings_iI_pp0p0_c20211231__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember_znMxrf8nQ39j" title="Borrowings"><ix:nonFraction name="us-gaap:OtherBorrowings" contextRef="AsOf2021-12-31_custom_IHCFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">510,000</ix:nonFraction></span> of available borrowings under these facilities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a revision or extension
of these debt facilities upon their maturity however, there can be no assurance that such revision or extension will occur or at what
terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
Payable Payroll Protection Plan</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $<span id="xdx_90E_eus-gaap--ProceedsFromLoans_c20200504__20200505__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zhtzDSwTN806" title="Proceeds from loan"><ix:nonFraction name="us-gaap:ProceedsFromLoans" contextRef="From2020-05-042020-05-05_custom_PaycheckProtectionProgramMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">444,000</ix:nonFraction></span> under the Paycheck Protection
Program (the &#8220;PPP&#8221;). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (&#8220;CARES
Act&#8221;), which provided for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of
the qualifying business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible
purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced
if the borrower terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan was payable
over two years at an interest rate of 1%, with a deferral of payments until a forgiveness application was accepted and reviewed by the
Small Business Administration (&#8220;SBA&#8221;), and the SBA provided Crestmark with the loan forgiveness amount. In June 2021 the
Company received notification from the SBA that the loan had been forgiven in its entirety and we were notified by Crestmark that the
debt was discharged. For the nine months ended December 31, 2021, a gain of approximately $<span id="xdx_909_eus-gaap--DebtInstrumentDecreaseForgiveness_c20210401__20211231__us-gaap--DebtInstrumentAxis__custom--PaycheckProtectionProgramMember_zhf8NR50dxV" title="Debt forgiveness"><ix:nonFraction name="us-gaap:DebtInstrumentDecreaseForgiveness" contextRef="From2021-04-012021-12-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">448,000</ix:nonFraction> </span>(including principal and interest)
from the forgiveness of the loan was included in other income and expenses in the accompanying condensed consolidated statements of income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Installment
Notes Payable</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 18, 2019, the Company entered into a financing arrangement with Dimension Funding, LLC (&#8220;Dimension&#8221;) to finance an entire
ERP System project over a term of <span id="xdx_90C_eus-gaap--DebtInstrumentTerm_dtM_c20190617__20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_z3GEnfzZCSCd" title="Debt instrument, term"><ix:nonNumeric contextRef="From2019-06-172019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt-sec:durmonth" name="us-gaap:DebtInstrumentTerm">60</ix:nonNumeric></span> months at a cost of approximately $<span id="xdx_90C_eus-gaap--DebtInstrumentFaceAmount_iI_c20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zxeM1WVF5K1b" title="Debt face amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">365,000</ix:nonFraction></span>. As of December 31, 2021, the Company had executed three
installment notes totaling approximately $<span id="xdx_909_eus-gaap--DebtInstrumentPeriodicPaymentPrincipal_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--ThreeInstallmentNotesMember_zD1LiCgu7XMd" title="Installment amount"><ix:nonFraction name="us-gaap:DebtInstrumentPeriodicPaymentPrincipal" contextRef="From2021-04-012021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_ThreeInstallmentNotesMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">365,000</ix:nonFraction></span> for payments issued to the project vendor. The installment notes have 60-month terms
with interest rates of <span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--InstallmentNoteOneMember_zdVMyrcoAMJ1" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_InstallmentNoteOneMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">7.58</ix:nonFraction></span>%, <span id="xdx_904_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--InstallmentNoteTwoMember_z6bNKTHZaRl3" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_InstallmentNoteTwoMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8.55</ix:nonFraction></span>% and <span id="xdx_901_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--InstallmentNoteThreeMember_zDMMRLHBkYFf" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_InstallmentNoteThreeMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.25</ix:nonFraction></span>%, respectively. The installment notes are payable in monthly installments of $<span id="xdx_906_eus-gaap--DebtInstrumentPeriodicPayment_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zTLObcIf3Qa8" title="Debt monthly payments"><ix:nonFraction name="us-gaap:DebtInstrumentPeriodicPayment" contextRef="From2021-04-012021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,459</ix:nonFraction></span> which
include principal and interest. As of December 31, 2021, and March 31, 2021 there was an outstanding balance on the installment notes
of approximately $<span id="xdx_905_eus-gaap--NotesPayable_iI_c20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zHRTQLaBeLdi" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">231,000</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--NotesPayable_iI_c20210331__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_ziyubqKZGc91" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">281,000</ix:nonFraction></span>, respectively. For the three months ended December 31, 2021 and 2020 the Company incurred interest
expense of approximately $<span id="xdx_908_eus-gaap--InterestExpense_c20211001__20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zP3xhKXjZ6Bi" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-10-012021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,000</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--InterestExpense_c20201001__20201231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zCADvPTkQWuj" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-10-012020-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,000</ix:nonFraction></span>, respectively. For the nine months ended December 31, 2021 and 2020 the Company incurred interest
expense of approximately $<span id="xdx_90B_eus-gaap--InterestExpense_pp0p0_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zTZ953DWXqJ6" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2021-04-012021-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">16,000</ix:nonFraction></span> and $<span id="xdx_909_eus-gaap--InterestExpense_pp0p0_c20200401__20201231__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_z9o7UiVXKISj" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012020-12-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">20,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Subordinated
Debt/Note Payable to Related Party</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
conjunction with the Crestmark Facility and IHC Facility there is a subordination agreement on related party debt due to Starlight Marketing
Development, Ltd. of approximately $<span id="xdx_909_eus-gaap--NotesPayableRelatedPartiesCurrentAndNoncurrent_iI_c20211231__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_ziaOXYLfQHK6" title="Notes payable to related parties"><ix:nonFraction name="us-gaap:NotesPayableRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-12-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">803,000</ix:nonFraction></span>. On June 1, 2020 the remaining amount due on the subordinated debt of approximately $<span id="xdx_901_eus-gaap--DebtConversionConvertedInstrumentAmount1_c20200529__20200601__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_zFfT4PoooSDb" title="Conversion of debt"><ix:nonFraction name="us-gaap:DebtConversionConvertedInstrumentAmount1" contextRef="From2020-05-292020-06-01_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">803,000</ix:nonFraction></span>
was converted to a note payable (&#8220;subordinated note payable&#8221;) which bears interest at <span id="xdx_906_eus-gaap--DebtConversionOriginalDebtInterestRateOfDebt_dp_uPure_c20200529__20200601__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__us-gaap--DebtInstrumentAxis__custom--SubordinatedNotesPayableMember_zzcA6PcUD9p8" title="Conversion of debt percentage"><ix:nonFraction name="us-gaap:DebtConversionOriginalDebtInterestRateOfDebt" contextRef="From2020-05-292020-06-01_custom_SubordinationAgreementMember_custom_SubordinatedNotesPayableMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6</ix:nonFraction></span>%. As part of the agreement to convert
the subordinated debt to a note payable it was agreed that interest expense would be accrued at the same 6% interest rate on the unpaid
principal retroactively from the date that previously scheduled payments had been missed. During the three months ended December 31,
2021 and 2020 interest expense was approximately $<span id="xdx_90E_eus-gaap--InterestExpenseRelatedParty_c20211001__20211231__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_zqvHQeEYlyyg" title="Interest expense, related party"><ix:nonFraction name="us-gaap:InterestExpenseRelatedParty" contextRef="From2021-10-012021-12-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,000</ix:nonFraction></span> and $<span id="xdx_90F_eus-gaap--InterestExpenseRelatedParty_c20201001__20201231__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_zovNLl9iI1d4" title="Interest expense, related party"><ix:nonFraction name="us-gaap:InterestExpenseRelatedParty" contextRef="From2020-10-012020-12-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">12,000</ix:nonFraction></span>, respectively on the subordinated note payable and the related party
subordinated debt. During the nine months ended December 31, 2021 and 2020 interest expense was approximately $<span id="xdx_90F_eus-gaap--InterestExpenseRelatedParty_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_z4tma3Q59lcc" title="Interest expense, related party"><ix:nonFraction name="us-gaap:InterestExpenseRelatedParty" contextRef="From2021-04-012021-12-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">17,000</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--InterestExpenseRelatedParty_c20200401__20201231__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_zvc2xVxIdyMf" title="Interest expense, related party"><ix:nonFraction name="us-gaap:InterestExpenseRelatedParty" contextRef="From2020-04-012020-12-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">36,000</ix:nonFraction></span>, respectively
on the subordinated note payable and the related party subordinated debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the note payable. Both the Crestmark
Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any amounts borrowed against these
credit facilities are paid in full, the Company maintains a 1 : 1 debt coverage ratio and exhibits sufficient cash liquidity to support
on-going operations. As of December 31, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility and
has made cumulative principal payments totaling $<span id="xdx_90F_eus-gaap--DebtInstrumentPeriodicPaymentPrincipal_c20210401__20211231__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_z8VfaFgcsQij" title="Debt principal payments"><ix:nonFraction name="us-gaap:DebtInstrumentPeriodicPaymentPrincipal" contextRef="From2021-04-012021-12-31_us-gaap_RevolvingCreditFacilityMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">450,000</ix:nonFraction></span>. During the next twelve months the Company intends on making additional payments
and pay off the remaining balance outstanding provided the Company meets all repayment requirements of the Crestmark Facility and IHC
Facility agreements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and March 31, 2021, the remaining amount due on the note payable was approximately $<span id="xdx_901_eus-gaap--NotesPayable_iI_c20211231__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember_zCXD2x7k7Loa" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-12-31_custom_SubordinationAgreementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">353,000</ix:nonFraction></span> and $<span id="xdx_901_eus-gaap--NotesPayable_iI_c20210331__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember_zvDRk86Y96ob" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_SubordinationAgreementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">503,000</ix:nonFraction></span> respectively.
The remaining amount due on the subordinated note payable was classified as a current liability as of December 31, 2021 and March 31,
2021 on the condensed consolidated balance sheets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 54 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_801_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zeYsOg4NGROf" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">NOTE
7 - <span id="xdx_82D_z2HI8ECCXLpb">COMMITMENTS AND CONTINGENCIES</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>COVID-19</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2020, the World Health Organization (&#8220;WHO&#8221;) announced a global health emergency because of a new strain of coronavirus
originating in Wuhan, China (&#8220;COVID-19&#8221;) and the risks to the international community. The WHO declared COVID-19 a global
pandemic on March 11, 2020 and since that time many of the previously imposed restrictions and other measures which were instituted in
response have been subsequently reduced or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic and its duration
and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional
strains of COVID-19, the administration and ultimate effectiveness of vaccines, and the eventual timeline to achieve a sufficient level
of herd immunity among the general population. Accordingly, the COVID-19 pandemic may continue to have negative effects on the health
of the U.S. economy for the foreseeable future. We continue to experience various degrees of manufacturing cost pressures due to raw
material and electronic component shortages as well as inflationary price increases. Although we regularly monitor the financial health
and operations of companies in our supply chain, and use alternative suppliers when necessary and available, any financial hardship or
government restrictions on our suppliers or sub-suppliers caused by the COVID-19 pandemic could cause a disruption in our ability to
obtain raw materials or components required to manufacture our products and adversely affect our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LEGAL
MATTERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
is not aware of any legal proceedings other than matters that arise in the ordinary course of business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LEASES
</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operating
Leases</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through
2024.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida
where we lease approximately <span id="xdx_901_eus-gaap--AreaOfLand_iI_usqft_c20171001__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zfgbe0dwNWde" title="Operating lease space for office"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2017-10-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="sqft">6,500</ix:nonFraction></span> square feet of office space. The lease expires on <span id="xdx_906_eus-gaap--LeaseExpirationDate1_c20170929__20171001__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember" title="Lease expiration date"><ix:nonNumeric contextRef="From2017-09-292017-10-01_custom_OperatingLeaseAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LeaseExpirationDate1">March 31, 2024</ix:nonNumeric></span>. The base rent payment is approximately
$<span id="xdx_903_eus-gaap--PaymentsForRent_pp0p0_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_z1TKXLhWeia9" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2021-04-012021-12-31_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,700</ix:nonFraction></span> per month, subject to annual adjustments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective June 1, 2013, for <span id="xdx_904_eus-gaap--AreaOfLand_iI_usqft_c20130601__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zcOaakPYa5y6" title="Operating lease space for office"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2013-06-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="sqft">86,000</ix:nonFraction></span> square feet of warehouse space in Ontario, California for
our logistics operations. On June 15, 2020 <span id="xdx_909_eus-gaap--LesseeOperatingLeaseOptionToExtend_c20130531__20130601__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember" title="Lease extend term"><ix:nonNumeric contextRef="From2013-05-312013-06-01_custom_OperatingLeaseAgreementMember" name="us-gaap:LesseeOperatingLeaseOptionToExtend">we executed a three-year lease extension which will expire on <span id="xdx_905_eus-gaap--LeaseExpirationDate1_c20200613__20200615__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_z8pYNOcCcDxg" title="Lease expiration date"><ix:nonNumeric contextRef="From2020-06-132020-06-15_custom_OperatingLeaseAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LeaseExpirationDate1">August 31, 2023</ix:nonNumeric></span>. The renewal
base rent payment is $<span id="xdx_90D_eus-gaap--PaymentsForRent_pp0p0_c20200603__20200615__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zpgPck8y76B5" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2020-06-032020-06-15_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,300</ix:nonFraction></span> with a 3% increase every 12 months for the remaining term of the extension.</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
May 2021 we executed a one-year lease for <span id="xdx_900_eus-gaap--AreaOfLand_iI_usqft_c20210501__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zex6VWiwTYGd" title="Operating lease space for office"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2021-05-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="sqft">424</ix:nonFraction></span> square feet of office space in Macau which will expire on <span id="xdx_905_eus-gaap--LeaseExpirationDate1_c20210430__20210501__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_z8IgD68GLigf" title="Lease expiration date"><ix:nonNumeric contextRef="From2021-04-302021-05-01_custom_OperatingLeaseAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LeaseExpirationDate1">April 30, 2022</ix:nonNumeric></span>. The lease provides
for a renewal option to extend the lease. Rent expense on the new lease is fixed at approximately $<span id="xdx_90B_eus-gaap--PaymentsForRent_pp0p0_c20210502__20210530__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zBY4e36xUYk" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2021-05-022021-05-30_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,700</ix:nonFraction></span> per month for the duration of
the lease term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease
expense for our operating leases is recognized on a straight-line basis over the lease terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Finance
Leases</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 1, 2021 we entered into a long-term capital leasing arrangement with Union Credit Corporation to finance the leasing of a used forklift
in the amount of approximately $<span title="Finance lease interest expense"><span id="xdx_903_eus-gaap--FinanceLeaseLiability_iI_pp0p0_c20210702__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zV3pwujYegbk" title="Finance lease interest expense"><ix:nonFraction name="us-gaap:FinanceLeaseLiability" contextRef="AsOf2021-07-02_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">24,000</ix:nonFraction></span></span>. The lease require monthly payments in the amount of approximately $<span title="Finance lease monthly payments"><span id="xdx_901_eus-gaap--SaleAndLeasebackTransactionGainLossNet_pp0p0_c20210628__20210702__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zYOZxjK2MaB7" title="Finance lease monthly payments"><ix:nonFraction name="us-gaap:SaleAndLeasebackTransactionGainLossNet" contextRef="From2021-06-282021-07-02_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">755</ix:nonFraction></span></span> per month over a total
lease term of <span title="Lease term"><span id="xdx_90C_eus-gaap--LesseeFinanceLeaseRemainingLeaseTerm_iI_dtM_c20210702__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zEZwdHEX6l7l" title="Lease term"><ix:nonNumeric contextRef="AsOf2021-07-02_custom_LongTermCapitalLeasingArrangementMember" format="ixt-sec:durmonth" name="us-gaap:LesseeFinanceLeaseRemainingLeaseTerm">36</ix:nonNumeric></span></span> months which commenced on July 1, 2021. The agreement has an effective interest rate of <span title="Effective nterest rate"><span id="xdx_905_eus-gaap--FinanceLeaseWeightedAverageDiscountRatePercent_iI_pid_dp_uPure_c20210702__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zmWpXWRk7Enj" title="Effective nterest rate"><ix:nonFraction name="us-gaap:FinanceLeaseWeightedAverageDiscountRatePercent" contextRef="AsOf2021-07-02_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.9</ix:nonFraction></span></span>% and the Company has the
option to purchase the equipment at the end of the lease term for one dollar. As of December 30, 2021 and March 31, 2021, the remaining
amounts due on this capital leasing arrangement was approximately $<span title="Remaining capital lease arrangements"><span id="xdx_902_ecustom--RemainingCapitalLeaseArrangements_iI_pp0p0_c20211231__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zzyXscPevOZ9" title="Remaining capital lease arrangements"><ix:nonFraction name="SMDM:RemainingCapitalLeaseArrangements" contextRef="AsOf2021-12-31_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">20,000</ix:nonFraction></span></span> and $<span title="Remaining capital lease arrangements"><span id="xdx_90D_ecustom--RemainingCapitalLeaseArrangements_iI_pp0p0_c20210331__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zpDkHPFS1iz" title="Remaining capital lease arrangements"><ix:nonFraction name="SMDM:RemainingCapitalLeaseArrangements" contextRef="AsOf2021-03-31_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></span></span>, respectively. For the three and nine months ended December
31, 2021 and 2020 the Company incurred interest expense of $<span title="Interest expense"><span id="xdx_905_eus-gaap--FinanceLeaseInterestExpense_pp0p0_c20211001__20211231__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zXgSvRG06hGk" title="Interest expense"><span id="xdx_903_eus-gaap--FinanceLeaseInterestExpense_pp0p0_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_z4upIFRFOdQ3" title="Interest expense"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2021-10-012021-12-31_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2021-04-012021-12-31_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">696</ix:nonFraction></ix:nonFraction></span></span></span> and $<span id="xdx_901_eus-gaap--FinanceLeaseInterestExpense_pp0p0_c20201001__20201231__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_zuP9w7U0ZAK2" title="Interest expense"><span id="xdx_90A_eus-gaap--FinanceLeaseInterestExpense_pp0p0_c20200401__20201231__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementMember_znYw7aTlThMj" title="Interest expense"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2020-10-012020-12-31_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2020-04-012020-12-31_custom_LongTermCapitalLeasingArrangementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,072</ix:nonFraction></ix:nonFraction></span></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 55 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:ScheduleOfSupplementalInformationRelatedToLeaseTableTextBlock"><p id="xdx_895_ecustom--ScheduleOfSupplementalInformationRelatedToLeaseTableTextBlock_ztHBR71Hj4L6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Supplemental
balance sheet information related to leases as of December 31, 2021 is as follows:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;<span id="xdx_8BE_zSbRLvhFNDif" style="display: none">SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES</span></b></span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assets:</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_491_20211231_ztI2kwUOSbk3" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_402_eus-gaap--OperatingLeaseRightOfUseAsset_iI_pp0p0_z7NTY0DqMF7b" style="vertical-align: bottom; background-color: White">
    <td style="width: 78%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating lease
    - right-of-use assets</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="width: 18%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,488,258</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_403_eus-gaap--FinanceLeaseRightOfUseAsset_iI_pp0p0_zi4j7NUIzrrk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance leases as a component
    of Property and equipment, net of accumulated depreciation of $<span id="xdx_909_eus-gaap--PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAccumulatedDepreciationAndAmortization_iI_c20211231_zJGBbqVNSNNc" title="Property, plant and equipment and finance lease right-of-use asset" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIFNVUFBMRU1FTlRBTCBJTkZPUk1BVElPTiBSRUxBVEVEIFRPIExFQVNFUyAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAccumulatedDepreciationAndAmortization" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,735</ix:nonFraction></span></span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:FinanceLeaseRightOfUseAsset" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">18,278</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Liabilities</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_407_eus-gaap--OperatingLeaseLiabilityCurrent_iI_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current
    portion of operating leases</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">860,528</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_40F_eus-gaap--FinanceLeaseLiabilityCurrent_iI_pp0p0_zyZAZI1RksNk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current
    portion of finance leases</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,421</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_40A_eus-gaap--OperatingLeaseLiabilityNoncurrent_iI_pp0p0_zmRDFTJnlZ4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
    lease liabilities, net of current portion</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">685,304</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_40D_eus-gaap--FinanceLeaseLiabilityNoncurrent_iI_pp0p0_zm55DowqCcQa" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
    leases, net of current portion</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">12,592</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>


</ix:nonNumeric><p id="xdx_8A2_zkjBfXbuTwZj" style="margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:LeaseCostTableTextBlock"><p id="xdx_89B_eus-gaap--LeaseCostTableTextBlock_zQmda9x4rFD" style="margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Supplemental statement
of operations information related to leases for the three and nine months ended December 31, 2021 is as follows:</b></span></p>

<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif">&#160;<span id="xdx_8B0_zBnMXc3SVgm9" style="display: none">SCHEDULE OF LEASE TERM AND DISCOUNT RATE</span></span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="font-size: 7pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    Months Ended</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">December
    31, 2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_400_eus-gaap--OperatingLeaseExpense_zOLWS0k8D1O1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating lease
    expense as a component of general and administrative expenses</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="width: 18%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeaseExpense" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">140,016</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="width: 18%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeaseExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">604,347</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_406_ecustom--DepreciationOfLeasedAssetsAsComponentOfDepreciation_zM7JDZ1ezrbk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depreciation
    of leased assets as a component of depreciation</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="SMDM:DepreciationOfLeasedAssetsAsComponentOfDepreciation" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,041</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="SMDM:DepreciationOfLeasedAssetsAsComponentOfDepreciation" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,735</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_400_eus-gaap--FinanceLeaseInterestExpense_z2DCVxPhD1Jd" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
    on lease liabilities as a component of interest expense</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">692</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,068</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>


</ix:nonNumeric><p id="xdx_8A3_zd6fIOXbriN9" style="margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfCashFlowSupplementalDisclosuresTableTextBlock"><p id="xdx_89C_eus-gaap--ScheduleOfCashFlowSupplementalDisclosuresTableTextBlock_zSLHQOnXx8o2" style="font: bold 7pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Supplemental
cash flow information related to leases for the nine months ended December 31, 2021 is as follows:</span></p>



<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif">&#160;<span id="xdx_8B4_z2DjvsDno3N2" style="display: none">SCHEDULE
OF SUPPLEMENTAL CASH FLOW INFORMATION</span></span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left; width: 56%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
    paid for amounts included in the measurement of lease liabilities:</span></td><td style="font: 7pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right; width: 18%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right; width: 18%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 7pt Times New Roman, Times, Serif; padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
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    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_98C_eus-gaap--OperatingLeasePayments_c20210401__20211231_pp0p0" title="Operating cash flow paid for operating leases" style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeasePayments" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">693,657</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 7pt Times New Roman, Times, Serif; padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financing
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    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_987_eus-gaap--FinanceLeasePrincipalPayments_c20210401__20211231_pp0p0" title="Financing cash flow paid for finance leases" style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:FinanceLeasePrincipalPayments" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,184</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: bold 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease
    term and Discount Rate</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
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    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 7pt Times New Roman, Times, Serif; padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
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    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
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    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
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    leases</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 7pt Times New Roman, Times, Serif; padding-left: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finance
    leases</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_98C_eus-gaap--LesseeFinanceLeaseDiscountRate_iI_dp_uPure_c20211231_zoF80Yrui1Se" title="Finance lease discount rate" style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:LesseeFinanceLeaseDiscountRate" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.86</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td><td style="font: 7pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A4_zdY4F0h8M3f8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:LesseeOperatingAndFinanceLeaseLiabilityMaturityTableTextBlock"><p id="xdx_895_ecustom--LesseeOperatingAndFinanceLeaseLiabilityMaturityTableTextBlock_zf62jlhgJPcg" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Scheduled
maturities of operating and finance lease liabilities outstanding as of December 31, 2021 are as follows:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="font: 10pt Times New Roman, Times, Serif"><b>&#160;<span id="xdx_8BD_zLroXAvJbbj4" style="display: none">SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES</span></b></span></b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Year</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Operating
    Leases</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Finance
    Leases</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">2022</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98B_eus-gaap--FinanceLeaseLiabilityPaymentsDueNextTwelveMonths_iI_pp0p0_c20211231_zmPXh7GzmSY" title="Finance Leases 2022" style="width: 18%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityPaymentsDueNextTwelveMonths" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,065</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">2023</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_984_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearTwo_iI_pp0p0_c20211231_zCw7IVZmEUVi" title="Operating Leases 2023" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearTwo" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">674,488</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98B_eus-gaap--FinanceLeaseLiabilityPaymentsDueYearTwo_iI_pp0p0_c20211231_zwEHypCENXT9" title="Finance Leases 2023" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityPaymentsDueYearTwo" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,065</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">2024</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_983_eus-gaap--FinanceLeaseLiabilityPaymentsDueYearThree_iI_pp0p0_c20211231_zvXir1KVOHyc" title="Finance Leases 2024" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityPaymentsDueYearThree" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,533</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; text-align: left">2025</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_986_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearFour_iI_c20210331_z1dv4ueLaf6a" title="Operating Leases, 2025" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearFour" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">30,739</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98F_eus-gaap--FinanceLeaseLiabilityPaymentsDueYearFour_iI_c20210331_zSazySnzFvDg" title="Finance Leases, 2025" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1431">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total Minimum Future Payments</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_987_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDue_c20211231_pp0p0" title="Operating Leases Total Minimum Future Payments" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDue" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,642,817</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98A_eus-gaap--FinanceLeaseLiabilityPaymentsDue_c20211231_pp0p0" title="Finance Leases Total Minimum Future Payments" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityPaymentsDue" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">22,663</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less:
    Imputed Interest</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_987_eus-gaap--LesseeOperatingLeaseLiabilityUndiscountedExcessAmount_c20211231_pp0p0" title="Operating Leases Less: Imputed Interest" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityUndiscountedExcessAmount" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">96,985</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_983_eus-gaap--FinanceLeaseLiabilityUndiscountedExcessAmount_c20211231_pp0p0" title="Finance Leases Less: Imputed Interest" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityUndiscountedExcessAmount" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,650</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Present
    Value of Lease Liabilities</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_984_eus-gaap--OperatingLeaseLiability_c20211231_pp0p0" title="Operating Leases Present Value of Lease Liabilities" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,545,832</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98E_eus-gaap--FinanceLeaseLiability_c20211231_pp0p0" title="Finance Leases Present Value of Lease Liabilities" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:FinanceLeaseLiability" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">20,013</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A6_z5uw3lQFq9w7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock"><p id="xdx_808_eus-gaap--DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock_zH9BMLWNAA8e" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
8 - <span id="xdx_82B_zOjLeqW3I09g">STOCK OPTIONS AND WARRANTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the nine months ended December 31, 2021 the Company issued <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20210401__20211231__srt--TitleOfIndividualAxis__srt--DirectorMember_zWSaC6MLPiyk" title="Number of stock option issued during period"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2021-04-012021-12-31_srt_DirectorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">40,000</ix:nonFraction></span> and <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20200401__20201231__srt--TitleOfIndividualAxis__srt--DirectorMember_z1jfmiabX0bi" title="Number of stock option issued during period"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2020-04-012020-12-31_srt_DirectorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">20,000</ix:nonFraction></span> stock options, respectively, at an exercise price of $<span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20210401__20211231__srt--TitleOfIndividualAxis__srt--DirectorMember_z9al7YyELyN1" title="Stock option of exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2021-04-012021-12-31_srt_DirectorMember" decimals="INF" unitRef="USDPShares">.29</ix:nonFraction></span>
and $<span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20200401__20201231__srt--TitleOfIndividualAxis__srt--DirectorMember_zOznfuL6VIS7" title="Stock option of exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2020-04-012020-12-31_srt_DirectorMember" decimals="INF" unitRef="USDPShares">.27</ix:nonFraction></span>, respectively to directors as compensation for their service.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three and nine months ended December 31, 2021 the Company issued <span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20211001__20211231__srt--TitleOfIndividualAxis__srt--VicePresidentMember_zeOkEfyZrNcl" title="Number of stock option issued during period"><span id="xdx_908_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20210401__20211231__srt--TitleOfIndividualAxis__srt--VicePresidentMember_z1FjXn70r4b5" title="Number of stock option issued during period"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2021-10-012021-12-31_srt_VicePresidentMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2021-04-012021-12-31_srt_VicePresidentMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">50,000</ix:nonFraction></ix:nonFraction></span></span> stock options at an exercise price of $<span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20211001__20211231__srt--TitleOfIndividualAxis__srt--VicePresidentMember_zMSAN3h4jfxe" title="Stock option of exercise price"><span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20210401__20211231__srt--TitleOfIndividualAxis__srt--VicePresidentMember_zsb7BvUEgjA2" title="Stock option of exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2021-10-012021-12-31_srt_VicePresidentMember" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2021-04-012021-12-31_srt_VicePresidentMember" decimals="INF" unitRef="USDPShares">.22</ix:nonFraction></ix:nonFraction></span></span> to the Vice President
of Sales and Marketing as compensation due under his fiscal 2021 incentive bonus plan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three and nine months ended December 31, 2020 the Company issued <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20201001__20201231_zhCy2B2v84Sj" title="Number of stock option issued during period"><span id="xdx_903_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20200401__20201231_zXO6fzmlest7" title="Number of stock option issued during period"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000</ix:nonFraction></ix:nonFraction></span></span> stock options at an exercise price of $<span id="xdx_906_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20201001__20201231_z2sEVdMEH7e5" title="Stock option of exercise price"><span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20200401__20201231_zeiikUWQAAh7" title="Stock option of exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2020-10-012020-12-31" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2020-04-012020-12-31" decimals="INF" unitRef="USDPShares">.29</ix:nonFraction></ix:nonFraction></span></span> to directors
as compensation for their service.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions
outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected
term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. The following
inputs were used to value each option grant:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    the nine months ended December 31, 2021: expected dividend yield of <span><span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate_pid_dp_uPure_c20210401__20211231_zGraPkPm8ySj" title="Stock option, expected dividend yield"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0</ix:nonFraction></span></span>%, risk-free interest rate between <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20210401__20211231__srt--RangeAxis__srt--MinimumMember_zhypyAQVjVD3" title="Stock option, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2021-04-012021-12-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0.43</ix:nonFraction></span>% and <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20210401__20211231__srt--RangeAxis__srt--MaximumMember_zH3RRjzrC042" title="Stock option, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2021-04-012021-12-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0.96</ix:nonFraction></span>%, respectively
    with volatility between <span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20210401__20211231__srt--RangeAxis__srt--MinimumMember_zARn0O8GZ9hd" title="Stock option, volatility"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-04-012021-12-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">149.5</ix:nonFraction></span>% and <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20210401__20211231__srt--RangeAxis__srt--MaximumMember_zDuAyRmKes3l" title="Stock option, volatility"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-04-012021-12-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">157.0</ix:nonFraction></span>% respectively with an expected term of <span id="xdx_903_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dc_c20210401__20211231_zmC4xXHW1IRi" title="Stock option, expected term"><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" format="ixt-sec:durwordsen" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">three years</ix:nonNumeric></span>.</span></td>
    </tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    </tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    the nine months ended December 31, 2020: expected dividend yield of <span id="xdx_906_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate_pid_dp_uPure_c20200401__20201231_zEAGAPuLkjV6" title="Stock option, expected dividend yield"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0</ix:nonFraction></span>%, risk-free interest rate of <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20200401__20201231__srt--RangeAxis__srt--MinimumMember_zizTg1wNaQP9" title="Stock option, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2020-04-012020-12-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0.18</ix:nonFraction></span>%, volatility of <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20200401__20201231__srt--RangeAxis__srt--MaximumMember_zxCjZjZfNFtj" title="Stock option, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2020-04-012020-12-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">146.7</ix:nonFraction></span>% and
    an expected term of <span id="xdx_906_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dc_c20200401__20201231_z2gdPwilqqRl" title="Stock option, expected term"><ix:nonNumeric contextRef="From2020-04-012020-12-31" format="ixt-sec:durwordsen" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">three years</ix:nonNumeric></span>.</span></td>
    </tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 56 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock"><p id="xdx_89A_eus-gaap--ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock_zwDc8csSiWEb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
summary of stock option activity for the nine months ended December 31, 2021 is summarized below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B9_zSEwvmRjkgP2" style="display: none">SUMMARY
OF STOCK OPTION ACTIVITY</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December
    31, 2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Number
                                            of</span></p>
                                                                  <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Options</span></p></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Weighted</span></p>
                                                                  <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Average</span></p>
                                                                  <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Exercise
                                            Price</span></p></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Stock Options:</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 60%; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">Balance at beginning of period</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_982_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_pid_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_z2R64JDhl9lk" title="Number of Options, Balance at end of period" style="width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2021-03-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,680,000</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iS_pid_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zGU7WI1r2IN4" title="Weighted Average Exercise Price, Balance at beginning of period" style="width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" contextRef="AsOf2021-03-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.32</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">Granted</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_983_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zuBcG5tdN1cf" title="Number of Options, Granted" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" contextRef="From2021-04-012021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">110,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98C_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_z5vEpbMUutf1" title="Weighted Average Exercise Price, Granted" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2021-04-012021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.25</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Exercised</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_983_eus-gaap--StockIssuedDuringPeriodSharesStockOptionsExercised_iN_di_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zXWJCeTaZHI7" title="Number of Options, Exercised" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" contextRef="From2021-04-012021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">80,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_980_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice_pid_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zBWUVor6Sqm6" title="Weighted Average Exercise Price, Exercised" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice" contextRef="From2021-04-012021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.18</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">Balance at end of period</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_982_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iE_pid_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zZ7VmDGI8EG7" title="Number of Options, Balance at end of period" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,710,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iE_pid_c20210401__20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zuanQGQR290l" title="Weighted Average Exercise Price, Balance at end of period" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" contextRef="AsOf2021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.33</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">Options
    exercisable at end of period</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber_iI_c20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_zp7Iw9jiovx1" title="Number of Options, exercisable at end of period" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber" contextRef="AsOf2021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,600,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_pid_c20211231__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_z4gRZ3yT3xb9" title="Weighted Average Exercise Price, Options exercisable at end of period" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2021-12-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.33</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AD_zpTVPbvvfIeb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeTextBlock"><p id="xdx_896_eus-gaap--ScheduleOfShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeTextBlock_zbsSNSgrwBQb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes information about employee stock options outstanding at December 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B0_zjq9ZbpXmXHf" style="display: none">SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Range
    of Exercise Price</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number
    Outstanding at December 31, 2021</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
    Average Exercise Price</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font: 7pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
    Average Exercise Price</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 7pt Times New Roman, Times, Serif; width: 14%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$<span id="xdx_908_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Options Outstanding Exercise Price"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit" contextRef="From2021-04-012021-12-31_custom_ExercisePriceRangeOneMember" decimals="INF" unitRef="USDPShares">.12</ix:nonFraction></span>
    - $<span id="xdx_90D_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Options Outstanding Exercise Price"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit" contextRef="From2021-04-012021-12-31_custom_ExercisePriceRangeOneMember" decimals="INF" unitRef="USDPShares">.38</ix:nonFraction></span></span></td><td style="font: 7pt Times New Roman, Times, Serif; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_98A_eus-gaap--SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageExercisePriceBeginningBalance1_c20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeTwoMember_pdd" title="Stock Option Outstanding Weighted Average Exercise Price" style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageExercisePriceBeginningBalance1" contextRef="AsOf2021-12-31_custom_ExercisePriceRangeTwoMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.50</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_986_eus-gaap--SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeExercisableOptionsWeightedAverageExercisePrice1_iI_pid_c20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeTwoMember_zHD60LL0CNdg" title="Stock Option Exercisable Weighted Average Exercise Price" style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeExercisableOptionsWeightedAverageExercisePrice1" contextRef="AsOf2021-12-31_custom_ExercisePriceRangeTwoMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.50</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 7pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 2.5pt double; font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_989_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions_c20211231_pdd" title="Stock Options Number Outstanding" style="border-bottom: Black 2.5pt double; font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,710,000</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; font: 7pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_98F_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions_iI_c20211231_zQyKqc2KqVWc" title="Stock Option Number Exercisable" style="border-bottom: Black 2.5pt double; font: 7pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,600,000</ix:nonFraction></span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 7pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F0E_zDtPMAxkdcMb" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="width: 5pt"></td><td style="text-align: justify"><span id="xdx_F1A_zBUISYivLy65" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001547" xml:lang="en-US">Total number of
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and <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_c20211231__srt--TitleOfIndividualAxis__custom--EmployeesMember_pdd" title="Option issued" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIEVNUExPWUVFIFNUT0NLIE9QVElPTlMgT1VUU1RBTkRJTkcgKERldGFpbHMpIChQYXJlbnRoZXRpY2FsKQA_"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2021-12-31_custom_EmployeesMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,090,000</ix:nonFraction></span> options issued to key employees.</ix:footnote></span></td>
</tr></table>

</ix:nonNumeric><p id="xdx_8A2_zRnjiR4BFQka" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, there was unrecognized expense of approximately $<span id="xdx_904_eus-gaap--EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedStockOptions_iI_c20211231_zvrA0aIflQy2" title="Unrecognised expense"><ix:nonFraction name="us-gaap:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedStockOptions" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">17,000</ix:nonFraction></span> remaining on options currently vesting over time with approximately
nine months remaining until these options are fully vested.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
intrinsic value of vested options as of December 31, 2021 was approximately $<span id="xdx_904_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares_c20210401__20211231_zgxtv1oMvjlf" title="Vested options"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">40,000</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:ScheduleOfCommonStockWarrantsIssuedAndOutstandingTableTextBlock"><p id="xdx_89B_ecustom--ScheduleOfCommonStockWarrantsIssuedAndOutstandingTableTextBlock_zA3Tv1b0f66c" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
per the execution of the August 2021 private placement as disclosed in Note 2 and Note 10, common warrants and pre-funded warrants issued
and outstanding as of December 31, 2021 are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;<span id="xdx_8B2_zgclHYqBnzyi" style="display: none">SCHEDULE
OF COMMON STOCK WARRANTS ISSUED AND OUTSTANDING</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 70%">
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Number
    of Shares</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif">Warrants outstanding at March 31, 2021</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_982_eus-gaap--WarrantsAndRightsOutstanding_iS_c20210401__20211231_zXNyVkEVKYei" title="Warrants outstanding beginning balance" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl1559">-</span></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Pre-funded warrants
    issued</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_987_ecustom--PreFundedWarrantsIssuedOne_c20210401__20211231_znfnLVOMa291" title="Pre-funded warrants issued" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:PreFundedWarrantsIssuedOne" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">16,833,333</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">Warrants outstanding at December 31, 2021</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_982_eus-gaap--WarrantsAndRightsOutstanding_iE_c20210401__20211231_zyAgSUj55otl" title="Warrants outstanding Ending balance" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="us-gaap:WarrantsAndRightsOutstanding" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">51,500,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A9_z6qk85Aq2lVf" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock"><p id="xdx_89C_eus-gaap--ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock_zkZzlFi2WwZd" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, the Company&#8217;s warrants by expiration date were as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BF_zEn0u7B4op57" style="display: none">SCHEDULE
OF WARRANTS EXPIRATION</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Number
    of CommonWarrants</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Number
                                            of</span></p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">Pre-funded
                                            Warrants</span></p></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Exercise
    Price</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Expiration
    Date</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td id="xdx_98D_ecustom--CommonStockWarrantIssued_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_zoZhZ9BQfJZ9" title="Number of common warrants" style="width: 30%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:CommonStockWarrantIssued" contextRef="From2021-04-012021-12-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">34,666,667</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_988_ecustom--PreFundedWarrantsIssued_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_zlKkEo7DdjQh" title="Number of pre-funded warrants" style="width: 27%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl1571">-</span></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98F_ecustom--WarrantExercisePrice_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_zYuudhTBu2w4" title="Warrant Exercise Price" style="width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:WarrantExercisePrice" contextRef="From2021-04-012021-12-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.35</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span id="xdx_90F_eus-gaap--WarrantsAndRightsOutstandingMaturityDate_iI_dd_c20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_zxC14insaRJ" title="Expiration Date"><ix:nonNumeric contextRef="AsOf2021-12-31_custom_ExercisePriceRangeOneMember" format="ixt:datemonthdayyear" name="us-gaap:WarrantsAndRightsOutstandingMaturityDate">9/15/2026</ix:nonNumeric></span></span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td id="xdx_98C_ecustom--CommonStockWarrantIssued_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeTwoMember_zuBcfyB8Mev4" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span style="-sec-ix-hidden: xdx2ixbrl1576">-</span></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_981_ecustom--PreFundedWarrantsIssued_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeTwoMember_zeISwWaBZBx2" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:PreFundedWarrantsIssued" contextRef="From2021-04-012021-12-31_custom_ExercisePriceRangeTwoMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">16,833,333</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_987_ecustom--WarrantExercisePrice_c20210401__20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeTwoMember_zgvcXLL0y7J9" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:WarrantExercisePrice" contextRef="From2021-04-012021-12-31_custom_ExercisePriceRangeTwoMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: right; padding-bottom: 1.5pt"><span id="xdx_F2A_zQwgAUsYGuDg" style="font-family: Times New Roman, Times, Serif">N/A<span style="display: none; font-size: 10pt"><span id="xdx_90E_eus-gaap--WarrantsAndRightsOutstandingMaturityDate_iI_dd_c20211231__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeTwoMember_fKg_____zFjeO4VLqZo7"><span style="-sec-ix-hidden: xdx2ixbrl1579">-</span></span></span>*</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td id="xdx_98C_ecustom--CommonStockWarrantIssued_c20210401__20211231_za95I11SnOl6" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:CommonStockWarrantIssued" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">34,666,667</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_988_ecustom--PreFundedWarrantsIssued_c20210401__20211231_zVOspRFntZF4" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:PreFundedWarrantsIssued" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">16,833,333</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
</table>

<p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: right; margin-top: 0pt; margin-bottom: 0pt"></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F00_zCyAGdZl7A31" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="width: 5pt"></td><td style="text-align: justify"><span id="xdx_F11_zEb4IQfjIwN2" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001582" xml:lang="en-US">Pre-funded warrants
expire on the dates they are exercised.</ix:footnote></span></td>
</tr></table>

</ix:nonNumeric><p id="xdx_8A2_z06fWMzuetyh" style="margin-top: 0; margin-bottom: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
outstanding warrants are fully vested. </span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:StockRedemptionTextBlock"><p id="xdx_80F_ecustom--StockRedemptionTextBlock_zAfB10uddE26" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
9 &#8211; <span id="xdx_82F_z8K6dajOMXgb">AUGUST 2021 STOCK REDEMPTION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 5, 2021, the Company entered into a stock redemption agreement (the &#8220;Redemption Agreement&#8221;) with Koncepts and Treasure
Green, pursuant to which the Company redeemed <span id="xdx_900_eus-gaap--StockRedeemedOrCalledDuringPeriodShares_c20210801__20210805__us-gaap--TypeOfArrangementAxis__custom--RedemptionAgreementMember__dei--LegalEntityAxis__custom--KonceptsandTreasureGreenMember_zlVZAzxPUROh" title="Shares redeemed"><ix:nonFraction name="us-gaap:StockRedeemedOrCalledDuringPeriodShares" contextRef="From2021-08-012021-08-05_custom_RedemptionAgreementMember_custom_KonceptsandTreasureGreenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">19,623,155</ix:nonFraction></span> shares of common stock of the Company (the &#8220;Redeemed Shares&#8221;). The
closing of the transaction set forth in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were
assigned and transferred back to the Company and the Company paid approximately $<span id="xdx_901_eus-gaap--ConversionOfStockAmountIssued1_c20210801__20210805__dei--LegalEntityAxis__custom--KonceptsandTreasureGreenMember__us-gaap--TypeOfArrangementAxis__custom--RedemptionAgreementMember_zE1RpjBYAV88" title="Conversion of stock, amount issued"><ix:nonFraction name="us-gaap:ConversionOfStockAmountIssued1" contextRef="From2021-08-012021-08-05_custom_RedemptionAgreementMember_custom_KonceptsandTreasureGreenMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,162,000</ix:nonFraction></span> to Koncepts and Treasure Green. The Redeemed
Shares were retired and are available for reissuance in the future. Pursuant to the Redemption Agreement, neither Koncepts nor Treasure
Green remained shareholders of the Company.</span></p>
<!-- Field: Split-Segment; Name: 002 -->
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 57 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:PrivatePlacementTextBlock"><p id="xdx_800_ecustom--PrivatePlacementTextBlock_zMdkzjhOeTjj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
10 &#8211; <span id="xdx_821_zQ18apwkrjT1">AUGUST 2021 PRIVATE PLACEMENT</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 5, 2021, the Company entered into a securities purchase agreement (the &#8220;Purchase Agreement&#8221;) with large institutional
investors and the strategic investor for private placement of (i) <span id="xdx_90D_eus-gaap--CommonStockSharesIssued_iI_c20210805__us-gaap--TypeOfArrangementAxis__custom--PurchaseAgreementMember_zqzdr4okQRH1" title="Common stock, shares, issued"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-08-05_custom_PurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,500,001</ix:nonFraction></span> shares of its common stock (the &#8220;Shares&#8221;) together
with Common Warrants to purchase up to <span id="xdx_90A_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_c20210805__us-gaap--TypeOfArrangementAxis__custom--PurchaseAgreementMember_zTMpX1Ote0Yj" title="Warrants to purchase common stock"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" contextRef="AsOf2021-08-05_custom_PurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,500,000</ix:nonFraction></span> shares of common stock with an exercise price of $<span id="xdx_905_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20210805__us-gaap--TypeOfArrangementAxis__custom--PurchaseAgreementMember_zJu0bXt6rOme" title="Exercise price of warrants"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2021-08-05_custom_PurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.35</ix:nonFraction></span> per share, and (ii) <span id="xdx_908_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_c20210805__us-gaap--StatementEquityComponentsAxis__custom--PreFundedWarrantsMember_znk4we55sgr8" title="Class of Warrant or Right, Number of Securities Called by Each Warrant or Right"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2021-08-05_custom_PreFundedWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,833,333</ix:nonFraction></span>
pre-funded warrants (&#8220;Pre-Funded Warrants&#8221;) with each Pre-Funded Warrant exercisable for one share of common stock at an
exercise price of $<span id="xdx_907_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20210805__us-gaap--StatementEquityComponentsAxis__custom--PreFundedWarrantsMember_znf8771kcMC5" title="Exercise price of warrants"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2021-08-05_custom_PreFundedWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></span> per share, together with Common Warrants to purchase up to <span id="xdx_907_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_c20210805__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_zyTCpQulQe94" title="Issuance of warrant shares"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" contextRef="AsOf2021-08-05_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">16,833,333</ix:nonFraction></span> shares of common stock at an exercise price
of $<span id="xdx_90E_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20210805__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_zHlDhl0Na6Q5" title="Exercise price of warrants"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2021-08-05_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.35</ix:nonFraction></span> per share (the &#8220;Private Placement&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Common Warrants and Pre-Funded Warrants are collectively referred to as (the &#8220;Warrants&#8221;). The Warrants are exercisable at
any time at the option of the holder, have a term of 5 years from the issuance date and provide for cashless exercise under certain conditions.
The Company determined that the Warrants meet the conditions for equity classification. Shares issuable upon exercise of the Warrants
are hereinafter referred to as the &#8220;Warrant Shares&#8221;. The exercise price and number of the Warrant Shares are subject to anti-dilution
and other adjustments for certain stock dividends, stock splits, subsequent rights offerings, pro rata distributions or certain equity
structure changes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the terms of the Purchase Agreement, on September 3, 2021, the Company filed a registration statement providing for the resale by
the purchasers of the Shares and Warrant Shares sold in the Private Placement, which registration statement became effective on September
15, 2021. Additionally, under the terms of the Purchase Agreement, the Company is obligated to use its reasonable best efforts to submit
an application to have the Company&#8217;s common stock listed on a national exchange by December 31, 2021, and to use its reasonable
best efforts to have the Shares and Warrant Shares listed on such national exchange as soon as practicable following the submission of
such application. As of December 31, 2021 an application with NASDAQ has been submitted and is pending approval. Should the NASDAQ application
be approved, the shareholders of the Company have approved a reverse stock split simultaneous with the up-listing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
closing of the Private Placement took place on August 10, 2021, when the Shares and Warrants were delivered to the purchasers and funds,
in the amount of approximately $<span id="xdx_90D_eus-gaap--ProceedsFromWarrantExercises_c20210801__20210810_zMpgjqWYAop7" title="Proceeds from Warrant Exercises"><ix:nonFraction name="us-gaap:ProceedsFromWarrantExercises" contextRef="From2021-08-012021-08-10" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,832,000</ix:nonFraction></span>, were received by the Company. Approximately $<span title="Conversion of Stock, Shares Issued"><span id="xdx_901_eus-gaap--ConversionOfStockAmountIssued1_c20210801__20210810__dei--LegalEntityAxis__custom--KonceptsandTreasureGreenMember__us-gaap--TypeOfArrangementAxis__custom--RedemptionAgreementMember_zX7HrinBqVth"><ix:nonFraction name="us-gaap:ConversionOfStockAmountIssued1" contextRef="From2021-08-012021-08-10_custom_KonceptsandTreasureGreenMember_custom_RedemptionAgreementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,162,000</ix:nonFraction></span></span> of the funds was used to execute the
Redemption Agreement (See Note 9 &#8211; August 2021 Stock Redemption).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stingray
Group Inc. (&#8220;Stingray&#8221; or the &#8220;strategic investor&#8221;), a leading music, media and technology is part of the group
of investors who participated in the Private Placement and have acquired a minority interest in the Company. Stingray is a long-standing
business partner with the Company that provides our customers with music content from their extensive library of expertly produced and
licensed karaoke content and is now a related party (see Note 12- Related Party Transactions).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Private Placement, on July 6, 2021, the Company entered into a Placement Agency Agreement with A.G.P./Alliance Global
Partners (&#8220;AGP&#8221;), which provided for AGP to serve as the exclusive placement agent, advisor or underwriter (the &#8220;placement
agent services&#8221;). Pursuant to the Placement Agency Agreement, upon closing of the Private Placement, the Company paid AGP placement
fees of $<span id="xdx_90E_eus-gaap--PaymentsForRepurchaseOfPrivatePlacement_c20210701__20210706__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_z62l154r1Ngc" title="Payments for repurchase of private placement"><ix:nonFraction name="us-gaap:PaymentsForRepurchaseOfPrivatePlacement" contextRef="From2021-07-012021-07-06_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">630,000</ix:nonFraction></span> <span id="xdx_905_eus-gaap--DerivativeDescriptionOfTerms_c20210701__20210706_zdePjyKmPuJ5" title="Derivative, description of terms"><ix:nonNumeric contextRef="From2021-07-012021-07-06" name="us-gaap:DerivativeDescriptionOfTerms">(representing 7% of the gross proceeds raised in the Private Placement excluding proceeds raised from the strategic
investor, plus 3.5% of the aggregate gross proceeds raised from the strategic investor)</ix:nonNumeric></span>, and issued AGP warrants to purchase <span id="xdx_906_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_c20211231__us-gaap--ClassOfWarrantOrRightAxis__custom--AGPWarrantsMember_zMdFoMzm6pXc" title="Proceeds from issuance of private placement"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights" contextRef="AsOf2021-12-31_custom_AGPWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,333,333</ix:nonFraction></span>
shares of the Company&#8217;s common stock (the &#8220;Advisor Warrants&#8221;) (representing <span id="xdx_90F_ecustom--AggregateNumberOfShares_iI_pid_dp_uPure_c20210706_zLozz6TTeADg" title="Aggregate number of shares"><ix:nonFraction name="SMDM:AggregateNumberOfShares" contextRef="AsOf2021-07-06" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5</ix:nonFraction></span>% of the aggregate number of Shares and
Pre-Funded Warrants sold in the Private Placement, excluding the Shares sold to the strategic investor). The Advisor Warrants have the
same exercise price ($<span id="xdx_901_eus-gaap--SharePrice_iI_pid_c20210706_zXeewq7W9q5g" title="Exercise price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2021-07-06" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.35</ix:nonFraction></span>) and terms as the Common Warrants issued in the Private Placement. The Company estimated the fair value of
the Advisor Warrants to be approximately $<span id="xdx_90B_eus-gaap--EquityFairValueDisclosure_iI_c20210706_zKNs1n5VfRo9" title="Equity fair value disclosure"><ix:nonFraction name="us-gaap:EquityFairValueDisclosure" contextRef="AsOf2021-07-06" format="ixt:numdotdecimal" decimals="0" unitRef="USD">359,000</ix:nonFraction></span> using the Black-Scholes Model based on the following input assumptions: common stock
price of $<span id="xdx_90E_ecustom--SharePrice1_iI_c20210706_zmvFDiKiJ9R7" title="Common stock price"><ix:nonFraction name="SMDM:SharePrice1" contextRef="AsOf2021-07-06" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.33</ix:nonFraction></span>, expected life of the warrants of <span id="xdx_900_eus-gaap--WarrantsAndRightsOutstandingTerm_iI_dtY_uPure_c20210706_zkggjexKvRkb" title="Expected life of the warrants"><ix:nonNumeric contextRef="AsOf2021-07-06" format="ixt-sec:duryear" name="us-gaap:WarrantsAndRightsOutstandingTerm">2.5</ix:nonNumeric></span> years; stock price volatility of <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_c20210701__20210706_zHA47YP1n1Vk" title="Stock option, volatility"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-07-012021-07-06" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">168</ix:nonFraction></span>%; dividend yield of <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate_pid_dp_c20210701__20210706_z9soiZtPuts8" title="Expected dividend rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" contextRef="From2021-07-012021-07-06" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0</ix:nonFraction></span>%; and the risk-free interest
rate of <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_c20210701__20210706_zpYhLU8QTqkj" title="Stock option, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2021-07-012021-07-06" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">2.65</ix:nonFraction></span>%.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to the placement fees paid to AGP, the Company incurred additional offering costs for direct incremental legal, consulting,
accounting and filing fees related to the Private Placement of approximately $<span id="xdx_90B_eus-gaap--LegalFees_c20210401__20211231__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_zFQA5CSbma13" title="Legal fees"><ix:nonFraction name="us-gaap:LegalFees" contextRef="From2021-04-012021-12-31_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">390,000</ix:nonFraction></span>, of which one consultant was issued <span id="xdx_907_eus-gaap--StockIssuedDuringPeriodSharesRestrictedStockAwardGross_c20210401__20211231__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_z6hzNv6p6GZ8" title="Stock issued for restricted shares"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesRestrictedStockAwardGross" contextRef="From2021-04-012021-12-31_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">571,428</ix:nonFraction></span> shares
of restricted common stock with an aggregate fair value of approximately $<span id="xdx_902_eus-gaap--StockIssuedDuringPeriodValueRestrictedStockAwardGross_c20210401__20211231_z1yaJOYzaOlk" title="Stock issued for restricted shares, value"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueRestrictedStockAwardGross" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">189,000</ix:nonFraction></span> and a cash payment of $<span id="xdx_905_eus-gaap--Cash_iI_c20211231_zqw0W4sGDTHl" title="Cash"><ix:nonFraction name="us-gaap:Cash" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">100,000</ix:nonFraction></span>. Total offering costs
related to the Private Placement amounted to approximately $<span id="xdx_909_eus-gaap--DeferredOfferingCosts_iI_c20211231_zaZ6Ljwk74Fb" title="Offering costs"><ix:nonFraction name="us-gaap:DeferredOfferingCosts" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,379,000</ix:nonFraction></span>, which is recorded as an offset to additional paid in capital in
the accompanying condensed consolidated statements of stockholders&#8217; equity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 58 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->16<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:SegmentReportingDisclosureTextBlock"><p id="xdx_806_eus-gaap--SegmentReportingDisclosureTextBlock_zR2Ia8vER2qb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
11 - <span id="xdx_824_zjpXFeM8FiG1">GEOGRAPHICAL INFORMATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ScheduleOfRevenuesFromExternalCustomersAndLongLivedAssetsByGeographicalAreasTableTextBlock"><p id="xdx_89D_eus-gaap--ScheduleOfRevenuesFromExternalCustomersAndLongLivedAssetsByGeographicalAreasTableTextBlock_z3IHEpGdUoFd" style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
to customers outside of the United States for the three and nine months ended December 31, 2021 and 2020 were primarily made by the Macau
Subsidiary in US dollars. Sales by geographic region for the periods presented are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;<span id="xdx_8B7_zC1xnCgeoXFl" style="display: none">SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="display: none; vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" id="xdx_493_20211001__20211231_z7XKB4DbSKQj" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">2021</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" id="xdx_49F_20201001__20201231_zkyPL2v9apni" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">2020</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" id="xdx_498_20210401__20211231_zAHhCqguk5gh" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">2021</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" id="xdx_49B_20200401__20201231_zNsiX47uK6s" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">2020</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="6" style="padding-bottom: 1.5pt; text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">FOR
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</ix:nonNumeric><p id="xdx_8A0_zglApKF9yKqj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
geographic area of sales was based on the location where the product is delivered.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_807_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_zQroR8H9al54" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
12 &#8211;<span id="xdx_822_zfDbyrAxwzsc">RELATED PARTY TRANSACTIONS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
transactions listed below are related to the Company as Cosmo Communications, Inc (&#8220;Cosmo&#8221;) and Starlight Electronics Co.,
Ltd (&#8220;SLE&#8221;) are affiliates of our former Chairman of the Board, Mr. Phillip Lau. Additionally, Stingray is part of the group
of investors who participated in the Private Placement and have acquired a minority interest in the Company (see Note 10 &#8211; August
2021 Private Placement ).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DUE
TO/FROM RELATED PARTIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 31, 2021 and March 31, 2021, the Company had amounts due to related parties in the amounts of approximately $<span id="xdx_909_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_c20210331_zXmVf50XMqOd" title="Due to related parties"><span id="xdx_900_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_c20211231_zGguJab3pIS7" title="Due to related parties"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">63,000</ix:nonFraction></ix:nonFraction></span></span> respectively
for services provided by these companies and licensing fees for use of pedestal model molds and tools owned by the former parent company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 31, 2021 and March 31, 2021, the Company had amounts due from Stingray of approximately $<span id="xdx_909_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_c20211231__srt--TitleOfIndividualAxis__custom--StingrayMember_zvwHAf6ik6x8" title="Due to related parties"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-12-31_custom_StingrayMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">159,000</ix:nonFraction></span> and $<span id="xdx_901_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_c20210331__srt--TitleOfIndividualAxis__custom--StingrayMember_zMOaZcPXrb62" title="Due to related parties"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-03-31_custom_StingrayMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">88,000</ix:nonFraction></span>, respectively for
shared revenue from music content provided to our customers from their library of produced and licensed karaoke content.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TRADE</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has a music subscription sharing agreement with Stingray. For the three months ended December 31, 2021 and 2020 the Company received
music subscription revenue of approximately $<span id="xdx_904_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20211001__20211231__us-gaap--TypeOfArrangementAxis__custom--MusicSubscriptionMember_zsuHpmbbtIW" title="Revenues"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2021-10-012021-12-31_custom_MusicSubscriptionMember184396625" format="ixt:numdotdecimal" decimals="0" unitRef="USD">160,000</ix:nonFraction></span> and $<span id="xdx_909_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20201001__20201231__us-gaap--TypeOfArrangementAxis__custom--MusicSubscriptionMember_zMRK9RjvbnT" title="Revenues"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-10-012020-12-31_custom_MusicSubscriptionMember184396640" format="ixt:numdotdecimal" decimals="0" unitRef="USD">188,000</ix:nonFraction></span>, respectively. For the nine months ended December 31, 2021 and 2020
the Company received music subscription revenue of approximately $<span id="xdx_904_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20210401__20211231__us-gaap--TypeOfArrangementAxis__custom--MusicSubscriptionMember_zVXf7Jc2Kv59" title="Revenues"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2021-04-012021-12-31_custom_MusicSubscriptionMember184396656" format="ixt:numdotdecimal" decimals="0" unitRef="USD">384,000</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20200401__20201231__us-gaap--TypeOfArrangementAxis__custom--MusicSubscriptionMember_zXJnzwpWAgCb" title="Revenues"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-04-012020-12-31_custom_MusicSubscriptionMember184396671" format="ixt:numdotdecimal" decimals="0" unitRef="USD">290,000</ix:nonFraction></span>, respectively. These amounts were included as
a component of net sales in the accompanying condensed consolidated statements of income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company&#8217;s Canadian distributor and the
Company became the sole and exclusive distributor of the Company&#8217;s products in Canada. As part of the agreement, the companies
executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo&#8217;s karaoke inventory for approximately $<span id="xdx_907_eus-gaap--InventoryNet_iI_c20200730__us-gaap--TypeOfArrangementAxis__custom--PurchaseAndSalesAgreementMember_zIPkHVUbYiV9" title="Inventory"><ix:nonFraction name="us-gaap:InventoryNet" contextRef="AsOf2020-07-30_custom_PurchaseAndSalesAgreementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">685,000</ix:nonFraction></span>.
During the three and nine months ended December 31, 2021, there was a gain of approximately $<span id="xdx_90F_eus-gaap--RelatedPartyTransactionDueFromToRelatedParty_iI_c20211231_ziuHAzQsLBK6" title="Due from related party debt"><ix:nonFraction name="us-gaap:RelatedPartyTransactionDueFromToRelatedParty" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">11,000</ix:nonFraction></span> from Cosmo related to payments received
in Fiscal 2022 on prior year sales and the related receivable previously reversed and written off as initially deemed uncollectible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company incurred service expenses from SLE. The services from SLE were approximately $<span id="xdx_905_ecustom--ServiceExpenses_c20211001__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--StarlightElectronicsCoLtdMember_zchV3p99jkR7" title="Service expenses"><span id="xdx_900_ecustom--ServiceExpenses_c20201001__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--StarlightElectronicsCoLtdMember_zMqFwjgCbI9d" title="Service expenses"><ix:nonFraction name="SMDM:ServiceExpenses" contextRef="From2021-10-012021-12-31_custom_StarlightElectronicsCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="SMDM:ServiceExpenses" contextRef="From2020-10-012020-12-31_custom_StarlightElectronicsCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">91,000</ix:nonFraction></ix:nonFraction></span></span> for the three months ended December 31,
2021 and 2020. The services from SLE for the nine months ended December 31, 2021 and 2020 were approximately $<span id="xdx_902_ecustom--ServiceExpenses_c20210401__20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--StarlightElectronicsCoLtdMember_zH14tGHINRx8" title="Service expenses"><span id="xdx_90D_ecustom--ServiceExpenses_c20200401__20201231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--StarlightElectronicsCoLtdMember_zW7FcfS3BGGj" title="Service expenses"><ix:nonFraction name="SMDM:ServiceExpenses" contextRef="From2021-04-012021-12-31_custom_StarlightElectronicsCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="SMDM:ServiceExpenses" contextRef="From2020-04-012020-12-31_custom_StarlightElectronicsCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">272,000</ix:nonFraction></ix:nonFraction></span></span>. These amounts
were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:ReserveForSalesReturnsTextBlock"><p id="xdx_802_ecustom--ReserveForSalesReturnsTextBlock_zLAMD1pd9vw4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
13 &#8211; <span id="xdx_82A_zUjeSKEKpj4j">RESERVE FOR SALES RETURNS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are allowed
to return defective goods within a specified period of time after shipment (between 6 and 9 months). The Company does make occasional
exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions
as identified and management estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability
for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 59 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>December
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:ScheduleOfReserveForSalesReturnsTableTextBlock"><p id="xdx_893_ecustom--ScheduleOfReserveForSalesReturnsTableTextBlock_zbYMDocbExjd" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes
in the Company&#8217;s reserve for sales returns are presented in the following table:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="font: 10pt Times New Roman, Times, Serif">&#160;<span id="xdx_8B0_z2fHsXIeRivb" style="display: none">SCHEDULE OF RESERVE FOR SALES RETURNS</span></span></b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Nine
    Months Ended</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif">December 31,</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-family: Times New Roman, Times, Serif">December 31,</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">2021</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif">2020</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Reserve for sales returns at beginning
    of the year</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98F_ecustom--ReserveForSalesReturn_iS_c20210401__20211231_zka4jxb9dzf1" title="Reserve for sales returns at beginning of the year" style="width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ReserveForSalesReturn" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">960,000</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 2%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_983_ecustom--ReserveForSalesReturn_iS_c20200401__20201231_zufN7SQJVwE7" title="Reserve for sales returns at beginning of the year" style="width: 16%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ReserveForSalesReturn" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,224,000</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">Provision for estimated sales returns</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98F_ecustom--ProvisionForEstimatedSalesReturns_c20210401__20211231_zRiN1BuuEvxi" title="Provision for estimated sales returns" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ProvisionForEstimatedSalesReturns" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,020,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98B_ecustom--ProvisionForEstimatedSalesReturns_c20200401__20201231_zW1FzITnOdMc" title="Provision for estimated sales returns" style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ProvisionForEstimatedSalesReturns" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,187,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Sales returns received</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98C_ecustom--SalesReturnsReceived_c20210401__20211231_zULQ5l8s3efe" title="Sales returns received" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:SalesReturnsReceived" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,058,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td id="xdx_98E_ecustom--SalesReturnsReceived_c20200401__20201231_zy3bWkk58D0g" title="Sales returns received" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">(<ix:nonFraction name="SMDM:SalesReturnsReceived" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,445,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">Reserve for sales returns
    at end of the period</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_98A_ecustom--ReserveForSalesReturn_iE_c20210401__20211231_z1LxEYcmdAZ9" title="Reserve for sales returns at end of the period" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ReserveForSalesReturn" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,922,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td id="xdx_989_ecustom--ReserveForSalesReturn_iE_c20200401__20201231_zTseBbkB8sa7" title="Reserve for sales returns at end of the period" style="border-bottom: Black 2.5pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction name="SMDM:ReserveForSalesReturn" contextRef="AsOf2020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,966,000</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
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</ix:nonNumeric><p id="xdx_8A2_zSxnUoeOFRwl" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="SMDM:RefundsDueToCustomersTextBlock"><p id="xdx_808_ecustom--RefundsDueToCustomersTextBlock_zsNAYAQZROXi" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
14 &#8211; <span id="xdx_82C_zVGNe66OMeue">REFUNDS DUE TO CUSTOMERS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021 and March 31, 2021 the amount of refunds due to customers was approximately $<span id="xdx_903_eus-gaap--CustomerRefundLiabilityCurrent_iI_c20211231_zgqbLHuqdCnf" title="Refund due to customer"><ix:nonFraction name="us-gaap:CustomerRefundLiabilityCurrent" contextRef="AsOf2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">90,000</ix:nonFraction></span> and $<span id="xdx_90F_eus-gaap--CustomerRefundLiabilityCurrent_iI_c20210331_zXiUqCnCHrKe" title="Refund due to customer"><ix:nonFraction name="us-gaap:CustomerRefundLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">145,000</ix:nonFraction></span>, respectively,
primarily due to one customer for overstock returns.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:CompensationAndEmployeeBenefitPlansTextBlock"><p id="xdx_803_eus-gaap--CompensationAndEmployeeBenefitPlansTextBlock_z4WuUcQU6CWa" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
15 - <span id="xdx_821_zPR4LM0OK1y8">EMPLOYEE BENEFIT PLANS</span> </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee&#8217;s
contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged
to operations for contributions to this plan and administrative costs during the three months ended both December 31, 2021 and 2020 totaled
approximately $<span id="xdx_905_eus-gaap--DefinedContributionPlanAdministrativeExpenses_c20211001__20211231_zTloVEUXWwh1" title="Defined contribution plan, administrative expenses"><span id="xdx_90A_eus-gaap--DefinedContributionPlanAdministrativeExpenses_c20201001__20201231_zW2ouY34Uki" title="Defined contribution plan, administrative expenses"><ix:nonFraction name="us-gaap:DefinedContributionPlanAdministrativeExpenses" contextRef="From2021-10-012021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="us-gaap:DefinedContributionPlanAdministrativeExpenses" contextRef="From2020-10-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">20,000</ix:nonFraction></ix:nonFraction></span></span>. The amounts charged to operations for contributions to this plan and administrative costs during the nine months
ended December 31, 2021 and 2020 totaled approximately $<span id="xdx_90A_eus-gaap--DefinedContributionPlanAdministrativeExpenses_c20210401__20211231_z11fRcymyLj7" title="Defined contribution plan, administrative expenses"><ix:nonFraction name="us-gaap:DefinedContributionPlanAdministrativeExpenses" contextRef="From2021-04-01to2021-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">55,000</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--DefinedContributionPlanAdministrativeExpenses_c20200401__20201231_zYtGuQiaqPR4" title="Defined contribution plan, administrative expenses"><ix:nonFraction name="us-gaap:DefinedContributionPlanAdministrativeExpenses" contextRef="From2020-04-012020-12-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">54,000</ix:nonFraction></span>, respectively. The amounts are included as a component of
general and administrative expense in the accompanying condensed consolidated statements of income. The Company does not provide any
post-employment benefits to retirees.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-04-01to2021-12-31" escape="true" name="us-gaap:ConcentrationRiskDisclosureTextBlock"><p id="xdx_80A_eus-gaap--ConcentrationRiskDisclosureTextBlock_zvOnNFUMtkB6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
16 - <span id="xdx_82B_zdHhjccWTQ3a">CONCENTRATIONS OF CREDIT AND SALES RISK</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company derives a majority of its revenues from retailers of products in the United States. The Company&#8217;s allowance for doubtful
accounts is based upon management&#8217;s estimates and historical experience and reflects the fact that accounts receivable are concentrated
with several large</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">customers.
At December 31, 2021, approximately <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20210401__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--FourCustomersMember_zsZIgD7iAFCd" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-04-012021-12-31_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember_custom_FourCustomersMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">75</ix:nonFraction></span>% of accounts receivable were due from four customers in North America that individually owed over
10% of total accounts receivable. At March 31, 2021, <span id="xdx_906_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--ThreeCustomersMember_zpXPtl5Wlnzg" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember_custom_ThreeCustomersMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">70</ix:nonFraction></span>% of accounts receivable were due from three customers in North America that individually
owed over 10% of total accounts receivable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company generates most of its revenue from retailers of products in the United States with a significant amount of sales concentrated
with several large customers the loss of which could have an adverse impact on the financial position of the Company. For the three months
ended December 31, 2021, there were five customers who individually accounted for 10% or more of the Company&#8217;s net sales. Revenue
derived from these customers as a percentage of net sales were <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20211001__20211231__srt--MajorCustomersAxis__custom--CustomerOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zLTgqh5qrLic" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-10-012021-12-31_custom_CustomerOneMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">25</ix:nonFraction></span>%, <span id="xdx_907_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20211001__20211231__srt--MajorCustomersAxis__custom--CustomerTwoMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zit11ZCFOURe" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-10-012021-12-31_custom_CustomerTwoMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">24</ix:nonFraction></span>%, <span id="xdx_90E_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20211001__20211231__srt--MajorCustomersAxis__custom--CustomerThreeMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zabqRjJzWB39" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-10-012021-12-31_custom_CustomerThreeMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">17</ix:nonFraction></span>%, <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20211001__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerFourMember_zUFHqY8BzMDd" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-10-012021-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerFourMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">17</ix:nonFraction></span>% and <span id="xdx_901_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20211001__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerFiveMember_zwH3R3FU1Ca7" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-10-012021-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerFiveMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>% respectively. For the three months ended December
31, 2020, there were five customers who individually accounted for 10% or more of the Company&#8217;s net sales. Revenue derived from
these customers as a percentage of net sales were <span id="xdx_902_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20201001__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerOneMember_zO68Uqngcova" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-10-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerOneMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">22</ix:nonFraction></span>%, <span id="xdx_900_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20201001__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerTwoMember_zlzdUVZ8nWxg" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-10-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerTwoMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">22</ix:nonFraction></span>%, <span id="xdx_90C_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20201001__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerThreeMember_zHl1kMGYvDu3" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-10-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerThreeMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">19</ix:nonFraction></span>%, <span id="xdx_905_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20201001__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerFourMember_zHrpn4KMDEn" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-10-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerFourMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">12</ix:nonFraction></span>% and <span id="xdx_907_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20201001__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerFiveMember_zoQqAhYtwZ02" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-10-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerFiveMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">12</ix:nonFraction></span>%, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the nine months ended December 31, 2021, there were four customers who individually accounted for 10% or more of the Company&#8217;s
net sales. Revenue derived from these customers as a percentage of net sales were <span id="xdx_90D_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20210401__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerOneMember_zn6uzMMgsote" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-04-012021-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerOneMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">37</ix:nonFraction></span>%, <span id="xdx_906_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20210401__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerTwoMember_zGVLKgWjL67f" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-04-012021-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerTwoMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">19</ix:nonFraction></span>%, <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20210401__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerThreeMember_zPu42gDAddO6"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-04-012021-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerThreeMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">16</ix:nonFraction></span>% and <span id="xdx_900_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20210401__20211231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerFourMember_zvYg1zvc7pD3" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-04-012021-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerFourMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11</ix:nonFraction></span>%, respectively. For the nine months
ended December 31, 2020, there were four customers who individually accounted for 10% or more of the Company&#8217;s net sales. Revenue
derived from these customers as a percentage of net sales were <span id="xdx_90B_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20200401__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerOneMember_ztgjfscfRpkh" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerOneMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">34</ix:nonFraction></span>%, <span id="xdx_905_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20200401__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerTwoMember_zKKRHh6eIHOk" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerTwoMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">19</ix:nonFraction></span>%, <span id="xdx_903_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20200401__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerThreeMember_zf7goCfvMBPc" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerThreeMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13</ix:nonFraction></span>% and <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_c20200401__20201231__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerFourMember_zSzZetKPN1d5" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012020-12-31_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember_custom_CustomerFourMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13</ix:nonFraction></span>%, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2021, the Company secured vendor invoice credits of approximately $<span id="xdx_901_ecustom--DamagedGoods_c20210801__20210831_zt5NCje0R4Ng" title="Damaged goods"><ix:nonFraction name="SMDM:DamagedGoods" contextRef="From2021-08-012021-08-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">236,000</ix:nonFraction></span> from a factory involved with a damaged goods incident
during fiscal 2020 which is reflected as gain from extinguishment of accounts payable in the condensed consolidated statement of income
for the nine months ended December 31, 2021.</span></p>

</ix:nonNumeric><p id="xdx_81A_zIra0gYC1zih" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="ma_001"></span>REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the Board of Directors and Shareholders of</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine Company, Inc.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Opinion
on the Financial Statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have audited the accompanying consolidated balance sheets of The Singing Machine Company, Inc. and Subsidiaries (the &#8220;Company&#8221;)
as of March 31, 2021 and 2020, and the related consolidated statements of operations, cash flows, and shareholders&#8217; equity for
each of the years then ended, and the related notes (collectively referred to as the &#8220;financial statements&#8221;). In our opinion,
the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of March 31,
2021 and 2020, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity
with accounting principles generally accepted in the United States of America.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Basis
for Opinion</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
financial statements are the responsibility of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (&#8220;PCAOB&#8221;) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company&#8217;s internal control over financial reporting. Accordingly, we express no such opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Critical
Audit Matters</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Variable
Consideration</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
described in Note 1 to the consolidated financial statements, the Company provides for variable consideration estimated at the expected
value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to
the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is resolved. Variable consideration primarily includes reserves for sales returns and accruals for promotional
incentives. The Company estimates variable consideration under its return programs for goods returned from the customer for various reasons,
whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.
The Company selectively participates in retailer&#8217;s promotional incentives to maximize sales of the Company&#8217;s products on
the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing allowances to their customers.
The Company&#8217;s reserve for sales returns were approximately $1.0 million as of March 31, 2021. The Company&#8217;s accrual for promotional
incentives was approximately $0.5 million as of March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
identified management&#8217;s estimates for variable consideration as a critical audit matter due to the fact that there was significant
judgment required by management with respect to measurement uncertainty, as the calculation of these reserves and allowances includes
assumptions such as product sell through at retailers, as well historical product sales used to predict future sales in evaluating the
net realizable value of inventory returns. This in turn led to a high degree of auditor judgment, subjectivity and effort in applying
the procedures related to those assumptions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial
statements. We obtained an understanding and evaluated the design of controls over the Company&#8217;s estimates for variable consideration.
Our procedures also included, among others,(1) recalculating the sales return reserve based on our review of returns received subsequent
to year end and the net realizable value of the returned goods based on historical margins and product sales projections; (2) recalculating
the Company&#8217;s promotional incentive accrual based on specific customer arrangements and programs along with supporting documentation
from those customers; (3) performing a sensitivity analysis of the Company&#8217;s variable consideration by recalculating using our
independent assumptions; (4)evaluating the Company&#8217;s ability to accurately estimate the sales return reserve by comparing historically
recorded reserves to the actual amount that was ultimately claimed by the retailers; and (5) analyzing year over year trends in the reserve
and allowance in comparison with revenue trends to further evaluate reasonableness of the estimate and consistency with expectations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Inventory
Valuation</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
described in Note 1 to the consolidated financial statements, the Company&#8217;s inventories are stated at the lower of cost or net
realizable value. The Company maintains its inventory at the lower of cost or net realizable value based primarily on the age of the
inventory, estimated required sell-through time and whether items are selling below cost. In determining appropriate inventory reserve
percentages, the Company evaluates a number of factors including its historical write off experience, the specific products affected,
its historic recovery percentages on various methods of liquidations, as well as forecasts of future sales. Inventories, net, and the
inventory reserve at March 31, 2021, totaled $5.5 million and $0.6 million, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
identified the valuation of inventory as a critical audit matter due to the significant judgments necessary to identify and record the
inventory at the lower of cost or net realizable value timely. This in turn led to a high degree of auditor judgement, subjectivity and
effort in, performing audit procedures to evaluate management&#8217;s estimates of the net realizable value for the inventory on-hand
as of the reporting date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. We obtained an understanding and evaluated the design of controls over the Company&#8217;s inventory valuation.
Our procedures related to management&#8217;s estimates of the net realizable value of the inventory on-hand as of the reporting date
included the following, among others, (1) evaluating of the appropriateness and consistency of management&#8217;s methodology and assumptions
used in determining the inventory reserve; (2) obtaining the Company&#8217;s inventory at the lower of cost or net realizable value calculation
and testing the mathematical accuracy; (3) testing the accuracy and completeness of the underlying data used in the calculation of the
Company&#8217;s net realizable value; and (4) selecting a sample of inventory items, evaluating historical sales performance relative
to management&#8217;s conclusions on the ability to sell through the inventory on-hand at the forecasted levels as well as testing sales
subsequent to year-end to evaluate the Company&#8217;s ability to accurately estimate the inventory reserve relative to the net realizable
value.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have served as the Company&#8217;s auditor since 2016.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    EisnerAmper LLP</i></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EISNERAMPER
    LLP</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Iselin,
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">July
    14, 2021</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="ma_002"></span>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
BALANCE SHEETS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_30C_111_z02kdtieGpE6" summary="xdx: Statement - Condensed Consolidated Balance Sheets" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td colspan="2" id="xdx_495_20200331_zoOkqV9PGG71" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
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    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--CashAndCashEquivalentsAtCarryingValue_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_402_eus-gaap--AssetsCurrent_i02TIC_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40F_eus-gaap--PropertyPlantAndEquipmentNet_i01I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_402_eus-gaap--DeferredIncomeTaxAssetsNet_i01I_pp0p0" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_404_eus-gaap--OperatingLeaseRightOfUseAsset_i01I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40E_eus-gaap--OtherAssetsNoncurrent_i01I_pp0p0" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40E_eus-gaap--Assets_i01TIC_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--LiabilitiesAndStockholdersEquityAbstract_iB_zkdMu8jozVyk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-decoration: underline; font-weight: bold; text-align: center">Liabilities and Shareholders&#8217; Equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_409_eus-gaap--LiabilitiesCurrentAbstract_i01B" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--AccountsPayableCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_eus-gaap--AccruedLiabilitiesCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Accrued expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,659,499</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_403_ecustom--DueToRelatedPartyStarlightConsumer_i02I_maCzOaQ_zMO9tEPy3Ecb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Due to related party - Starlight Consumer Electronics Co., Ltd.</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:DueToRelatedPartyStarlightConsumer" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">14,400</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40B_ecustom--DueToRelatedPartyStarlightElectronicsCoLtd_i02I_maCzOaQ_zSLU0HZVNsq6" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Due to related party - Starlight Electronics Co., Ltd</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1841">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:DueToRelatedPartyStarlightElectronicsCoLtd" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">372,300</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_ecustom--DueToRelatedPartyStarlightRdLtd._i02I_maCzOaQ_z9kb6Hngbgph" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Due to related party - Starlight R&amp;D, Ltd.</td><td>&#160;</td>
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  <tr id="xdx_40C_eus-gaap--LinesOfCreditCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Revolving line of credit - Iron Horse Credit</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LinesOfCreditCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">64,915</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1848">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--ContractWithCustomerLiabilityCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Customer deposits</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">139,064</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1851">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--ContractWithCustomerRefundLiability_i02I_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Refunds due to customers</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">145,408</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">806,475</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_ecustom--ReserveForSalesReturns_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Reserve for sales returns</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:ReserveForSalesReturns" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,224,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--FinanceLeaseLiabilityCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Current portion of finance leases</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityCurrent" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">14,953</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_ecustom--InstallmentNoteCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Current portion of installment notes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:InstallmentNoteCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">68,332</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:InstallmentNoteCurrent" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">63,098</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--NotesPayableCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Current portion of note payable - Paycheck Protection Program</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:NotesPayableCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">172,685</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1866">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--OperatingLeaseLiabilityCurrent_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Current portion of operating lease liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">794,938</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">321,389</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--SubordinatedDebtCurrent_i02I_pp0p0_zWDuZKeYjaTd" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Current portion of related party subordinated note payable - Starlight Marketing Development, Ltd.</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:SubordinatedDebtCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">502,659</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1872">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--LiabilitiesCurrent_i02TIC_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: bold; text-align: left">Total Current Liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LiabilitiesCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,034,199</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LiabilitiesCurrent" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,502,409</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--FinanceLeaseLiabilityNoncurrent_i01I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Finance leases, net of current portion</td><td>&#160;</td>
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  <tr id="xdx_40C_eus-gaap--LongTermNotesPayable_i01I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_eus-gaap--OperatingLeaseLiabilityNoncurrent_i01I_pp0p0" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_406_eus-gaap--DueToRelatedPartiesNoncurrent_i01I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Subordinated related party debt - Starlight Marketing Development, Ltd., net of current portion</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_404_eus-gaap--Liabilities_i01TIC_pp0p0" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--CommitmentsAndContingencies_i01I_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Commitments and Contingencies</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--StockholdersEquityAbstract_i01B_z7uuDcCRWIUd" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Shareholders&#8217; Equity</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--PreferredStockValue_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1901">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1902">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--CommonStockValue_i02I_pp0p0_hus-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zUBAnBTeedMb" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Common stock, Class A, $<span id="xdx_90F_eus-gaap--CommonStockParOrStatedValuePerShare_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Common stock, par value"><span id="xdx_90E_eus-gaap--CommonStockParOrStatedValuePerShare_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-03-31_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2020-03-31_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></ix:nonFraction></span></span> par value; <span id="xdx_90E_eus-gaap--CommonStockSharesAuthorized_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Common stock, shares authorized"><span id="xdx_90D_eus-gaap--CommonStockSharesAuthorized_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-03-31_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2020-03-31_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000</ix:nonFraction></ix:nonFraction></span></span> shares authorized; <span id="xdx_909_eus-gaap--CommonStockSharesIssued_iI_do_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zlHW0hdVhAch" title="Common stock, shares issued"><span id="xdx_90D_eus-gaap--CommonStockSharesIssued_iI_do_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zDYUWz5bmfEk" title="Common stock, shares issued"><span id="xdx_901_eus-gaap--CommonStockSharesOutstanding_iI_do_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z6v7tf2Qz8o4" title="Common stock, shares outstanding"><span id="xdx_901_eus-gaap--CommonStockSharesOutstanding_iI_do_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zyGbxzMFdGIa" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-03-31_us-gaap_CommonClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2020-03-31_us-gaap_CommonClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-03-31_us-gaap_CommonClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2020-03-31_us-gaap_CommonClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares">no</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></span></span></span></span> shares
    issued and outstanding</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1920">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl1921">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--CommonStockValue_i02I_pp0p0_hus-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zDYKAjoxrqR6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left"><p style="margin-top: 0; margin-bottom: 0"></p>
                                                     <p style="margin-top: 0; margin-bottom: 0"></p>
                                                     <p style="margin-top: 0; margin-bottom: 0">Common stock, Class B, $<span id="xdx_90C_eus-gaap--CommonStockParOrStatedValuePerShare_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, par value"><span id="xdx_90F_eus-gaap--CommonStockParOrStatedValuePerShare_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2020-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></ix:nonFraction></span></span> par value;
                                            <span id="xdx_90F_eus-gaap--CommonStockSharesAuthorized_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares authorized"><span id="xdx_90E_eus-gaap--CommonStockSharesAuthorized_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2020-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000,000</ix:nonFraction></ix:nonFraction></span></span> shares authorized; <span id="xdx_907_eus-gaap--CommonStockSharesIssued_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares issued"><span id="xdx_902_eus-gaap--CommonStockSharesOutstanding_c20210331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">39,040,748</ix:nonFraction></ix:nonFraction></span></span> and <span id="xdx_906_eus-gaap--CommonStockSharesIssued_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares issued"><span id="xdx_905_eus-gaap--CommonStockSharesOutstanding_c20200331__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2020-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2020-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">38,557,643</ix:nonFraction></ix:nonFraction></span></span> shares issued and outstanding, respectively</p></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2021-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">390,407</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2020-03-31_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">385,576</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--CommonStockValue_i02I_pp0p0" style="display: none; vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Common stock value</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">390,407</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">385,576</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--AdditionalPaidInCapital_i02I_pp0p0_zif3WOR9Y1o2" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Additional paid-in capital</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:AdditionalPaidInCapital" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">19,773,322</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:AdditionalPaidInCapital" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">19,729,043</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--RetainedEarningsAccumulatedDeficit_i02I_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Accumulated deficit</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:RetainedEarningsAccumulatedDeficit" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">12,254,191</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_40F_eus-gaap--StockholdersEquity_i02TIC_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: bold; text-align: left; padding-bottom: 1.5pt">Total Shareholders&#8217; Equity</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:StockholdersEquity" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,909,538</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:StockholdersEquity" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,688,063</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--LiabilitiesAndStockholdersEquity_i01TIC_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total Liabilities and Shareholders&#8217; Equity</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the consolidated financial statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="ma_003"></span>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the consolidated financial statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="ma_004"></span>The Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></span></p>


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  <tr id="xdx_40D_ecustom--GainFromRelatedPartiesDebt_i02_pp0p0_zA1Te3jMzxM6" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Gain - related party</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:GainFromRelatedPartiesDebt" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">220,023</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2079">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_ecustom--GainFromSettlementOfAccountsPayable_i02_pp0p0_zFjQ0FS0OwN5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Gain from settlement of accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:GainFromSettlementOfAccountsPayable" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">390,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2082">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--IncreaseDecreaseInOperatingCapitalAbstract_i02B" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Changes in operating assets and liabilities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--IncreaseDecreaseInAccountsReceivable_i03N_pp0p0_di_zglSEGrkNBue" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Accounts receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivable" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">239,541</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivable" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">377,461</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_405_eus-gaap--IncreaseDecreaseDueFromAffiliates_i03N_pp0p0_di_zhtMHKPU1NDl" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Due from banks</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseDueFromAffiliates" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,168,682</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseDueFromAffiliates" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">151,659</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_40B_eus-gaap--IncreaseDecreaseInAccountsReceivableRelatedParties_i03N_pp0p0_di_zz6Oo6yvZhXc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Accounts receivable - related parties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivableRelatedParties" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">100,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsReceivableRelatedParties" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">188,941</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--IncreaseDecreaseInInsuranceSettlementsReceivable_i03N_pp0p0_di_zZ8vDKJc4Clh" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Insurance receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInInsuranceSettlementsReceivable" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">1,268,463</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInInsuranceSettlementsReceivable" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,268,463</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_40E_eus-gaap--IncreaseDecreaseInInventories_i03N_pp0p0_di_zULQ8ZcYOC74" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Inventories</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInInventories" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">1,908,683</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInInventories" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,756,966</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_403_eus-gaap--IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets_i03N_pp0p0_di_zX59dcgp6cjb" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Prepaid expenses and other current assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">31,402</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">21,805</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--IncreaseDecreaseInOtherNoncurrentAssets_i03N_pp0p0_di_zylIcM85hWFe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Other non-current assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInOtherNoncurrentAssets" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">3,336</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInOtherNoncurrentAssets" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">60,427</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_40D_eus-gaap--IncreaseDecreaseInAccountsPayable_i03_pp0p0_zGwTIotDxSb4" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Accounts payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayable" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">3,190,530</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayable" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,198,902</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--IncreaseDecreaseInAccruedIncomeTaxesPayable_i03_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Income Taxes Payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--IncreaseDecreaseInAccruedLiabilities_i03_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Accrued expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">130,331</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">704,433</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--IncreaseDecreaseInDueToRelatedParties_i03_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Due to related parties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInDueToRelatedParties" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">438,666</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInDueToRelatedParties" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">501,716</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--IncreaseDecreaseInContractWithCustomerLiability_i03_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Customer deposits</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInContractWithCustomerLiability" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">139,064</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2121">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_ecustom--IncreaseDecreaseInRefundsDueToCustomers_i03_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Refunds due to customers</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="SMDM:IncreaseDecreaseInRefundsDueToCustomers" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">661,067</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:IncreaseDecreaseInRefundsDueToCustomers" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">775,400</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_ecustom--IncreaseDecreaseInReserveForSalesReturns_i03_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Reserve for sales returns</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="SMDM:IncreaseDecreaseInReserveForSalesReturns" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">264,000</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:IncreaseDecreaseInReserveForSalesReturns" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">327,846</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_ecustom--IncreaseDecreaseInOperatingLeaseLiabilitiesNetOfOperatingLeasesRightOfUseAssets_i03_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left; padding-bottom: 1.5pt">Operating lease liabilities, net of operating leases - right of use assets</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="SMDM:IncreaseDecreaseInOperatingLeaseLiabilitiesNetOfOperatingLeasesRightOfUseAssets" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">14,945</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="SMDM:IncreaseDecreaseInOperatingLeaseLiabilitiesNetOfOperatingLeasesRightOfUseAssets" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">56,260</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_402_eus-gaap--NetCashProvidedByUsedInOperatingActivities_i01TC_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; text-align: left; padding-bottom: 1.5pt">Net cash provided by operating activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">171,017</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">444,765</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--NetCashProvidedByUsedInInvestingActivitiesAbstract_iB" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Cash flows from investing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--PaymentsToAcquirePropertyPlantAndEquipment_i01N_pp0p0_di_zZ1BHwoa0QJ2" style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; padding-left: 10pt; text-align: left">Purchase of property and equipment</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">201,161</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">517,546</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_407_eus-gaap--NetCashProvidedByUsedInInvestingActivities_i01TC_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 30pt; text-align: left">Net cash used in investing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInInvestingActivities" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">201,161</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInInvestingActivities" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">517,546</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_40F_eus-gaap--NetCashProvidedByUsedInFinancingActivitiesAbstract_iB" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Cash flows from financing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_ecustom--NetProceedsFromRevolvingLinesOfCredit_i01_pp0p0_zq3qli4QDgt8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; text-align: left">Net Proceeds from revolving lines of credit</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:NetProceedsFromRevolvingLinesOfCredit" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">64,915</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2148">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--ProceedsFromNotesPayable_i01_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; text-align: left">Proceeds from note payable - Payroll Protection Program</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_403_ecustom--OperatingLeasesRightOfUseAssetsInitialAdoption_i01_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; padding-left: 10pt; text-align: left">Operating leases - right of use assets initial adoption</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="padding-bottom: 2.5pt; padding-left: 10pt; text-align: left">Operating lease liabilities - initial adoption</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  <tr id="xdx_406_ecustom--OperatingLeasesRightOfUseAssetsAndLeaseLiabilitiesAtInceptionOfLease_i01_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; padding-left: 10pt; text-align: left">Operating leases - right of use assets and lease liabilities at inception of lease</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the consolidated financial statements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<!-- Field: Page; Sequence: 65 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="ma_005"></span>The
Singing Machine Company, Inc. and Subsidiaries</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF SHAREHOLDERS&#8217; EQUITY </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the twelve months ended March 31, 2021 and 2020</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_305_114_zH4eMHDjAeul" summary="xdx: Statement - Condensed Consolidated Statements of Shareholders&apos; Equity" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
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</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>See
notes to the consolidated financial statements.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="ma_006"></span>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p id="xdx_04C_c20200401__20210331_z42J1HawJYCh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:BasisOfAccounting"><p id="xdx_80F_eus-gaap--BasisOfAccounting_z9NPcb5WhTPc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
1 - <span id="xdx_82D_zSQv8RTd5Er8">BASIS OF PRESENTATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>OVERVIEW</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">The
Singing Machine Company, Inc., a Delaware corporation (the &#8220;Company,&#8221; &#8220;SMC&#8221;, &#8220;The Singing Machine&#8221;),
and wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada (&#8220;Macau Subsidiary&#8221;), SMC Logistics, Inc. (&#8220;SMCL&#8221;)
and SMC-Music, Inc. (&#8220;SMCM&#8221;), are primarily engaged in the development, marketing, and sale of consumer karaoke audio equipment,
accessories and musical recordings. The products are sold directly to distributors and retail customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is partially held by koncepts International Limited (&#8220;koncepts&#8221;) who is major shareholder of the Company, owning
approximately <span id="xdx_901_eus-gaap--EquityMethodInvestmentOwnershipPercentage_c20210331__dei--LegalEntityAxis__custom--KonceptsInternationalLimitedMember_pdd" title="Equity method investment, ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2021-03-31_custom_KonceptsInternationalLimitedMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">49</ix:nonFraction>%</span> of our shares of common stock outstanding on a fully diluted basis as of March 31, 2021. The Company is also partly
held by Treasure Green Holdings Ltd. (&#8220;Treasure Green) who owns approximately <span id="xdx_905_eus-gaap--EquityMethodInvestmentOwnershipPercentage_c20210331__dei--LegalEntityAxis__custom--TreasureGreenHoldingsLtdMember_pdd" title="Equity method investment, ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2021-03-31_custom_TreasureGreenHoldingsLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">2</ix:nonFraction>%</span> of our common stock. In total approximately <span id="xdx_900_eus-gaap--EquityMethodInvestmentOwnershipPercentage_c20210331__dei--LegalEntityAxis__custom--KonceptsInternationalLimitedAndTreasureGreenMember_pdd" title="Equity method investment, ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2021-03-31_custom_KonceptsInternationalLimitedAndTreasureGreenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">51</ix:nonFraction>%</span>
of the Company&#8217;s shares of common stock on a fully diluted basis as of March 31, 2021 are owned by koncepts and Treasure Green.
koncepts and Treasure Green are owned by Fairy King Prawn Holdings Limited (&#8220;Fairy King&#8221;), an investment holding company
incorporated in the British Virgin Islands, principally owned by the Company&#8217;s Chairman, Philip Lau.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do business with a number of entities that are principally owned by the Company&#8217;s Chairman, Philip Lau, including Starlight R&amp;D
Ltd (&#8220;SLRD&#8221;), Starlight Consumer Electronics USA, Inc., (&#8220;SCE&#8221;), Cosmo Communications Corporation of Canada,
Inc. (&#8220;Cosmo&#8221;), Winglight Pacific, Ltd (&#8220;Winglight&#8221;) and Starlight Electronics Company Ltd (&#8220;SLE&#8221;),
among others.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_80C_eus-gaap--SignificantAccountingPoliciesTextBlock_zw7P2XdttWda" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 - <span>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b style="display: none">&#160;<span id="xdx_822_z1fclXEB8p2h">SUMMARY OF ACCOUNTING POLICIES</span></b></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p id="xdx_841_eus-gaap--ConsolidationPolicyTextBlock_zNASKNTlpNHi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PRINCIPLES
OF CONSOLIDATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">The
accompanying consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMCL, and SMCM. All inter-company
accounts and transactions have been eliminated in consolidation for all periods presented.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_842_eus-gaap--UseOfEstimates_zwjMWcom7FRi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>USE
OF ESTIMATES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty
reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination
of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company&#8217;s
financial statements. However, circumstances could change which may alter future expectations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:TradeAndOtherAccountsReceivablePolicy"><p id="xdx_84F_eus-gaap--TradeAndOtherAccountsReceivablePolicy_zlB34fRWFDG8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>COLLECTIBILITY
OF ACCOUNTS RECEIVABLE</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">The
Singing Machine&#8217;s allowance for doubtful accounts is based on management&#8217;s estimates of the creditworthiness of its customers,
current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient
to respond to normal business conditions. Management sets <span id="xdx_903_ecustom--PercentageOfReservesForCustomers_c20200401__20210331_pdd" title="Percentage of reserves for customers"><ix:nonFraction name="SMDM:PercentageOfReservesForCustomers" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction>%</span> reserves for customers in bankruptcy and other allowances based upon historical
collection experience. The Company is subject to chargebacks from customers for co-op program incentives, defective returns, return freight
and handling charges that are deducted from open invoices and reduce collectability of open invoices. Should business conditions deteriorate
or any major customer default on its obligations to the Company, this allowance may need to be significantly increased, which would have
a negative impact on operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><p id="xdx_846_eus-gaap--ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock_z432BKaK7tgf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOREIGN
CURRENCY TRANSLATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">The
functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S.
dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs,
and expenses. Net gains and losses resulting from foreign exchange transactions are recorded in the statement of operations and translations
would be recorded in a separate component of shareholders&#8217; equity. Any such amounts were not material during the periods presented.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ConcentrationRiskCreditRisk"><p id="xdx_84D_eus-gaap--ConcentrationRiskCreditRisk_zwtqnBKoNqp" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>Concentration
of Credit Risk</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">At
times, the Company maintains cash in United States bank accounts that are in excess of the Federal Deposit Insurance Corporation insured
amounts. The Company maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at March
31, 2021 and 2020 were approximately $<span id="xdx_908_eus-gaap--ForeignFinancialInstitutionsActualDeposits_iI_pn5n6_c20210331_zkswsn3MY6ff" title="Foreign financial institutions actual deposits"><span id="xdx_90E_eus-gaap--ForeignFinancialInstitutionsActualDeposits_iI_pn5n6_c20200331_zHzVQE5YqLsd" title="Foreign financial institutions actual deposits"><ix:nonFraction name="us-gaap:ForeignFinancialInstitutionsActualDeposits" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD"><ix:nonFraction name="us-gaap:ForeignFinancialInstitutionsActualDeposits" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.2</ix:nonFraction></ix:nonFraction></span></span> million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 67 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:InventoryPolicyTextBlock"><p id="xdx_845_eus-gaap--InventoryPolicyTextBlock_z0eXy3HT8dv1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INVENTORY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inventories
are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable
value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected
future inventory returns due to warranty and allowance programs. As of March 31, 2021 and March 31, 2020 the estimated amounts for these
future inventory returns were approximately $<span id="xdx_90C_ecustom--FutureInventoryReturn_iI_pn5n6_c20210331_zq0SVM8DOoDl" title="Future inventory returns"><ix:nonFraction name="SMDM:FutureInventoryReturn" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.0</ix:nonFraction></span> million and $<span id="xdx_903_ecustom--FutureInventoryReturn_iI_pn5n6_c20200331_ziuZGsZ1uQn5" title="Future inventory returns"><ix:nonFraction name="SMDM:FutureInventoryReturn" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.4</ix:nonFraction></span> million, respectively. The Company reduces inventory on hand to its
net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below
its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below
cost. Management regularly reviews the Company&#8217;s investment in inventories for such declines in value. As of March 31, 2021 and
2020 the Company had inventory reserves of approximately and $<span id="xdx_90E_eus-gaap--InventoryValuationReserves_iI_pn5n6_c20210331_zvGj9ByxzQFd" title="Inventory reserves"><ix:nonFraction name="us-gaap:InventoryValuationReserves" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.6</ix:nonFraction></span> million and $<span id="xdx_90C_eus-gaap--InventoryValuationReserves_iI_pn5n6_c20200331_zQUvUOBerXv6" title="Inventory reserves"><ix:nonFraction name="us-gaap:InventoryValuationReserves" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.4</ix:nonFraction></span> million, respectively for estimated excess and obsolete
inventory.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock"><p id="xdx_841_eus-gaap--ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock_zC98ovNKrzYf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LONG-LIVED
ASSETS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the
carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying
amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards
Board (&#8220;FASB&#8221;) Accounting Standards Codification (&#8220;ASC&#8221;) 360-10-05, &#8220;Accounting for the Impairment or Disposal
of Long-Lived Assets.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock"><p id="xdx_84D_eus-gaap--PropertyPlantAndEquipmentPolicyTextBlock_zNk61RVll1Ub" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PROPERTY
AND EQUIPMENT</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property
and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred.
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated
and straight-line methods.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy"><p id="xdx_84E_eus-gaap--FairValueOfFinancialInstrumentsPolicy_z0LX8QYTOqJ5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FAIR
VALUE OF FINANCIAL INSTRUMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">We
follow FASB ASC 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments
for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the
amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
carrying amounts of the Company&#8217;s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses,
customer deposits, refunds due to customers, and due to related parties approximates fair value due to the relatively short period to
maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment notes approximate fair value
either due to the relatively short period to maturity or the related interest is accrued at a rate similar to market rates. The carrying
amounts on the revolving line of credit approximates fair value due the relatively short period to maturity and related interest accrued
at market rates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:RevenueFromContractWithCustomerPolicyTextBlock"><p id="xdx_84A_eus-gaap--RevenueFromContractWithCustomerPolicyTextBlock_zQgQ4sEAzKof" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REVENUE
RECOGNITION AND RESERVE FOR SALES RETURNS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes revenue in accordance with FASB ASC 606, &#8220;Revenue from Contracts with Customers&#8221;. All revenue is generated
from contracts with customers. The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an
amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange
for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification of the contract with
a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination
of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when,
or as, the Company transfers control of the product or service for each performance obligation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company selectively participates in a retailer&#8217;s co-op promotion incentives to maximize sales of the Company&#8217;s products on
the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our
customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair
value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers
are recorded as a reduction to net sales. Co-op promotion incentives were approximately $<span id="xdx_900_eus-gaap--AdvertisingExpense_pn5n6_c20200401__20210331_zdoWkGI7ggUi" title="Co-op promotion incentives"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.0</ix:nonFraction></span> million during fiscal 2021 and $<span id="xdx_90D_eus-gaap--AdvertisingExpense_pn5n6_c20190401__20200331_zhpHaOVrYcU5" title="Co-op promotion incentives"><ix:nonFraction name="us-gaap:AdvertisingExpense" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.9</ix:nonFraction></span> million
during fiscal 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s contracts with customers consist of one performance obligation (the sale of the Company&#8217;s products). The Company&#8217;s
contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations
once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive
for the sale of these goods.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Costs
incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in
general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions
are included in selling expenses in the accompanying consolidated statements of operations as our underlying customer agreements are
less than one year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 68 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke
hardware and the Company has no other material business segments (See NOTE 10 &#8211; SEGMENT INFORMATION).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the
occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending
on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant
reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
The Company estimates variable consideration under our return allowance programs for goods returned from the customer for various reasons,
whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product
lines consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B8_zLVW7meiPZtk">SCHEDULE OF DISAGGREGATION OF REVENUE</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 70%">
  <tr style="display: none; vertical-align: bottom">
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    <td style="text-align: left; padding-bottom: 1.5pt">Music Subscriptions</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--Revenues_zh24IPbyOYjl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</ix:nonNumeric><p id="xdx_8A2_z2qySFdAC2Qb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:ShippingAndHandlingCostsPolicyTextBlock"><p id="xdx_84A_ecustom--ShippingAndHandlingCostsPolicyTextBlock_zYOkw5jRoDq5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SHIPPING
AND HANDLING COSTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shipping
and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to
fulfill the Company&#8217;s promise to transfer the goods. For both Fiscal 2021 and 2020 shipping and handling expenses were approximately
$<span id="xdx_909_ecustom--ShippingAndHandlingExpenses_pn5n6_c20200401__20210331_zbzorxQmVFFh" title="Shipping and handling expenses"><span id="xdx_902_ecustom--ShippingAndHandlingExpenses_pn5n6_c20190401__20200331_zTDwEdTuBBT1" title="Shipping and handling expenses"><ix:nonFraction name="SMDM:ShippingAndHandlingExpenses" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD"><ix:nonFraction name="SMDM:ShippingAndHandlingExpenses" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.2</ix:nonFraction></ix:nonFraction></span></span> million. These expenses are classified as a component of selling expenses in the accompanying consolidated statements of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><p id="xdx_848_eus-gaap--ShareBasedCompensationOptionAndIncentivePlansPolicy_zeFnohjFXZ74" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>STOCK-BASED
COMPENSATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the provisions of the FASB ASC 718-20, &#8220;Compensation &#8211; Stock Compensation Awards Classified as Equity&#8221;.
ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed
in the consolidated statement of operations over the service period (generally the vesting period). The Company uses the Black-Scholes
option valuation model to value stock options. Employee stock option compensation expense in fiscal years 2021 and 2020 includes the
estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion
of the award. For the years ended March 31, 2021 and 2020, the stock option expense was approximately $<span id="xdx_900_eus-gaap--StockOptionPlanExpense_c20200401__20210331_pp0p0" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">10,000</ix:nonFraction></span> and $<span id="xdx_90A_eus-gaap--StockOptionPlanExpense_c20190401__20200331_pp0p0" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">20,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions
outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected
term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s directors were issued shares of stock as compensation for their service. For the years ended March 31, 2021and 2020,
the stock compensation expense to directors was $<span id="xdx_902_eus-gaap--AllocatedShareBasedCompensationExpense_c20200401__20210331_pp0p0" title="Stock compensation expense"><span id="xdx_90A_eus-gaap--AllocatedShareBasedCompensationExpense_c20190401__20200331_pp0p0" title="Stock compensation expense"><ix:nonFraction name="us-gaap:AllocatedShareBasedCompensationExpense" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:AllocatedShareBasedCompensationExpense" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">12,500</ix:nonFraction></ix:nonFraction></span></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ResearchAndDevelopmentExpensePolicy"><p id="xdx_843_eus-gaap--ResearchAndDevelopmentExpensePolicy_zs4gd9Y1cWui" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>RESEARCH
AND DEVELOPMENT COSTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and
administrative expenses in the consolidated statements of operations. For both years ended March 31, 2021 and 2020, these amounts totaled
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_843_eus-gaap--IncomeTaxPolicyTextBlock_zuqohkI51qD8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INCOME
TAXES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the provisions of FASB ASC 740 &#8220;Accounting for Income Taxes.&#8221; Under the asset and liability method of ASC
740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized,
a valuation allowance is recognized.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed
tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is
reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the
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were no uncertain tax positions that resulted in any adjustment to the Company&#8217;s provision for income taxes. The Company recognizes
interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities
recorded for accrued interest or penalties related to uncertain tax provisions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B7_zEuDmsEnOX7b">SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNING PER SHARE</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 90%">
  <tr style="vertical-align: bottom">
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    <td colspan="2" id="xdx_49C_20200401__20210331_zUDXaU8ZpMQb" style="border-bottom: Black 1.5pt solid; text-align: center">Fiscal year ended March 31, 2021</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Effect of dilutive stock options</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--WeightedAverageNumberOfDilutedSharesOutstanding_z6cjWOPfFOT" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Diluted weighted average of common shares outstanding</td><td style="padding-bottom: 2.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8A6_zW7TYajrgik1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Basic
net income per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income
per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options
and the proceeds thereof were used to purchase shares of Company common stock at the average market price during the period using the
treasury stock method.</span> For fiscal years ended March 31, 2021 and 2020, options to purchase approximately <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward_c20200401__20210331_pdd" title="Options to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardSharesPurchasedForAward" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">750,000</ix:nonFraction></span> shares and
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:AdoptionOfNewAccountingStandardsPolicyTextBlock"><p id="xdx_84D_ecustom--AdoptionOfNewAccountingStandardsPolicyTextBlock_zquQv7VtYGEa" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ADOPTION
OF NEW ACCOUNTING STANDARDS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2019, the FASB issued ASU 2019-12, &#8220;Income Taxes <i>(Topic 740). </i>Among several issues addressed in this ASU, there
was one area that may potentially affect the Company&#8217;s calculations of interim income tax provision or benefit. The guidance specifies
that an entity should apply the annual effective tax rate to the year-to date income or loss as long as the tax benefits for any losses
are expected to be realized during the year or would be recognizable as a deferred tax asset at the end of the year eliminating the requirement
of a valuation allowance for that interim period. There is specific guidance for circumstances in which an entity incurs a loss on a
year-to-date basis that exceeds the anticipated ordinary loss for the year, which is an exception to the general guidance in Subtopic
740-270. The Company adopted the standard for the fiscal year ended March 31, 2021. The adoption of this standard did not have a material
effect on our consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_840_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_ztfziS6VRAug" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><b>RECENT
ACCOUNTING PRONOUNCEMENTS:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2016, the FASB issued ASU 2016-13, &#8220;Financial Instruments&#8212;Credit Losses&#8221; <i>(Topic 326)</i>. This ASU represents
a significant change in the current accounting model by requiring immediate recognition of management&#8217;s estimates of current expected
credit losses. Under the prior model, losses were recognized only as they were incurred, which delayed recognition of expected losses
that might not yet have met the threshold of being probable. The amendments in ASU 2016-03 are effective for our fiscal year beginning
April 1, 2023 including interim periods within that fiscal year. Early adoption is permitted. We are currently evaluating the potential
effects of this updated guidance on our consolidated financial statements and related disclosures.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b></b></span></p>

<ix:exclude><!-- Field: Page; Sequence: 70 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:InventoryDisclosureTextBlock"><p id="xdx_80E_eus-gaap--InventoryDisclosureTextBlock_zVxTj9jc0e6k" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
3 &#8211;</b>&#160; <b><span id="xdx_826_zBQfwF4CJI7a">INVENTORIES, NET</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfInventoryCurrentTableTextBlock"><p id="xdx_896_eus-gaap--ScheduleOfInventoryCurrentTableTextBlock_zjsdpUEYorr2" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
are comprised of the following components:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B7_zCeHkT5kcYb1">SCHEDULE OF INVENTORY</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" id="xdx_499_20210331__us-gaap--LongTermPurchaseCommitmentByCategoryOfItemPurchasedAxis__us-gaap--InventoriesMember_z2XgyJKQ0n2f" style="text-align: center">March 31,</td><td>&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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  <tr id="xdx_401_eus-gaap--InventoryFinishedGoods_iI_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_400_eus-gaap--OtherInventoryInTransit_iI_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Inventory in Transit</td><td>&#160;</td>
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    <td style="text-align: left; padding-bottom: 2.5pt">Total Inventories</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8A8_zTNsBuL9Sq8l" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p id="xdx_80F_eus-gaap--PropertyPlantAndEquipmentDisclosureTextBlock_zXp7AmT8PATc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
4 - <span id="xdx_822_zcWbHQMpiqm6">PROPERTY AND EQUIPMENT</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><p id="xdx_890_eus-gaap--PropertyPlantAndEquipmentTextBlock_zZQHENIVBuB8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">A
summary of property and equipment is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif; display: none">&#160;<span id="xdx_8B6_z7KxPDZ4hVMe">SUMMARY OF PROPERTY AND EQUIPMENT</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">USEFUL</td><td>&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center">LIFE</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
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  <tr id="xdx_400_eus-gaap--PropertyPlantAndEquipmentOtherNet_iI_zlLjH0buYmDa" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center; padding-bottom: 2.5pt">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentOtherNet" contextRef="AsOf2021-03-31_us-gaap_PropertyPlantAndEquipmentMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">700,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentOtherNet" contextRef="AsOf2020-03-31_us-gaap_PropertyPlantAndEquipmentMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">800,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AC_zJm4QDtW3Mza" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depreciation
expense for fiscal years ended 2021 and 2020 was approximately $<span id="xdx_90B_eus-gaap--Depreciation_pn5n6_c20200401__20210331_zEJzrh7f05pe" title="Depreciation expense"><span id="xdx_909_eus-gaap--Depreciation_pn5n6_c20190401__20200331_zqZT0VJDSKaa" title="Depreciation expense"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.3</ix:nonFraction></ix:nonFraction></span></span> million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:DebtDisclosureTextBlock"><p id="xdx_804_eus-gaap--DebtDisclosureTextBlock_zavHmpjDXKNb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
5 &#8211; <span>FINANCING</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b style="display: none">&#160;<span><span id="xdx_82E_zmovfcekH3k9">BANK FINANCING</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Intercreditor
Revolving Credit Facility Crestmark Bank and Iron Horse Credit</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility on eligible accounts receivable and inventory which replaced
the Company&#8217;s previous revolving credit facility with PNC Bank which was terminated on June 16, 2020. The Company signed a two-year
Loan and Security Agreement for a $<span id="xdx_90C_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn5n6_c20200616__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_zsh2L7NO8M3f" title="Line of credit facility, maximum borrowing amount"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2020-06-16_custom_TwoYearLoanAndSecurityAgreementMember_us-gaap_RevolvingCreditFacilityMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">10.0</ix:nonFraction></span> million financing facility (decreasing to $<span id="xdx_90C_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_pn5n6_c20200613__20200616__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember__srt--StatementScenarioAxis__custom--OffPeakSeasonMember_zq82YWzJGfAg" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2020-06-132020-06-16_us-gaap_RevolvingCreditFacilityMember_custom_OffPeakSeasonMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.0</ix:nonFraction></span> million in off-peak season) with Crestmark Bank
(&#8220;Crestmark Facility&#8221;) on eligible accounts receivable. The outstanding loan balance cannot exceed $<span id="xdx_90C_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_pn5n6_c20200613__20200616__srt--RangeAxis__srt--MaximumMember__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zpmELuZvafC2" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2020-06-132020-06-16_us-gaap_RevolvingCreditFacilityMember_srt_MaximumMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">10.0</ix:nonFraction></span> million during peak
selling season between July 1 and December 31and is reduced to a maximum of $<span id="xdx_904_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_pn5n6_c20200613__20200616__srt--StatementScenarioAxis__custom--PeakSellingSeasonBetweenJanuaryOneAndJulyThirtyOneMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember_z2YvKRdSUOxc" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember_custom_PeakSellingSeasonBetweenJanuaryOneAndJulyThirtyOneMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.0</ix:nonFraction> </span>million between January 1 and July 31. Costs associated
with closing of the Intercreditor Revolving Credit Facility of approximately $<span id="xdx_90C_ecustom--CostAssociatedWithRevolvingCreditFacilityDeferred_c20200613__20200616__srt--StatementScenarioAxis__custom--AmortizedOverOneYearMember__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zhwSh9sIdbl9" title="Cost associated with Revolving credit facility deferred"><ix:nonFraction name="SMDM:CostAssociatedWithRevolvingCreditFacilityDeferred" contextRef="From2020-06-132020-06-16_us-gaap_RevolvingCreditFacilityMember_custom_AmortizedOverOneYearMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">74,000</ix:nonFraction></span> were deferred and are being amortized over one year.
During fiscal years ended March 31, 2021 and 2020 the Company incurred amortization expense of approximately $<span id="xdx_90D_eus-gaap--AmortizationOfFinancingCosts_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--IntercreditorRevolvingCreditFacilityMember_pp0p0" title="Amortization of deferred financing costs"><ix:nonFraction name="us-gaap:AmortizationOfFinancingCosts" contextRef="From2020-04-012021-03-31_custom_IntercreditorRevolvingCreditFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">62,000</ix:nonFraction></span> and $<span id="xdx_902_eus-gaap--AmortizationOfFinancingCosts_c20190401__20200331__us-gaap--TypeOfArrangementAxis__custom--IntercreditorRevolvingCreditFacilityMember_pp0p0" title="Amortization of deferred financing costs"><ix:nonFraction name="us-gaap:AmortizationOfFinancingCosts" contextRef="From2019-04-012020-03-31_custom_IntercreditorRevolvingCreditFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></span>, respectively
associated with the amortization of deferred financing costs from the Intercreditor Revolving Credit Facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Crestmark Facility:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
    rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crestmark
    shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crestmark
    will implement an availability block of 20% of amounts due on Iron Horse Credit (&#8220;IHC&#8221;) Intercreditor Revolving Credit
    Facility. See below</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mandatory
    pay-down of the loan to zero in January and February each year.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable
and Inventory. Notwithstanding the foregoing, Crestmark shall subordinate its first security interest in inventory to IHC as agreed between
all parties. The Crestmark Facility bears interest at the Wall Street Journal Prime Rate plus <span id="xdx_906_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__us-gaap--VariableRateAxis__us-gaap--PrimeRateMember_zR7K790g5Bc6" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember_us-gaap_PrimeRateMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.50</ix:nonFraction></span>% with a floor of <span id="xdx_90B_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__us-gaap--DerivativeInstrumentRiskAxis__us-gaap--InterestRateFloorMember_zDtms3wZM7Th" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember_us-gaap_InterestRateFloorMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8.75</ix:nonFraction></span>%. Interest and
Maintenance Fees shall be calculated on the higher of the actual average monthly loan balance from the prior month or a minimum average
loan balance of $<span id="xdx_903_eus-gaap--PrincipalAmountOutstandingOnLoansSecuritized_iI_pn5n6_c20200616__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember_zP6WKxkBv0X8" title="Average loan balance"><ix:nonFraction name="us-gaap:PrincipalAmountOutstandingOnLoansSecuritized" contextRef="AsOf2020-06-16_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.0</ix:nonFraction></span> million. For the fiscal years ended March 31, 2021 and 2020 the Company recorded interest expense under the Crestmark
Facility of approximately $<span id="xdx_905_eus-gaap--InterestExpense_pn5n6_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zRIt5AuW59Zk" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012021-03-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.2</ix:nonFraction></span> million and $<span id="xdx_901_eus-gaap--InterestExpense_pn5n6_c20190401__20200331__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zTYPIsWTV3q7" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2019-04-012020-03-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.0</ix:nonFraction></span> million, respectively. The Crestmark Facility expires on <span id="xdx_904_eus-gaap--LineOfCreditFacilityExpirationDate1_dd_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--CrestmarkBankMember_zogBVWxe7H9c" title="Credit facility expiry date"><ix:nonNumeric contextRef="From2020-04-012021-03-31_custom_RevolvingCreditFacilitiesMember_custom_CrestmarkBankMember" format="ixt:datemonthdayyearen" name="us-gaap:LineOfCreditFacilityExpirationDate1">June 15, 2022</ix:nonNumeric></span>. As of
March 31, 2021 and 2020 the Company had no outstanding balance on the Crestmark Facility. In addition, the Company executed a two-year
Loan and Security Agreement with Iron Horse Credit (&#8220;IHC Facility&#8221;) for up to $<span id="xdx_903_ecustom--InventoryFinancing_iI_pn5n6_c20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_zYvmr7nOvpX1" title="Inventory financing"><ix:nonFraction name="SMDM:InventoryFinancing" contextRef="AsOf2021-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.5</ix:nonFraction></span> million in inventory financing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 71 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the IHC Facility:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
    rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined
    by an independent third-party appraiser engaged by IHC.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before
    interest, taxes, depreciation and amortization (&#8220;EBITDA&#8221;) less non-financed capital expenditures, cash dividends and
    distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. This financial covenant
    was waived for the first six months of the IHC Facility. As of March 31, 2021, the Company was in compliance with this covenant.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
IHC Facility is secured by a perfected security interest in the Company&#8217;s inventory. The IHC Facility bears interest at <span id="xdx_90B_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__srt--StatementScenarioAxis__custom--InterestRatePerMonthMember__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_z9tlH2nuy9n1" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember_custom_InterestRatePerMonthMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.292</ix:nonFraction></span>%
per month or <span id="xdx_904_eus-gaap--LineOfCreditFacilityInterestRateDuringPeriod_pid_dp_uPure_c20200613__20200616__srt--StatementScenarioAxis__custom--InterestRateAnnuallyMember__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_zyid0j5qsBVa" title="Line of credit facility, interest rate during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityInterestRateDuringPeriod" contextRef="From2020-06-132020-06-16_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember_custom_InterestRateAnnuallyMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15.51</ix:nonFraction></span>% annually. Interest shall be calculated on the higher of the actual average monthly loan balance from the prior
month or a minimum average loan balance of $<span id="xdx_901_eus-gaap--LoansPayable_c20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_pp0p0" title="Loan balance"><ix:nonFraction name="us-gaap:LoansPayable" contextRef="AsOf2021-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,000,000</ix:nonFraction></span>. Interest expense under the IHC Facility for the fiscal years ended March 31,
2021 and 2020 was approximately $<span id="xdx_900_eus-gaap--InterestExpense_pn5n6_c20200401__20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_z7GnojHXJj3g" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012021-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million and $<span id="xdx_901_eus-gaap--InterestExpense_pn5n6_c20190401__20200331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_znRe16zDyGzc" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2019-04-012020-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.0</ix:nonFraction></span> million, respectively. The IHC Facility expires on <span id="xdx_90A_eus-gaap--LineOfCreditFacilityExpirationDate1_dd_c20200401__20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_zeGih4eKxwH7" title="Credit facility expiry date"><ix:nonNumeric contextRef="From2020-04-012021-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LineOfCreditFacilityExpirationDate1">June 15, 2022</ix:nonNumeric></span>. As of March
31, 2021 and 2020, there was an outstanding balance of approximately $<span id="xdx_90F_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_c20200401__20210331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_pp0p0" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2020-04-012021-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,000</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod_c20190401__20200331__us-gaap--CreditFacilityAxis__custom--IHCFacilityMember__us-gaap--TypeOfArrangementAxis__custom--TwoYearLoanAndSecurityAgreementMember_pp0p0" title="Line of credit facility, maximum amount outstanding during period"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumAmountOutstandingDuringPeriod" contextRef="From2019-04-012020-03-31_custom_IHCFacilityMember_custom_TwoYearLoanAndSecurityAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a
revision or extension of these debt facilities upon their maturity however, there can be no assurance that such revision or extension
will occur or at what terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Revolving
Credit Facility PNC Bank</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 22, 2017, the Company renewed the existing revolving credit facility (the &#8220;PNC Revolving Credit Facility&#8221;) with PNC
Bank, National Association (&#8220;PNC&#8221;) for an additional three years which was terminated on June 16, 2020 and replaced by the
Intercreditor Revolving Credit Facility with Crestmark and IHC. In September 2019, the Company defaulted on the PNC Revolving Credit
Facility due to non-compliance with the fixed charge coverage ratio requirement. In November 2019, the Company entered into a Forbearance
Agreement with PNC whereby PNC delayed taking action they would have been entitled to under a default through March 31, 2020. The Company
remained in default of the Forbearance Agreement up until termination of the Revolving Credit Facility on June 16, 2020 at which time
the Company executed the Intercreditor Revolving Credit Facility with Crestmark and IHC. As of March 31, 2021, and 2020 there were no
amounts due on the PNC Revolving Credit Facility. During the fiscal years ended March 31, 2021 and 2020 the Company incurred interest
expense of approximately $<span id="xdx_90F_eus-gaap--InterestExpense_pn5n6_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--PNCBankMember_zeaJ4uejS1Z1" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012021-03-31_custom_RevolvingCreditFacilitiesMember_custom_PNCBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.0</ix:nonFraction></span> million and $<span id="xdx_90A_eus-gaap--InterestExpense_pn5n6_c20190401__20200331__us-gaap--TypeOfArrangementAxis__custom--RevolvingCreditFacilitiesMember__us-gaap--CreditFacilityAxis__custom--PNCBankMember_z4U3d7kpmATj" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2019-04-012020-03-31_custom_RevolvingCreditFacilitiesMember_custom_PNCBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million, respectively on amounts borrowed against the PNC Revolving Credit Facility.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
Payable Payroll Protection Plan</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $<span id="xdx_909_eus-gaap--ProceedsFromLoanOriginations1_pn5n6_c20200504__20200505__us-gaap--TypeOfArrangementAxis__custom--PaycheckProtectionProgramMember_zocAxEUQZeK2" title="Proceeds from loan"><ix:nonFraction name="us-gaap:ProceedsFromLoanOriginations1" contextRef="From2020-05-042020-05-05_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.4</ix:nonFraction> </span>million under the Paycheck Protection
Program (&#8220;PPP&#8221;). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (&#8220;CARES Act&#8221;),
which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying
business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including
payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced if the borrower
terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan is payable over two years
at an interest rate of 1%, with a deferral of payments until a forgiveness application has been accepted and reviewed by the Small Business
Administration (&#8220;SBA&#8221;), and the SBA has provided Crestmark with the loan forgiveness amount. For the fiscal years ended March
31, 2021 and 2020 the Company incurred interest expense of approximately $<span id="xdx_90D_eus-gaap--InterestExpense_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--PaycheckProtectionProgramMember_pp0p0" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012021-03-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,000</ix:nonFraction></span> and $<span id="xdx_90A_eus-gaap--InterestExpense_c20190401__20200331__us-gaap--TypeOfArrangementAxis__custom--PaycheckProtectionProgramMember_pp0p0" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2019-04-012020-03-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></span>, respectively. As of March 31, 2021 and 2020 there
was an outstanding balance on the PPP note payable of approximately $<span id="xdx_900_eus-gaap--NotesPayable_iI_pn5n6_c20210331__us-gaap--TypeOfArrangementAxis__custom--PaycheckProtectionProgramMember_zpTcbbqO9ULa" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.4</ix:nonFraction></span> million and $<span id="xdx_903_eus-gaap--NotesPayable_iI_pn5n6_c20200331__us-gaap--TypeOfArrangementAxis__custom--PaycheckProtectionProgramMember_zfiISJfib3i" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2020-03-31_custom_PaycheckProtectionProgramMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.0</ix:nonFraction> </span>million, respectively. In June 2021 the Company
received notification from the SBA that the loan had been forgiven in its entirety.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Installment
Notes Payable</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">On
June 18, 2019, the Company entered into a financing arrangement with Dimension Funding, LLC (&#8220;Dimension&#8221;) to finance an entire
ERP System project over a term of <span id="xdx_90C_eus-gaap--DebtInstrumentTerm_dtM_c20190617__20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zrGfpnf1Yz82" title="Debt instrument, term"><ix:nonNumeric contextRef="From2019-06-172019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt-sec:durmonth" name="us-gaap:DebtInstrumentTerm">60</ix:nonNumeric></span> months at a cost of approximately $<span id="xdx_902_eus-gaap--NotesPayable_c20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_pp0p0" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">365,000</ix:nonFraction></span>. As of March 31, 2021, the Company executed three installment
notes totaling approximately $<span id="xdx_90F_eus-gaap--NotesPayable_iI_pn5n6_c20210331__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--ThreeInstallmentNotesMember_zFeG08V1Tam" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_ThreeInstallmentNotesMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.4</ix:nonFraction></span> million for payments issued to the project vendor. The installment notes have 60-month terms with interest
rates of <span id="xdx_909_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--InstallmentNoteOneMember_zxWQh0A65Z5i" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_InstallmentNoteOneMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">7.58</ix:nonFraction></span>%, <span id="xdx_909_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--InstallmentNoteTwoMember_zJfqcEfKkhwh" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_InstallmentNoteTwoMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8.55</ix:nonFraction></span>% and <span id="xdx_90B_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__us-gaap--DebtInstrumentAxis__custom--InstallmentNoteThreeMember_zrhemboUrK83" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_InstallmentNoteThreeMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.25</ix:nonFraction></span>%, respectively. The installment notes are payable in monthly installments of $<span id="xdx_90F_eus-gaap--RepaymentsOfNotesPayable_c20190617__20190618__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember__srt--StatementScenarioAxis__custom--PaymentsOfNotesPayableWithPrincipalAndInterestMember_pp0p0" title="Repayments of notes payable"><ix:nonFraction name="us-gaap:RepaymentsOfNotesPayable" contextRef="From2019-06-172019-06-18_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember_custom_PaymentsOfNotesPayableWithPrincipalAndInterestMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,459</ix:nonFraction></span> which include principal
and interest. For both fiscal years ended March 31, 2021 and 2020 there was an outstanding balance on the installment notes of approximately
$<span id="xdx_909_eus-gaap--NotesPayable_iI_pn5n6_c20210331__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_zmIi5iEWrT09" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.3</ix:nonFraction></span> million. For the fiscal years ended March 31 2021 and 2020 the Company incurred interest expense of approximately $<span id="xdx_909_eus-gaap--InterestExpense_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_pp0p0" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2020-04-012021-03-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">26,000</ix:nonFraction></span> and $<span id="xdx_901_eus-gaap--InterestExpense_c20190401__20200331__us-gaap--TypeOfArrangementAxis__custom--FinancingAgreementMember__dei--LegalEntityAxis__custom--DimensionFundingLLCMember_pp0p0" title="Interest expenses"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2019-04-012020-03-31_custom_FinancingAgreementMember_custom_DimensionFundingLLCMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">23,000</ix:nonFraction></span>,
respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Subordinated
Debt/Note Payable to Related Party</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
conjunction with the Crestmark Facility and IHC Facility there is a subordination agreement on related party debt due to Starlight
Marketing Development, Ltd. of approximately $<span id="xdx_905_eus-gaap--NotesPayable_c20210331__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_pp0p0" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">803,000</ix:nonFraction></span>. On June 1, 2020 the remaining amount due on the subordinated debt of
approximately $<span id="xdx_90E_eus-gaap--NotesPayable_c20200602__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember__us-gaap--DebtInstrumentAxis__custom--SubordinatedNotesPayableMember_pp0p0" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2020-06-02_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember_custom_SubordinatedNotesPayableMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">803,000</ix:nonFraction></span> was converted to a note payable (&#8220;subordinated note payable&#8221;) which bears interest at <span id="xdx_907_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20200602__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember__us-gaap--DebtInstrumentAxis__custom--SubordinatedNotesPayableMember_z6dK5wMB5AO6" title="Debt instrument, interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2020-06-02_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember_custom_SubordinatedNotesPayableMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6</ix:nonFraction></span>%. As part
of the agreement to convert the subordinated debt to a note payable it was agreed that interest expense would be accrued at the same
6% interest rate on the unpaid principal retroactively from the date that previously scheduled payments had been missed. During the
fiscal years ended March 31, 2021 and 2020 interest expense was approximately $<span id="xdx_90F_eus-gaap--InterestExpenseRelatedParty_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_pp0p0" title="Interest expense, related party"><ix:nonFraction name="us-gaap:InterestExpenseRelatedParty" contextRef="From2020-04-012021-03-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">47,000</ix:nonFraction></span> and $<span id="xdx_904_eus-gaap--InterestExpenseRelatedParty_c20190401__20200331__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember__dei--LegalEntityAxis__custom--StarlightMarketingDevelopmentLtdMember_pp0p0" title="Interest expense, related party"><ix:nonFraction name="us-gaap:InterestExpenseRelatedParty" contextRef="From2019-04-012020-03-31_custom_SubordinationAgreementMember_custom_StarlightMarketingDevelopmentLtdMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">74,000</ix:nonFraction></span>, respectively on the subordinated
note payable and the related party subordinated debt.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 72 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the subordinated note payable.
Both the Crestmark Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any
amounts borrowed against these credit facilities are paid in full, the Company maintains a 1 : 1 debt coverage ratio and exhibits
sufficient cash liquidity to support on-going operations. As of March 31, 2021 the Company met repayment requirements of the
Intercreditor Revolving Credit Facility to make principal payments totaling $<span id="xdx_901_eus-gaap--DebtInstrumentPeriodicPaymentPrincipal_pp0n5_c20200401__20210331__us-gaap--CreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zDcBxZFLU0Va" title="Debt principal payments"><ix:nonFraction name="us-gaap:DebtInstrumentPeriodicPaymentPrincipal" contextRef="From2020-04-012021-03-31_us-gaap_RevolvingCreditFacilityMember" format="ixt:numdotdecimal" decimals="0" scale="5" unitRef="USD">0.3</ix:nonFraction></span> million. During the next twelve months the Company
intends on making additional payments and pay off the remaining balance outstanding provided the Company meets all repayment
requirements of the Crestmark Facility and IHC Facility agreements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and 2020 the remaining amount due on the note payable was approximately $<span id="xdx_909_eus-gaap--NotesPayable_iI_pn5n6_c20210331__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember_zTETsoA3xCy2" title="Notes payable"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2021-03-31_custom_SubordinationAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.5</ix:nonFraction></span> million and $<span id="xdx_904_eus-gaap--NotesPayable_iI_pn5n6_c20200331__us-gaap--TypeOfArrangementAxis__custom--SubordinationAgreementMember_zHfoD6uRkYJ3"><ix:nonFraction name="us-gaap:NotesPayable" contextRef="AsOf2020-03-31_custom_SubordinationAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.8</ix:nonFraction></span> million, respectively.
The remaining amount due on the subordinated note payable was classified as a current liability as of March 31, 2021 on the consolidated
balance sheets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_801_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zXYpliiHpMo9" style="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">NOTE
6 - <span id="xdx_821_zXvhGPLUVTeb">COMMITMENTS AND CONTINGENCIES</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LEGAL
MATTERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 11, 2020 a Complaint was filed against the Company&#8217;s SMCL subsidiary and various staffing agencies used by SMCL in a
Superior Court of San Bernadino County. The complaint alleges an employee of SMCL committed employment practice violations against a
former temporary employee not employed by SMC Logistics. Management has investigated the allegation and has engaged with an employment
attorney to defend the lawsuit. Management does not believe the claims have merit and does not believe the lawsuit will have a material
adverse effect on our financial results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of this filing management is not aware of any other legal proceedings other than matters that arise in the ordinary course of business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LEASES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the
Company&#8217;s right to use an underlying asset for the lease term and lease liabilities represent the Company&#8217;s obligation
to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date.
The liability is equal to the present value of the remaining minimum lease payments. The asset is based on the liability, subject to
certain adjustments. Operating leases result in straight-line expense (similar to operating leases under the prior accounting
standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting
standard). As the interest rate implicit in the Company&#8217;s operating leases is not readily determinable, the Company utilizes
its incremental borrowing rate to discount the lease payments. The Company utilizes the implicit rate for its finance
leases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operating
Leases</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">We
have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through
2024.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida
where we lease approximately <span id="xdx_90B_eus-gaap--AreaOfLand_iI_usqft_c20171001__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zgPY7Lsz5cga" title="Operating lease space for office"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2017-10-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="sqft">6,500</ix:nonFraction></span> square feet of office space. The lease expires on <span id="xdx_902_eus-gaap--LeaseExpirationDate1_dd_c20170929__20171001__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zHAd4lKR60Dh" title="Lease expiration date"><ix:nonNumeric contextRef="From2017-09-292017-10-01_custom_OperatingLeaseAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LeaseExpirationDate1">March 31, 2024</ix:nonNumeric></span>. The base rent payment is approximately
$<span id="xdx_90E_eus-gaap--PaymentsForRent_pp0p0_c20200401__20210331_zkwSJdxPmLZ4" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,400</ix:nonFraction></span> per month, subject to annual adjustments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective June 1, 2013, for <span id="xdx_907_eus-gaap--AreaOfLand_iI_usqft_c20130601__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zaOoMsIfTEze" title="Operating lease space for office"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2013-06-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="sqft">86,000</ix:nonFraction></span> square feet of warehouse space in Ontario, California for
our logistics operations. On June 15, 2020 we executed a three-year lease extension which will expire on <span id="xdx_90F_eus-gaap--LeaseExpirationDate1_c20200613__20200615__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zTEn01HSzAC6" title="Lease expiration date"><ix:nonNumeric contextRef="From2020-06-132020-06-15_custom_OperatingLeaseAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LeaseExpirationDate1">August 31, 2023</ix:nonNumeric></span>. The renewal
base rent payment is $<span id="xdx_907_eus-gaap--PaymentsForRent_c20200613__20200615__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zYEVR1FGh5zc" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2020-06-132020-06-15_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">65,300</ix:nonFraction></span> per month with a 3% increase every 12 months for the remaining term of the extension.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
entered into an operating lease agreement, effective May 1, 2018, for <span id="xdx_90F_eus-gaap--AreaOfLand_iI_usqft_c20180501__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_zgUU2jgPZxef" title="Operating lease space for office"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2018-05-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="sqft">424</ix:nonFraction></span> square feet of office space in Macau. The rent is fixed at
approximately $<span id="xdx_901_eus-gaap--PaymentsForRent_c20180430__20180501__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember_pp0p0" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2018-04-302018-05-01_custom_OperatingLeaseAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,600</ix:nonFraction></span> per month for the duration of the lease which expired on <span id="xdx_90F_eus-gaap--LeaseExpirationDate1_c20180430__20180501__us-gaap--TypeOfArrangementAxis__custom--OperatingLeaseAgreementMember" title="Lease expiration date"><ix:nonNumeric contextRef="From2018-04-302018-05-01_custom_OperatingLeaseAgreementMember" format="ixt:datemonthdayyearen" name="us-gaap:LeaseExpirationDate1">April 30, 2021</ix:nonNumeric></span>. In May 2021 <span id="xdx_904_eus-gaap--LesseeOperatingLeaseOptionToExtend_c20210502__20210530__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember" title="Lease extend term"><ix:nonNumeric contextRef="From2021-05-022021-05-30_us-gaap_SubsequentEventMember" name="us-gaap:LesseeOperatingLeaseOptionToExtend">we executed a one-year lease
extension which will expire on April 30, 2022.</ix:nonNumeric></span> The lease provides for a renewal option to extend the lease. Rent expense on the new lease
is fixed at approximately $<span id="xdx_90B_eus-gaap--PaymentsForRent_c20210502__20210530__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_pp0p0" title="Rent expense"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2021-05-022021-05-30_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,700</ix:nonFraction> </span>per month for the duration of the lease term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease
expense for our operating leases is recognized on a straight-line basis over the lease terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Finance
Leases</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 25, 2018 and June 4, 2018, we entered into two long-term capital leasing arrangements with Wells Fargo Equipment Finance (&#8220;Wells
Fargo&#8221;) to finance the leasing of two used forklift vehicles in the amount of approximately $<span id="xdx_905_eus-gaap--PaymentsOfFinancingCosts_c20180603__20180604__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_pp0p0" title="Financing lease costs"><span id="xdx_908_eus-gaap--PaymentsOfFinancingCosts_c20180524__20180525__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_pp0p0" title="Financing lease costs"><ix:nonFraction name="us-gaap:PaymentsOfFinancingCosts" contextRef="From2018-06-032018-06-04_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:PaymentsOfFinancingCosts" contextRef="From2018-05-242018-05-25_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">44,000</ix:nonFraction></ix:nonFraction></span></span>. The leases require monthly
payments in the amount of $<span id="xdx_90B_eus-gaap--FinanceLeasePrincipalPayments_c20180603__20180604__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_pp0p0" title="Monthly lease payments"><span id="xdx_904_eus-gaap--FinanceLeasePrincipalPayments_c20180524__20180525__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_pp0p0" title="Monthly lease payments"><ix:nonFraction name="us-gaap:FinanceLeasePrincipalPayments" contextRef="From2018-06-032018-06-04_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:FinanceLeasePrincipalPayments" contextRef="From2018-05-242018-05-25_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,279</ix:nonFraction></ix:nonFraction></span></span> per month over a total lease term of <span id="xdx_907_eus-gaap--LesseeFinanceLeaseTermOfContract1_iI_dtM_c20180604__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_zl3cmTLYjBch" title="Financing lease term"><span id="xdx_90A_eus-gaap--LesseeFinanceLeaseTermOfContract1_iI_dtM_c20180525__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_zDCOCkE4N6gb" title="Financing lease term"><ix:nonNumeric contextRef="AsOf2018-06-04_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt-sec:durmonth" name="us-gaap:LesseeFinanceLeaseTermOfContract1"><ix:nonNumeric contextRef="AsOf2018-05-25_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt-sec:durmonth" name="us-gaap:LesseeFinanceLeaseTermOfContract1">36</ix:nonNumeric></ix:nonNumeric></span></span> months which commenced on June 1, 2018. The agreement has an
effective interest rate of <span id="xdx_90D_ecustom--LesseeFinanceLeaseEffectiveInterestRate_iI_pid_dp_uPure_c20180604__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_zs6qknKbBVK6" title="Effective interest rate"><span id="xdx_904_ecustom--LesseeFinanceLeaseEffectiveInterestRate_iI_pid_dp_uPure_c20180525__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_zPhZcMFnqpZ4" title="Effective interest rate"><ix:nonFraction name="SMDM:LesseeFinanceLeaseEffectiveInterestRate" contextRef="AsOf2018-06-04_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure"><ix:nonFraction name="SMDM:LesseeFinanceLeaseEffectiveInterestRate" contextRef="AsOf2018-05-25_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.5</ix:nonFraction></ix:nonFraction></span></span>% and the Company has the option to purchase the equipment at the end of the lease term for one dollar.
As of March 31, 2021 and March 31, 2020, the remaining amounts due on these capital leasing arrangements was approximately $<span id="xdx_909_ecustom--RemainingCapitalLeaseArrangements_c20210331__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_pp0p0" title="Remaining capital lease arrangements"><ix:nonFraction name="SMDM:RemainingCapitalLeaseArrangements" contextRef="AsOf2021-03-31_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,000</ix:nonFraction></span> and
$<span id="xdx_906_ecustom--RemainingCapitalLeaseArrangements_c20200331__us-gaap--TypeOfArrangementAxis__custom--LongTermCapitalLeasingArrangementsMember__dei--LegalEntityAxis__custom--WellsFargoEquipmentFinanceMember_pp0p0" title="Remaining capital lease arrangements"><ix:nonFraction name="SMDM:RemainingCapitalLeaseArrangements" contextRef="AsOf2020-03-31_custom_LongTermCapitalLeasingArrangementsMember_custom_WellsFargoEquipmentFinanceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">18,000</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 73 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->31<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:ScheduleOfSupplementalInformationRelatedToLeaseTableTextBlock"><p id="xdx_89C_ecustom--ScheduleOfSupplementalInformationRelatedToLeaseTableTextBlock_zUsPBgoxzp1h" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Supplemental
balance sheet information related to leases as of March 31, 2021 is as follows:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;<span id="xdx_8B8_zrU0YawUoJwe" style="display: none">SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_494_20210331_zxgL3Fcs7iRa" style="text-align: right">1</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Assets:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--OperatingLeaseRightOfUseAsset_iI_pp0p0_zPYWcGhMiyLd" style="vertical-align: bottom; background-color: White">
    <td style="width: 80%; text-align: left">Operating lease - right-of-use assets</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,074,115</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--FinanceLeaseRightOfUseAsset_iI_pp0p0_zn9XP7jSChqb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FinanceLeaseRightOfUseAsset" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">25,390</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Current</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--OperatingLeaseLiabilityCurrent_iI_pp0p0_zF15m9FJam9j" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Current portion of operating leases</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">794,938</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--FinanceLeaseLiabilityCurrent_iI_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Current portion of finance leases</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Noncurrent</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--OperatingLeaseLiabilityNoncurrent_iI_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Operating lease liabilities, net of current portion</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--FinanceLeaseLiabilityNoncurrent_iI_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Finance leases, net of current portion</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl2683">-</span></td><td style="text-align: left">&#160;</td></tr>
  </table>


</ix:nonNumeric><p id="xdx_8A1_zApgFZBeSvJk" style="margin: 0">&#160;</p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:LeaseCostTableTextBlock"><p id="xdx_891_eus-gaap--LeaseCostTableTextBlock_zTUkwkfv4lU7" style="margin: 0"><span style="font: 10pt Times New Roman, Times, Serif"><b>Supplemental
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<p style="margin: 0"><span id="xdx_8B6_zvmACPlG0y37" style="display: none">SCHEDULE OF LEASE TERM AND DISCOUNT RATE</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" id="xdx_490_20200401__20210331_zLJEP25PFJw4" style="font-weight: bold; text-align: center">Fiscal Year Ended</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--OperatingLeaseExpense_i_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 80%; text-align: left">Operating lease expense as a component of general and administrative expenses</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Finance lease cost</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_ecustom--DepreciationOfLeasedAssetsAsComponentOfDepreciation_i_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Depreciation of leased assets as a component of depreciation</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="SMDM:DepreciationOfLeasedAssetsAsComponentOfDepreciation" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,218</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--FinanceLeaseInterestExpense_i_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Interest on lease liabilities as a component of interest expense</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FinanceLeaseInterestExpense" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">370</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
</table>

</ix:nonNumeric><p id="xdx_8AD_zjMnyreODVF8" style="margin: 0">&#160;</p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfCashFlowSupplementalDisclosuresTableTextBlock"><p id="xdx_89D_eus-gaap--ScheduleOfCashFlowSupplementalDisclosuresTableTextBlock_zr5ykUljov4h" style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt">Supplemental cash flow information related to leases for the nine months ended March 31, 2021 is as follows:</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8BD_zXLl9hmyFs32" style="display: none">SCHEDULE OF SUPPLEMENTAL
CASH FLOW INFORMATION</span></p>



<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" id="xdx_491_20200401__20210331_z7Z0DSsSPtLb" style="display: none; font-weight: bold; text-align: center">Fiscal Year Ended</td><td style="font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; display: none; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>

<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; width: 80%">Cash paid for amounts included in the measurement of lease liabilities:</td><td style="width: 2%">&#160;</td>
    <td style="text-align: left; width: 1%">&#160;</td><td style="text-align: right; width: 16%">&#160;</td><td style="text-align: left; width: 1%">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--OperatingLeasePayments_i_pp0p0" style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Operating cash flow paid for operating leases</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeasePayments" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">805,662</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--FinanceLeasePrincipalPayments_i_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Financing cash flow paid for finance leases</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FinanceLeasePrincipalPayments" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">14,957</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Lease term and Discount Rate</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Weighted average remaining lease term (months)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90C_eus-gaap--OperatingLeaseWeightedAverageRemainingLeaseTerm1_iI_dtM_c20210331_zxXdVPI49o75" title="Weighted average remaining lease term (months), Operating leases"><ix:nonNumeric contextRef="AsOf2021-03-31" format="ixt-sec:durmonth" name="us-gaap:OperatingLeaseWeightedAverageRemainingLeaseTerm1">30.0</ix:nonNumeric></span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Operating leases</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90F_eus-gaap--FinanceLeaseWeightedAverageRemainingLeaseTerm1_iI_dtM_c20210331_zzP96nhi9lXc" title="Weighted average remaining lease term (months), Finance leases"><ix:nonNumeric contextRef="AsOf2021-03-31" format="ixt-sec:durmonth" name="us-gaap:FinanceLeaseWeightedAverageRemainingLeaseTerm1">2.0</ix:nonNumeric></span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Finance leases</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Weighted average discount rate</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left">Operating leases</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90C_eus-gaap--OperatingLeaseWeightedAverageDiscountRatePercent_iI_pid_dp_uPure_c20210331_zT7VUcXAErMj" title="Weighted average discount rate, Operating leases"><ix:nonFraction name="us-gaap:OperatingLeaseWeightedAverageDiscountRatePercent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.25</ix:nonFraction></span></td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Finance leases</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_905_eus-gaap--FinanceLeaseWeightedAverageDiscountRatePercent_iI_pid_dp_uPure_c20210331_zSpT0ppPc8G5" title="Weighted average discount rate, Finance leases"><ix:nonFraction name="us-gaap:FinanceLeaseWeightedAverageDiscountRatePercent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3.68</ix:nonFraction></span></td><td style="text-align: left">%</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A8_zFIXYy64pYVh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:LesseeOperatingAndFinanceLeaseLiabilityMaturityTableTextBlock"><p id="xdx_893_ecustom--LesseeOperatingAndFinanceLeaseLiabilityMaturityTableTextBlock_zdhyE3j9QrB4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Scheduled
maturities of operating and finance lease liabilities outstanding as of March 31, 2021 are as follows:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span id="xdx_8BB_zONYC0Ctd7Y8" style="display: none">SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING AND FINANCE LEASES</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 85%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: center">Fiscal Year</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Operating Leases</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Finance Leases</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left">2022</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_985_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths_c20210331_pp0p0" title="Operating Leases, 2022" style="width: 18%; text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">682,373</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_985_eus-gaap--FinanceLeaseLiabilityPaymentsDueNextTwelveMonths_c20210331_pp0p0" title="Finance Leases, 2022" style="width: 18%; text-align: right"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityPaymentsDueNextTwelveMonths" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,558</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2023</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_989_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearTwo_c20210331_pp0p0" title="Operating Leases, 2023" style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearTwo" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">931,948</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_981_eus-gaap--FinanceLeaseLiabilityPaymentsDueYearTwo_c20210331_pdp0" title="Finance Leases, 2023" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl2715">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2024</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_980_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearThree_c20210331_pp0p0" title="Operating Leases, 2024" style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearThree" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">674,488</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98F_eus-gaap--FinanceLeaseLiabilityPaymentsDueYearThree_c20210331_pdp0" title="Finance Leases, 2024" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl2719">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">2025</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearFour_c20210331_pp0p0" title="Operating Leases, 2025" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearFour" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">30,739</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_981_eus-gaap--FinanceLeaseLiabilityPaymentsDueYearFour_c20210331_pdp0" title="Finance Leases, 2025" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl2723">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total Minimum Future Payments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDue_c20210331_pp0p0" title="Operating Leases, Total Minimum Future Payments" style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDue" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,319,548</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_eus-gaap--FinanceLeaseLiabilityPaymentsDue_c20210331_pp0p0" title="Finance Leases, Total Minimum Future Payments" style="text-align: right"><ix:nonFraction name="us-gaap:FinanceLeaseLiabilityPaymentsDue" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,558</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: Imputed Interest</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8A2_zrwYMqhgIWhd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock"><p id="xdx_807_eus-gaap--DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock_zN2nGuW1SZ7c" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
7 &#8211; <span>SHAREHOLDERS&#8217; EQUITY</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;<span id="xdx_826_zBxPVyiYLwRe" style="display: none">STOCK OPTIONS AND WARRANTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>COMMON
STOCK ISSUANCES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">During
the years ended March 31, 2021 and 2020 the Company issued the following common stock shares:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fiscal
2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 30, 2020 the Company issued <span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20201029__20201030__srt--TitleOfIndividualAxis__custom--ThreeExecutiveOfficersMember_pdd" title="Number of shares of common stock"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2020-10-292020-10-30_custom_ThreeExecutiveOfficersMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">440,000</ix:nonFraction></span> shares of its common stock to three executive officers who exercised stock options at an
average exercise price of $<span id="xdx_901_eus-gaap--SharesIssuedPricePerShare_c20201030__srt--TitleOfIndividualAxis__custom--ThreeExecutiveOfficersMember_pdd" title="Shares exercise price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2020-10-30_custom_ThreeExecutiveOfficersMember" decimals="INF" unitRef="USDPShares">.06</ix:nonFraction></span> per share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 6, 2020, the Company issued <span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20201105__20201106__srt--TitleOfIndividualAxis__custom--BoardOfDirectorsMember_pdd" title="Number of shares of common stock"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2020-11-052020-11-06_custom_BoardOfDirectorsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">43,105</ix:nonFraction></span> shares of its common stock to our Board of Directors at $<span id="xdx_905_eus-gaap--SharesIssuedPricePerShare_c20201106__srt--TitleOfIndividualAxis__custom--BoardOfDirectorsMember_pdd" title="Shares exercise price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2020-11-06_custom_BoardOfDirectorsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.29</ix:nonFraction></span> per share, pursuant to our
annual director compensation plan for the fiscal year ending March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fiscal
2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">On
August 30, 2019 the Company issued <span id="xdx_902_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20190829__20190830__srt--TitleOfIndividualAxis__custom--FormerDirectorMember_pdd" title="Number of shares of common stock"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2019-08-292019-08-30_custom_FormerDirectorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">60,000</ix:nonFraction></span> shares of its common stock to a former director who exercised stock options at an average exercise
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 12, 2019, the Company issued <span id="xdx_90C_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20190611__20190612__srt--TitleOfIndividualAxis__custom--BoardOfDirectorsMember_pdd" title="Number of shares of common stock"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2019-06-112019-06-12_custom_BoardOfDirectorsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">32,890</ix:nonFraction></span> shares of its common stock to our Board of Directors at $<span id="xdx_90D_eus-gaap--SharesIssuedPricePerShare_c20190612__srt--TitleOfIndividualAxis__custom--BoardOfDirectorsMember_pdd" title="Shares exercise price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2019-06-12_custom_BoardOfDirectorsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.38</ix:nonFraction></span> per share, pursuant to our annual
director compensation plan for the fiscal year ending March 31, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:exclude><!-- Field: Page; Sequence: 74 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>STOCK
OPTIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 1, 2001, the Board of Directors approved the 2001 Stock Option Plan (&#8220;Plan&#8221;), as amended. The Plan was developed to
provide a means whereby directors and selected employees, officers, consultants, and advisors of the Company may be granted incentive
or non-qualified stock options to purchase common stock of the Company. As of March 31, 2021, the Plan had expired and no shares were
available to be issued nor were any additional shares issued from the plan in Fiscal 2021 or 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock"><p id="xdx_893_eus-gaap--ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock_zCP0ohU7Orl3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
summary of stock option activity for each of the years presented is summarized below.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B6_z5JDvqldeBnc" style="display: none">SUMMARY OF STOCK OPTION ACTIVITY</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Fiscal 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Fiscal 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Weighted Average Exercise Price</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Number of Options</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Weighted Average Exercise Price</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Stock Options:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 36%; font-weight: bold; text-align: left">Balance at beginning of year</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_c20200401__20210331__us-gaap--FinancialInstrumentAxis__us-gaap--StockOptionMember_ztUaZTmH76Vg" title="Number of Options, Balance at Beginning of Year" style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2020-03-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,230,000</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Exercised</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  </table>

</ix:nonNumeric><p id="xdx_8A6_zTdzaCadgcGi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeTextBlock"><p id="xdx_898_eus-gaap--ScheduleOfShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeTextBlock_zkj7lfnWVgK4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes information about employee stock options outstanding at March 31, 2021:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B6_zqY4UXEydXfg" style="display: none">SCHEDULE OF EMPLOYEE STOCK OPTIONS OUTSTANDING</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: center">Range of Exercise Price</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 25%; text-align: center">$<span id="xdx_909_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit_c20200401__20210331__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Options Outstanding Exercise Price, Lower Range Limit"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit" contextRef="From2020-04-012021-03-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.12</ix:nonFraction></span> - $<span id="xdx_90E_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit_c20200401__20210331__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Options Outstanding Exercise Price, Upper Range Limit"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit" contextRef="From2020-04-012021-03-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.38</ix:nonFraction></span></td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td id="xdx_987_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions_c20210331__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Options Number Outstanding" style="width: 11%; text-align: right"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions" contextRef="AsOf2021-03-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,130,000</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 11%; text-align: right"><span id="xdx_908_eus-gaap--SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2_dtY_c20200401__20210331__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_zxFA5mdYwGQg" title="Stock Option Outstanding Weighted Average Remaining Contractual Life"><ix:nonNumeric contextRef="From2020-04-012021-03-31_custom_ExercisePriceRangeOneMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2">4.0</ix:nonNumeric></span></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td id="xdx_983_eus-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions_c20210331__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Option Number Exercisable" style="width: 11%; text-align: right"><ix:nonFraction name="us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions" contextRef="AsOf2021-03-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,030,000</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right"><span id="xdx_909_eus-gaap--SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeExercisableOptionsWeightedAverageExercisePrice1_c20210331__us-gaap--ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeAxis__custom--ExercisePriceRangeOneMember_pdd" title="Stock Option Exercisable Weighted Average Exercise Price"><ix:nonFraction name="us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeExercisableOptionsWeightedAverageExercisePrice1" contextRef="AsOf2021-03-31_custom_ExercisePriceRangeOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.23</ix:nonFraction></span></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: right; padding-bottom: 2.5pt">*</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt; text-align: right">&#160;</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" border="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
  <td style="text-align: justify; width: 0.25in"><span id="xdx_F08_z1vSlCUkVbZ2" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
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<span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iI_c20210331__srt--TitleOfIndividualAxis__custom--FiveCurrentAndTwoFormerDirectorsMember_zL2BC1ePkxHk" title="Stock options outstanding" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIEVNUExPWUVFIFNUT0NLIE9QVElPTlMgT1VUU1RBTkRJTkcgKERldGFpbHMpIChQYXJlbnRoZXRpY2FsKQA_"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2021-03-31_custom_FiveCurrentAndTwoFormerDirectorsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">600,000</ix:nonFraction></span> options issued to five current and two former directors as compensation and <span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iI_c20210331__srt--TitleOfIndividualAxis__custom--EmployeesMember_zADT2zaY0HJj" title="Stock options outstanding" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIEVNUExPWUVFIFNUT0NLIE9QVElPTlMgT1VUU1RBTkRJTkcgKERldGFpbHMpIChQYXJlbnRoZXRpY2FsKQA_"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2021-03-31_custom_EmployeesMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,040,000</ix:nonFraction></span> options issued to key employees that were
not issued from the Plan.</ix:footnote></span></td></tr>
</table>


</ix:nonNumeric><p id="xdx_8A0_zfKXnq8UAWB5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock"><p id="xdx_80F_eus-gaap--IncomeTaxDisclosureTextBlock_zvSGStagWVfl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
8 - <span id="xdx_826_zURZ7c1i9RCf">INCOME TAXES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company files separate tax returns in the United States and in Macau. The Macau Subsidiary has received approval from the Macau government
to operate its business as a Macau Offshore Company (MOC), and is exempt from the Macau income tax. For the fiscal years ended March
31, 2021 and 2020, the Macau Subsidiary recorded no tax provision.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
U.S. Federal net operating loss carryforward is subject to an IRS Section 382 limitation. As of March 31, 2021 and 2020, the Company
had net deferred tax assets of approximately $<span id="xdx_90A_eus-gaap--DeferredTaxAssetsLiabilitiesNet_iI_pn5n6_c20210331_zUmsthMWAX52" title="Net deferred tax assets"><ix:nonFraction name="us-gaap:DeferredTaxAssetsLiabilitiesNet" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.9</ix:nonFraction></span> million and $<span id="xdx_90D_eus-gaap--DeferredTaxAssetsLiabilitiesNet_iI_pn5n6_c20200331_zYejkulDRZb3" title="Net deferred tax assets"><ix:nonFraction name="us-gaap:DeferredTaxAssetsLiabilitiesNet" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.3</ix:nonFraction></span> million, respectively. For the fiscal year ended March 31, 2021
we determined our effective tax rate to be approximately <span id="xdx_90A_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_pid_dp_uPure_c20200401__20210331_znItZcRuLV56" title="Income tax rate"><ix:nonFraction name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">17.4</ix:nonFraction></span>% and we recorded a tax provision of approximately $<span id="xdx_904_eus-gaap--IncomeTaxExpenseBenefit_pn5n6_c20200401__20210331_zxI4gEkO48Gc" title="Income tax provision"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.5</ix:nonFraction></span> million which
was net of a valuation reserve of approximately $<span id="xdx_908_ecustom--IncomeTaxValuationReserve_c20200401__20210331_pp0p0" title="Income tax valuation reserve"><ix:nonFraction name="SMDM:IncomeTaxValuationReserve" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">23,000</ix:nonFraction></span> for deferred tax assets that will most likely expire prior to being
realized. For the fiscal year ended March 31, 2020 we determined our effective tax rate to be approximately <span id="xdx_906_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_pid_dp_uPure_c20190401__20200331_zLlXajfotFa2" title="Income tax rate"><ix:nonFraction name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">18.1</ix:nonFraction></span>% and we recorded a
tax benefit of approximately $<span id="xdx_90B_eus-gaap--IncomeTaxExpenseBenefit_iN_pn5n6_di_c20190401__20200331_zjkpL9mPLDc" title="Income tax provision"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" sign="-" unitRef="USD">0.6</ix:nonFraction></span> million which was net of a valuation reserve of approximately $<span id="xdx_902_ecustom--IncomeTaxValuationReserve_c20190401__20200331_pp0p0" title="Income tax valuation reserve"><ix:nonFraction name="SMDM:IncomeTaxValuationReserve" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">88,000</ix:nonFraction></span> for deferred tax assets that
will most likely expire prior to being realized. The Company also recorded an income tax receivable of approximately $<span id="xdx_90D_eus-gaap--DeferredIncomeTaxesAndOtherTaxReceivableCurrent_iI_pn5n6_c20210331_za6CUbUDooi5" title="Income tax receivable"><ix:nonFraction name="us-gaap:DeferredIncomeTaxesAndOtherTaxReceivableCurrent" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million
due to the availability of net operating loss carrybacks and alternative minimum tax credits that were realized for the year ended
March 31, 2021. The income tax receivable was included as a component of prepaid expenses and other current assets on the
accompanying consolidated balance sheet as of March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 75 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->33<!-- Field: /Sequence --></td></tr></table></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock"><p id="xdx_89D_eus-gaap--ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock_zEN3l7aGGv48" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
income tax provision (benefit) for federal, foreign, and state income taxes in the consolidated statements of operations consisted of
the following components for 2021 and 2020:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BB_zgfWMnKkldf5" style="display: none">SCHEDULE OF INCOME TAX PROVISION (BENEFIT)</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_491_20200401__20210331_zYvMqdaIrIse" style="border-bottom: Black 1.5pt solid; text-align: center">2021</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49B_20190401__20200331_z4VPg07RWEp9" style="border-bottom: Black 1.5pt solid; text-align: center">2020</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="padding-bottom: 1.5pt; text-align: center">(Restated)</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Income tax provision (benefit):</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--CurrentFederalTaxExpenseBenefit_maCITEBzCkQ_z1UKpPMVp6Q" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; width: 64%; text-align: left">Federal</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:CurrentFederalTaxExpenseBenefit" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">54,487</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">State</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:CurrentStateAndLocalTaxExpenseBenefit" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,825</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2870">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--CurrentIncomeTaxExpenseBenefit_iT_pp0p0_mtCITEBzCkQ_maITEBzkj9_z6hFtX7u9Q3i" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total current Federal and State tax benefit</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--DeferredFederalIncomeTaxExpenseBenefit_maDITEBzkhz_zfmpRxRNhG5h" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_406_eus-gaap--DeferredStateAndLocalIncomeTaxExpenseBenefit_maDITEBzkhz_zuj8icZrKANl" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--DeferredIncomeTaxExpenseBenefit_iT_pp0p0_mtDITEBzkhz_maITEBzkj9_zPaBIDVbp9w2" style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredIncomeTaxExpenseBenefit" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">527,355</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--IncomeTaxExpenseBenefit_iT_pp0p0_mtITEBzkj9_z0FLXibvOaa" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total income tax (benefit) provision</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">456,869</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">641,814</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A0_zaPSzXrH52f6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock"><p id="xdx_891_eus-gaap--ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock_zHKCFRE8tPB4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
United States and foreign components of income (loss) before income taxes are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B0_zPDMTtEaF3hb" style="display: none">SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49D_20200401__20210331_zQznftVFiFl9" style="border-bottom: Black 1.5pt solid; text-align: center">2021</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49F_20190401__20200331_zwlYtNPbbzaf" style="border-bottom: Black 1.5pt solid; text-align: center">2020</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
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    <td style="width: 64%; text-align: left">United States</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">(<ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesDomestic" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">3,765,272</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td></tr>
  <tr id="xdx_40B_eus-gaap--IncomeLossFromContinuingOperationsBeforeIncomeTaxesForeign_maILFCOzvJ5_zrOQNol5JmXg" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Foreign</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesForeign" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">706,287</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesForeign" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">266,458</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest_iT_mtILFCOzvJ5_zJJUXy6T6GRj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt"><span style="display: none; font-family: Times New Roman, Times, Serif">Net income before income
    tax benefit</span></td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,629,234</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">3,498,814</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AA_zjfKO4R0PyP7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfDifferencesBetweenReportedAmountAndReportingCurrencyDenominatedAmountTableTextBlock"><p id="xdx_89F_eus-gaap--ScheduleOfDifferencesBetweenReportedAmountAndReportingCurrencyDenominatedAmountTableTextBlock_zoT4mVzALnyf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
actual tax provision differs from the &#8220;expected&#8221; tax for the years ended March 31, 2021 and 2020 (computed by applying the
U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B3_zba0U7cvKfh1" style="display: none">SCHEDULE OF DIFFERENCE BETWEEN ACTUAL TAX EXPENSES AND EXPECTED TAX EXPENSES</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49F_20200401__20210331_zxuhTqZcVGzd" style="border-bottom: Black 1.5pt solid; text-align: center">2021</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_490_20190401__20200331_zc4KrLhSUIij" style="border-bottom: Black 1.5pt solid; text-align: center">2020</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_40D_ecustom--IncomeTaxReconciliationExpectedTaxExpenseBenefit_maITEBzi0M_z5V8AXItQeKe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Expected tax provision (benefit)</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="SMDM:IncomeTaxReconciliationExpectedTaxExpenseBenefit" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">551,982</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">(<ix:nonFraction name="SMDM:IncomeTaxReconciliationExpectedTaxExpenseBenefit" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">734,751</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td></tr>
  <tr id="xdx_404_eus-gaap--IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate_maITEBzi0M_zfIgWJjNZtmh" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">State income taxes, net of Federal income tax provision (benefit)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">128,699</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">175,245</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_408_ecustom--IncomeTaxReconciliationPermanentDifferences_maITEBzi0M_zgYrn2YOqzW3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Permanent differences</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="SMDM:IncomeTaxReconciliationPermanentDifferences" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">6,578</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:IncomeTaxReconciliationPermanentDifferences" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,977</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--IncomeTaxReconciliationForeignIncomeTaxRateDifferential_maITEBzi0M_zFyJKtQ8xd1c" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Tax rate differential on foreign earnings</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationForeignIncomeTaxRateDifferential" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">108,690</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2910">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--IncomeTaxReconciliationChangeInDeferredTaxAssetsValuationAllowance_iN_di_maITEBzi0M_z4KSfQgPE5Q4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Change in valuation allowance</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationChangeInDeferredTaxAssetsValuationAllowance" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">65,193</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationChangeInDeferredTaxAssetsValuationAllowance" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">87,842</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--IncomeTaxReconciliationMinorityInterestIncomeExpense_msITEBzi0M_zg4VBUl9h7w9" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Effect of IRC &#167;382 on NOL</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2915">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationMinorityInterestIncomeExpense" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">100,966</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_ecustom--IncomeTaxReconciliationTaxRateDifferentialOnNOLCarryback_iN_di_maITEBzi0M_zhdA9IBLCEnc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Tax rate differential on NOL carryback</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2918">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="SMDM:IncomeTaxReconciliationTaxRateDifferentialOnNOLCarryback" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">16,263</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--IncomeTaxReconciliationStateAndLocalIncomeTaxes_maITEBzi0M_zDQLSHSOObJ7" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Correction of state rate</td><td>&#160;</td>
    <td style="text-align: left"><span style="-sec-ix-hidden: xdx2ixbrl2921">&#160;</span></td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationStateAndLocalIncomeTaxes" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">83,803</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--IncomeTaxReconciliationOtherAdjustments_maITEBzi0M_zRDJ3M40csa1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8A3_zGuE3tRc8UZ3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 76 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->34<!-- Field: /Sequence --></td></tr></table></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONDENSED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock"><p id="xdx_890_eus-gaap--ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock_zHxP3Jccc9vc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BD_zugh3YUdo8y2" style="display: none">SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_497_20210331_zp3ekfGgBIbg" style="border-bottom: Black 1.5pt solid; text-align: center">2021</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-left: 10pt; width: 64%; font-weight: bold; text-align: left">NOL Federal Carryforward</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_40E_eus-gaap--DeferredTaxAssetsOperatingLossCarryforwardsStateAndLocal_iI_pp0p0_maDTAGzwKh_z2tvc92uHVUc" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_400_eus-gaap--DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAllowanceForDoubtfulAccounts_iI_pp0p0_maDTAGzwKh_z6vyn0oHVubf" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAllowanceForDoubtfulAccounts" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">35,877</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="padding-left: 10pt; font-weight: bold; text-align: left">Insurance contingency</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsReturnsAndAllowances_iI_pp0p0_maDTAGzwKh_zJVqILmKmu01" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsReturnsAndAllowances" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">111,887</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,186</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="padding-left: 10pt; font-weight: bold; text-align: left; padding-bottom: 1.5pt">Business interest deduction</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8AB_zZtWzUJpOul4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative
evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess
the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences
and the length of carryback and carryforward periods available under the applicable federal and state laws; and the amount and timing
of future taxable income. At March 31, 2021, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP
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tax asset and corresponding tax benefit is based upon the Company&#8217;s conclusions regarding, among other considerations, the Company&#8217;s
history of earnings and projected earnings for fiscal year 2022 and in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
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expire in the year 2025.</ix:nonNumeric></span> The net operating loss carryforward is subject to an IRS Section 382 limitation that limited the amount available
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 1.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:SegmentReportingDisclosureTextBlock"><p id="xdx_809_eus-gaap--SegmentReportingDisclosureTextBlock_zQFp8ceEP2P6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
9 - <span>SEGMENT INFORMATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_82B_zh2pZDuAUCKh" style="display: none">GEOGRAPHICAL INFORMATION</span></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ScheduleOfRevenuesFromExternalCustomersAndLongLivedAssetsByGeographicalAreasTableTextBlock"><p id="xdx_89A_eus-gaap--ScheduleOfRevenuesFromExternalCustomersAndLongLivedAssetsByGeographicalAreasTableTextBlock_zyslut2muz6j" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B5_zH9OMWJHYUEa" style="display: none">SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 70%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_491_20200401__20210331_zOjpVnnblm4d" style="border-bottom: Black 1.5pt solid; text-align: center">2021</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="width: 56%; text-align: left">North America</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left">Europe</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2020-04-012021-03-31_srt_EuropeMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,200,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">Asia</td><td>&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Australia</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 2.5pt"><span style="display: none; font-family: Times New Roman, Times, Serif">Net Sales</span></td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">45,800,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8AD_zAczZLDhymrf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
geographic area of sales is based primarily on where the product was delivered.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:CompensationAndEmployeeBenefitPlansTextBlock"><p id="xdx_801_eus-gaap--CompensationAndEmployeeBenefitPlansTextBlock_zXCx3GJ0sCSl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
10 - <span id="xdx_824_zW8b1bCaqX9e">EMPLOYEE BENEFIT PLANS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee&#8217;s
contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged
to operations for contributions to this plan and administrative costs during the fiscal years ended March 31, 2021 and 2020 totaled approximately
$<span id="xdx_908_eus-gaap--DefinedContributionPlanAdministrativeExpenses_c20200401__20210331_pp0p0" title="Defined contribution plan, administrative expenses"><ix:nonFraction name="us-gaap:DefinedContributionPlanAdministrativeExpenses" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">74,000</ix:nonFraction></span> and $<span id="xdx_901_eus-gaap--DefinedContributionPlanAdministrativeExpenses_c20190401__20200331_pp0p0" title="Defined contribution plan, administrative expenses"><ix:nonFraction name="us-gaap:DefinedContributionPlanAdministrativeExpenses" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">63,000</ix:nonFraction></span>, respectively. The amounts are included as a component of general and administrative expense in the accompanying
Consolidated Statements of Operations. The Company does not provide any post-employment benefits to retirees.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 77 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:ConcentrationRiskDisclosureTextBlock"><p id="xdx_80F_eus-gaap--ConcentrationRiskDisclosureTextBlock_zJuQBYYTYeCj" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
11 - <span>CONCENTRATIONS OF CREDIT RISK, CUSTOMERS, AND SUPPLIERS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="display: none; font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_826_zjx9icurQ7s9">CONCENTRATIONS OF CREDIT AND SALES RISK</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company derives a majority of its revenues from retailers in the United States. The Company&#8217;s allowance for doubtful accounts is
based upon management&#8217;s estimates and historical experience and reflects the fact that accounts receivable are concentrated with
several large customers. At March 31, 2021, <span id="xdx_90E_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__srt--MajorCustomersAxis__custom--FourCustomersMember__srt--StatementGeographicalAxis__srt--NorthAmericaMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_znAfCZf2p2dl" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_AccountsReceivableMember_custom_FourCustomersMember_srt_NorthAmericaMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">70</ix:nonFraction></span>% of accounts receivable were due from four customers in North America that individually
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that individually owed over 10% of total accounts receivable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenues
derived from three customers in 2021 and 2020 were <span id="xdx_90B_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--ThreeCustomersMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zJmnUsshYzb" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_SalesRevenueNetMember_custom_ThreeCustomersMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">69</ix:nonFraction></span>% and <span id="xdx_90A_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20190401__20200331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--ThreeCustomersMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zsCEFHvbNeyh" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2019-04-012020-03-31_us-gaap_SalesRevenueNetMember_custom_ThreeCustomersMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">64</ix:nonFraction></span>% of total revenue, respectively. Revenues from customers representing greater
than 10% of total net sales were derived from top four customers in Fiscal 2021 and top three customers in Fiscal 2020 as percentage
of the net sales were <span id="xdx_902_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerOneMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zdTOlTcgUjXi" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerOneMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">36</ix:nonFraction></span>%, <span id="xdx_900_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerTwoMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_z6UqmPSCPe0c" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerTwoMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">20</ix:nonFraction></span>%, <span id="xdx_90F_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerThreeMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zvB2oHthHfgj" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerThreeMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13</ix:nonFraction></span>% and <span id="xdx_907_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerFourMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zNNPGAXRvx33" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerFourMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">12</ix:nonFraction></span>%, and <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20190401__20200331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerOneMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_z0pdDpuvTQH6" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2019-04-012020-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerOneMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">41</ix:nonFraction></span>%, <span id="xdx_907_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20190401__20200331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerTwoMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_z0O5gHlIc1v1" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2019-04-012020-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerTwoMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13</ix:nonFraction></span>% and <span id="xdx_909_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20190401__20200331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerThreeMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_ze9m8wpBi75a" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2019-04-012020-03-31_us-gaap_SalesRevenueNetMember_custom_CustomerThreeMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>%, respectively. The loss of any of these customers could have an adverse
impact on the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Macau Subsidiary recorded net sales of approximately $<span id="xdx_904_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn5n6_c20200401__20210331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__dei--LegalEntityAxis__custom--MacauSubsidiaryMember_zUiPvD3okSXh" title="Total net sales"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-04-012021-03-31_us-gaap_SalesRevenueNetMember_custom_MacauSubsidiaryMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.1</ix:nonFraction></span> million and $<span id="xdx_900_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn5n6_c20190401__20200331__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__dei--LegalEntityAxis__custom--MacauSubsidiaryMember_zSVGHtIILOb1" title="Total net sales"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2019-04-012020-03-31_us-gaap_SalesRevenueNetMember_custom_MacauSubsidiaryMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.1</ix:nonFraction></span> million in fiscal 2021 and 2020, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is dependent upon foreign companies for the manufacture of all its electronic products. The Company&#8217;s arrangements with
manufacturers are subject to the risk of doing business abroad, such as import duties, trade restrictions, work stoppages, foreign currency
fluctuations, political instability, and other factors, which could have an adverse impact on its business. The Company believes that
the loss of any one or more of their suppliers would not have a long-term material adverse effect because other manufacturers with whom
the Company does business would be able to increase production to fulfill their requirements. However, the loss of certain suppliers
in the short-term could adversely affect business until alternative supply arrangements are secured.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal years 2021 and 2020, manufacturers in the People&#8217;s Republic of China accounted for <span id="xdx_90C_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200401__20210331__dei--LegalEntityAxis__custom--RepublicOfChinaMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__us-gaap--ConcentrationRiskByBenchmarkAxis__custom--PurchasesMember_zC9DAu3Uu8di" title="Concentration of sales risk, percentage"><span id="xdx_906_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20190401__20200331__dei--LegalEntityAxis__custom--RepublicOfChinaMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__us-gaap--ConcentrationRiskByBenchmarkAxis__custom--PurchasesMember_zcbMdGQSOqm8" title="Concentration of sales risk, percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-04-012021-03-31_custom_RepublicOfChinaMember_us-gaap_CustomerConcentrationRiskMember_custom_PurchasesMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2019-04-012020-03-31_custom_RepublicOfChinaMember_us-gaap_CustomerConcentrationRiskMember_custom_PurchasesMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></ix:nonFraction></span></span>% of the Company&#8217;s total product
purchases, including all of the Company&#8217;s hardware purchases. In 2018 <span id="xdx_903_eus-gaap--DebtInstrumentDescription_c20170401__20180331__dei--LegalEntityAxis__custom--RepublicOfChinaMember" title="Debt description"><ix:nonNumeric contextRef="From2017-04-012018-03-31_custom_RepublicOfChinaMember" name="us-gaap:DebtInstrumentDescription">the U.S. government-imposed tariffs of up to 25% on certain
goods imported from China. All of our products are manufactured and imported from China however, only our microphones are currently subject
to a 7.5% tariff currently in place.</ix:nonNumeric></span> Should the government decide to expand its list of products to include our karaoke products that
would subject our products to tariffs in the future, there could be a significant increase in the landed cost of our products. If we
are unable to mitigate these increased costs through price increases, we could experience reductions in revenues, gross profit margin
and results from operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_80A_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_zmQfs1LZBIR4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
12 &#8211; <span id="xdx_826_zHe1P5qypCc9">RELATED PARTY TRANSACTIONS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DUE
TO/FROM RELATED PARTIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">On
March 31, 2021 the Company had approximately $<span id="xdx_905_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_pn5n6_c20210331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--RelatedPartiesMember_zLAUy8uY6m9a" title="Due to related parties"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-03-31_custom_RelatedPartiesMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million due to related parties SLRD, SCE and SLE for services provided by these companies
and licensing fees for use of pedestal model molds and tools owned by them. On March 31, 2020, the Company had approximately $<span id="xdx_907_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_pn5n6_c20200331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--RelatedPartiesMember_zShw33UjGeHe" title="Due to related parties"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2020-03-31_custom_RelatedPartiesMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.5</ix:nonFraction></span> million
due from related parties SLRD, SCE and SLE for goods and services sold to these companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TRADE</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
both Fiscal 2021 and 2020 the Company paid approximately $<span id="xdx_908_eus-gaap--RepaymentsOfRelatedPartyDebt_pn5n6_c20200401__20210331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--StarlightElectronicsCoLtdMember_zyFqhi86EuRe" title="Payments to related party"><span id="xdx_900_eus-gaap--RepaymentsOfRelatedPartyDebt_pn5n6_c20190401__20200331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--StarlightElectronicsCoLtdMember_zhlWP7ZHm2N2" title="Payments to related party"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2020-04-012021-03-31_custom_StarlightElectronicsCoLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2019-04-012020-03-31_custom_StarlightElectronicsCoLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.4</ix:nonFraction></ix:nonFraction></span></span> million to SLE as reimbursement for engineering, quality control and other
administrative services performed on our behalf in China. These expense reimbursements were included in general and administrative expenses
on our consolidated statements of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
Fiscal 2021 and 2020 the Company sold approximately $<span id="xdx_906_eus-gaap--RevenueFromRelatedParties_pn5n6_c20200401__20210331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WinglightPacificLtdMember_zXNwvfbuxTbg" title="Revenue from related parties"><ix:nonFraction name="us-gaap:RevenueFromRelatedParties" contextRef="From2020-04-012021-03-31_custom_WinglightPacificLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.0</ix:nonFraction></span> million and $<span id="xdx_907_eus-gaap--RevenueFromRelatedParties_pn5n6_c20190401__20200331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--WinglightPacificLtdMember_zbOWESr5zFb7" title="Revenue from related parties"><ix:nonFraction name="us-gaap:RevenueFromRelatedParties" contextRef="From2019-04-012020-03-31_custom_WinglightPacificLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.9</ix:nonFraction></span> million, respectively of product to Winglight for direct shipment
to Cosmo at discounted pricing granted to major direct import customers shipped internationally with freight prepaid. These amounts were
included as a component of net sales in the accompanying consolidated statements of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company&#8217;s Canadian distributor and the
Company became the sole and exclusive distributor of the Company&#8217;s products in Canada. As part of the agreement, the companies
executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo&#8217;s karaoke inventory for approximately $<span id="xdx_908_eus-gaap--InventoryNet_iI_pn5n6_c20200730__us-gaap--TypeOfArrangementAxis__custom--PurchaseAndSaleAgreementMember_zjt0uF080MEg" title="Inventory"><ix:nonFraction name="us-gaap:InventoryNet" contextRef="AsOf2020-07-30_custom_PurchaseAndSaleAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.7</ix:nonFraction></span> million.
During Fiscal 2021 there was a gain of approximately $<span id="xdx_90C_eus-gaap--RevenueFromRelatedParties_pn5n6_c20200401__20210331__us-gaap--TypeOfArrangementAxis__custom--PurchaseAndSaleAgreementMember_zjLKHplvLpe7" title="Revenue from related parties"><ix:nonFraction name="us-gaap:RevenueFromRelatedParties" contextRef="From2020-04-012021-03-31_custom_PurchaseAndSaleAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.2</ix:nonFraction></span> million from Cosmo related to payments received in Fiscal 2021 on prior year
sales and the related receivable previously reversed and written off as initially deemed uncollectible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:ReserveForSalesReturnsTextBlock"><p id="xdx_802_ecustom--ReserveForSalesReturnsTextBlock_z0r3lKd4Nygg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
13 &#8211; <span id="xdx_82E_zvLbIX8yTBBi">RESERVE FOR SALES RETURNS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are either allowed
to return defective goods within a specified period of time after shipment (between 6 and 9 months) or granted a &#8220;defective allowance&#8221;
consisting of a fixed percentage (between 1% and 5%) off of invoice price in lieu of returning defective products. The Company does make
occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific
exceptions as identified and management estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 78 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability
for defective goods is included in the reserve for sales returns on the consolidated balance sheets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:ScheduleOfReserveForSalesReturnsTableTextBlock"><p id="xdx_892_ecustom--ScheduleOfReserveForSalesReturnsTableTextBlock_zFDC5lXKk2Ga" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes
in the Company&#8217;s reserve for sales returns are presented in the following table:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BE_ztHxBPrKqc0d" style="display: none">SCHEDULE OF RESERVE FOR SALES RETURNS</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 80%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; text-align: center">Fiscal Year Ended</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">March 31,</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">March 31,</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Reserve for sales returns at end of the year</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_981_ecustom--ReserveForSalesReturn_iE_pp0p0_c20200401__20210331_zQbNAKoOVafa" title="Reserve for sales returns at end of the period" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SMDM:ReserveForSalesReturn" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">960,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_989_ecustom--ReserveForSalesReturn_iE_pp0p0_c20190401__20200331_zFG6SDPHICn7" title="Reserve for sales returns at end of the period" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="SMDM:ReserveForSalesReturn" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,224,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A8_zj3R6Vw9wiX8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="us-gaap:EnvironmentalLossContingencyDisclosureTextBlock"><p id="xdx_801_eus-gaap--EnvironmentalLossContingencyDisclosureTextBlock_zEPFqwhyAUgi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
14 &#8211; <span id="xdx_82A_zTHvtXUSvbPc">DAMAGED GOODS INCIDENT</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2019, we received notification from a major customer that several containers of goods from multiple vessels purchased direct import
by the customer had arrived severely water damaged. Upon inspection of the damaged goods by insurance surveyors it was their opinion
that the source of the damage was due to moisture in the pallets provided by the factory which caused significant condensation and consequently
water damage to the merchandise. Actual damage to the goods occurred while the goods were in transit. We filed insurance claims on our
cargo insurance policy which provided for recovery of the sales value plus additional expenses associated with the damaged goods. For
the fiscal year ended March 31, 2020, the customer charged us back a total of approximately $<span id="xdx_90F_ecustom--DamagedGoods_pn5n6_c20190401__20200331_zJL1wJ2XZr0i" title="Damaged goods"><ix:nonFraction name="SMDM:DamagedGoods" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.7</ix:nonFraction></span> million for damaged goods consisting
of sales value of approximately $<span id="xdx_908_ecustom--ReductionOfNetSales_pn5n6_c20190401__20200331_zoswjcVCuIVg" title="Reduction of net sales"><ix:nonFraction name="SMDM:ReductionOfNetSales" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.6</ix:nonFraction></span> million which was recorded as a reduction in net sales and approximately $<span id="xdx_900_ecustom--FreightCharges_pn5n6_c20190401__20200331_zVy2WCenqtk1" title="Freight charges"><ix:nonFraction name="SMDM:FreightCharges" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million in freight
charges which were expensed as a component of sales and marketing expense on the accompanying consolidated statements of operations.
For the fiscal year ended March 31, 2020, we incurred additional related expenses of approximately $<span id="xdx_904_ecustom--AdditionalRelatedExpenses_pn5n6_c20190401__20200331_zWwFu4yePfX6" title="Additional related expenses"><ix:nonFraction name="SMDM:AdditionalRelatedExpenses" contextRef="From2019-04-012020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.3</ix:nonFraction></span> million that were included as
a component of general and administrative expenses on the accompanying consolidated statements of operations. We recorded a refund due
to the customer of approximately $<span id="xdx_902_ecustom--ContractWithCustomerRefundLiabilities_iI_pn5n6_c20200331_zgfTcEPIha1b" title="Refund due to customer"><ix:nonFraction name="SMDM:ContractWithCustomerRefundLiabilities" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.5</ix:nonFraction></span> million which reflected approximately $<span id="xdx_90F_ecustom--PaymentOfChargebacksByCustomer_iI_pn5n6_c20200331_znHc3wDOrVIb" title="Payment of chargebacks by customer"><ix:nonFraction name="SMDM:PaymentOfChargebacksByCustomer" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.7</ix:nonFraction></span> million of chargebacks by the customer less approximately
$<span id="xdx_905_ecustom--PaymentRemittances_iI_pn5n6_c20200331_zRvpGkW6Yqh8" title="Payment remittances"><ix:nonFraction name="SMDM:PaymentRemittances" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.2</ix:nonFraction></span> million the customer had deducted on payment remittances to the Company as of March 31, 2020. We recognized an insurance claim receivable
of approximately $<span id="xdx_90F_ecustom--InsuranceClaimReceivable_iI_pn5n6_c20200331_zD8Yu1hVHPk3" title="Insurance claim receivable"><ix:nonFraction name="SMDM:InsuranceClaimReceivable" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.3</ix:nonFraction></span> million (the approximate cost of the damaged goods destroyed) on the accompanying consolidated balance sheets for
March 31, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
Fiscal 2021, we recovered approximately $<span id="xdx_904_ecustom--DamagedGoods_pn5n6_c20200401__20210331_zMltVjd3G8Kl" title="Damaged goods"><ix:nonFraction name="SMDM:DamagedGoods" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.3</ix:nonFraction></span> million in proceeds from the damaged goods insurance claim which consisted of $<span id="xdx_906_ecustom--ReductionOfNetSales_pn5n6_c20200401__20210331_z7OWmDeSVH18" title="Reduction of net sales"><ix:nonFraction name="SMDM:ReductionOfNetSales" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.6</ix:nonFraction></span> million
of lost sales, approximately $<span id="xdx_90E_ecustom--FreightCharges_pn5n6_c20200401__20210331_zFBzuETpyn5d" title="Freight charges"><ix:nonFraction name="SMDM:FreightCharges" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million in freight costs and approximately $<span id="xdx_908_ecustom--AdditionalRelatedExpenses_pn5n6_c20200401__20210331_zz2VL4YmzzY7" title="Additional related expenses"><ix:nonFraction name="SMDM:AdditionalRelatedExpenses" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.6</ix:nonFraction></span> million in out-of-pocket expenses associated with the
incident. We recognized a one-time gain from the damaged goods claim settlement of approximately $<span id="xdx_904_ecustom--ContractWithCustomerRefundLiabilities_iI_pn5n6_c20210331_zN510uozfLxd" title="Refund due to customer"><ix:nonFraction name="SMDM:ContractWithCustomerRefundLiabilities" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.1</ix:nonFraction></span> million (net of the insurance claim
receivable) as other income for the fiscal year ended March 31, 2021 on the accompanying statements of operations. In addition, we recognized
an additional one-time gain of approximately $<span id="xdx_90F_ecustom--GainOnSettlementOfAccountsPayable_pn5n6_c20200401__20210331_z5e1Oms0LJ3" title="Gain on Settlement of accounts payable"><ix:nonFraction name="SMDM:GainOnSettlementOfAccountsPayable" contextRef="From2020-04-012021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.4</ix:nonFraction></span> million as other income for the fiscal year ended March 31, 2021 on the accompanying
consolidated statements of operations due settlement of accounts payable by the factory that caused the damage.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:RefundsDueToCustomersTextBlock"><p id="xdx_802_ecustom--RefundsDueToCustomersTextBlock_zRT3O2rGDljd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
15 &#8211; <span id="xdx_82C_z2ij8P6pkiik">REFUNDS DUE TO CUSTOMERS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and 2020 the amount of refunds due to customers was approximately $<span id="xdx_906_eus-gaap--ContractWithCustomerRefundLiability_iI_pn5n6_c20210331_zoB9c9VOivZ6" title="Refund due to customer"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2021-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.1</ix:nonFraction></span> million and $<span id="xdx_90E_eus-gaap--ContractWithCustomerRefundLiability_iI_pn5n6_c20200331_zISCeozvLd0d" title="Refund due to customer"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2020-03-31" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.8</ix:nonFraction></span> million, respectively. All
refunds related to the damaged goods incident were settled with the customer from proceeds from the damaged goods insurance
settlement claim. </span>Refunds due to customers at March 31, 2021 were primarily due to amounts due to two major customers for
seasonal returns. Refunds due to customers at March 31, 2020 were primarily due to one major customer which reflects approximately
$<span id="xdx_900_eus-gaap--ContractWithCustomerRefundLiability_iI_pn5n6_c20200331__srt--MajorCustomersAxis__custom--OneMajorCustomerMember_zCQVQ0enI2Wl" title="Refund due to customer"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2020-03-31_custom_OneMajorCustomerMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.7</ix:nonFraction></span> million of chargebacks primarily due to damaged goods received less approximately $<span id="xdx_90B_ecustom--DeductedOnPaymentRemittances_iI_pn5n6_c20200331__srt--MajorCustomersAxis__custom--OneMajorCustomerMember_zzd9yOzO8Rzd" title="Deducted on payment remittances"><ix:nonFraction name="SMDM:DeductedOnPaymentRemittances" contextRef="AsOf2020-03-31_custom_OneMajorCustomerMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.2</ix:nonFraction></span> million that the customer had deducted
on payment remittances to the Company as of March 31, 2020. The remaining $<span id="xdx_90D_eus-gaap--ContractWithCustomerRefundLiability_iI_pn5n6_c20200331__srt--MajorCustomersAxis__custom--TwoMajorCustomerMember_z93A2FjXVvp6" title="Refund due to customer"><ix:nonFraction name="us-gaap:ContractWithCustomerRefundLiability" contextRef="AsOf2020-03-31_custom_TwoMajorCustomerMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.3</ix:nonFraction></span> million was primarily due to amounts due to two major
customers for overstock returns.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 79 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->37<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March
31, 2021 and 2020</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:ReservesTextBlock"><p id="xdx_806_ecustom--ReservesTextBlock_zSlhUAUHO9Lg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
16 &#8211; <span id="xdx_823_zz8IW1P3Osz5">RESERVES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<ix:nonNumeric contextRef="From2020-04-012021-03-31" escape="true" name="SMDM:ScheduleOfValuationAndQualifyingAccountsTableTextBlock"><p id="xdx_892_ecustom--ScheduleOfValuationAndQualifyingAccountsTableTextBlock_zEJx7KM6aFyk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Asset
reserves and allowances for years ended March 31, 2021 and 2020 are presented in the following table:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B9_zILpHbOtJaJ4" style="display: none">SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="text-align: center">Credited to</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">Balance at</td><td>&#160;</td></tr>
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    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left">Inventory reserve</td><td>&#160;</td>
    <td style="text-align: left">$</td><td id="xdx_98D_eus-gaap--ValuationAllowancesAndReservesBalance_iS_pp0p0_c20190401__20200331__us-gaap--ValuationAllowancesAndReservesTypeAxis__us-gaap--InventoryValuationReserveMember_zqzmMqLOBsnk" title="Balance at Beginning of Year" style="text-align: right"><ix:nonFraction name="us-gaap:ValuationAllowancesAndReservesBalance" contextRef="AsOf2019-03-31_us-gaap_InventoryValuationReserveMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">254,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</ix:nonNumeric><p id="xdx_8A3_z4zsUiZKl38b" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><p id="xdx_81A_ztKLRYBlvRtg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: yellow"></span></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="forms-1_005.jpg" alt="https:||www.sec.gov|Archives|edgar|data|0000923601|000149315221022031|logo_01.jpg" style="height: 77px; width: 340px" /></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Common
Stock</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PROSPECTUS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 16pt"><b>AEGIS
CAPITAL CORP.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;&#160;&#160;
<b>, 2022</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
II</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INFORMATION
NOT REQUIRED IN PROSPECTUS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
13. Other Expenses of Issuance and Distribution. </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth all costs and expenses paid or payable by us in connection with the sale of the securities being registered,
other than underwriting discounts and commissions. All amounts shown are estimates except for the Securities and Exchange Commission,
or SEC, registration fee, the Nasdaq listing fee, and the FINRA filing fee.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Expense</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount<br /> Paid or<br /> to be Paid</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 82%; text-align: left">SEC registration fee</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">472.77</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">FINRA filing fee</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Nasdaq Listing Fee</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Legal fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accounting fees and expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Miscellaneous expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Expense reimbursement to underwriters</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
To be filed by amendment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
14. Indemnification of Directors and Officers. </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
certificate of incorporation, as amended, and bylaws empower us to indemnify our directors and officers, and our employees and other
agents, to the fullest extent permitted by DGCL. DGCL prohibits our amended and restated certificate of incorporation from limiting the
liability of our directors for the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">any
    breach of the director&#8217;s duty of loyalty to us or to our stockholders;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">acts
    or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">liability
    for actions taken under Section 174 of DGCL; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">any
    transaction from which the director derived an improper personal benefit.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability
of our directors will be eliminated or limited to the fullest extent permitted by DGCL, as so amended. Our certificate of incorporation,
as amended, does not eliminate a director&#8217;s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive
or other forms of non-monetary relief, remain available under DGCL. This provision also does not affect a director&#8217;s responsibilities
under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we are also empowered to
purchase insurance on behalf of any person whom we are required or permitted to indemnify.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
limitation of liability and indemnification provisions provided in our certificate of incorporation and amended and bylaws, each as amended,
may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the
likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders.
Moreover, a stockholder&#8217;s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming
any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation
that may result in claims for indemnification by any director or officer.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
15. Recent Sales of Unregistered Securities.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 20, 2021, we issued 17,242 shares of common stock pursuant to section 4(a)(2) of the Securities Act, as compensation to two of
our directors Harvey Judkowitz and Joseph Kling.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 20, 2021, we issued 50,000 shares of our common stock pursuant to section 4(a)(2) of the Securities Act, as compensation to a
third party investment relations firm Three Rivers Business Consulting, LLC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 1, 2019 and 2020, we issued 6,578 and 8,621 shares of restricted stock, respectively, to Messiers. Judkowitz, Kling, Lau, Tung
Lau, and Hon as compensation pursuant to section 4(a)(2) of the Securities Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None
of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe that
the offers, sales, and issuances of the above securities were exempt from registration under the Securities Act by virtue of Section
4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering,
or in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act because the transactions were pursuant to compensatory
benefit plans or contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions
represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were placed upon the share certificates issued in these transactions. We believe that all
recipients had adequate information about us or had adequate access, through their relationships with us, to information about us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
16. Exhibits and Financial Statement Schedules. </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: normal 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exhibit
    No. </span></td>
    <td style="font: normal 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; width: 0.1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: justify; font: normal 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Description</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: normal 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: normal 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: normal 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form
    of Underwriting Agreement </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000095011600000456/0000950116-00-000456.txt" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate of Incorporation of the Singing Machine filed with the Delaware Secretary of State on February 15, 1994 and amendments through April 15, 1999 (incorporated by reference to Exhibit 3.1 in the Singing Machine&#8217;s registration statement on Form SB-2 filed with the SEC on March 7, 2000).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.3</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.4</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000095011600000456/0000950116-00-000456.txt" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Certificate Evidencing Shares of Common Stock (incorporated by reference to Exhibit 3.3. of the Singing Machine&#8217;s registration statement on Form SB-2 filed with the SEC on March 7, 2000). File No. 333-57722).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Opinion
    of Sichenzia Ross Ference LLP</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.5</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.6</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.7</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.8</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.9</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-1.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intercreditor Agreement with Crestmark and Iron Horse, dated June 11, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.10</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-2.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Loan and Security Agreement with Crestmark, dated June 11, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.11</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-3.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Schedule to Loan and Security Agreement with Crestmark, dated June 11, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.12</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-4.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Promissory Note with Crestmark, dated June 11, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.13</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-5.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Loan and Security Agreement with Iron Horse, dated June 11, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.14</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-7.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subordination Agreement with Starlight Marketing, dated June 11, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.15</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315220011448/ex99-8.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Promissory Note with Starlight Marketing, dated June 1, 2020 (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on June 16, 2020).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.16</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315221019422/ex10-1.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stock Redemption Agreement, dated as of August 5, 2021, by and among The Singing Machine Company, Inc., Koncepts International, Ltd. and Treasure Green Holdings, Ltd. (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on August 12, 2021).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.17</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315221019422/ex10-2.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Securities Purchase Agreement (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on August 12, 2021).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.18</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315221019422/ex10-3.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Common Stock Purchase Warrant (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on August 12, 2021).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/923601/000149315221019422/ex10-4.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to the Singing Machine&#8217;s Current Report on Form 8-K filed with the SEC on August 12, 2021).</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">21**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex21.htm">List of subsidiaries of The Singing Machine Company Inc.</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex23-1.htm">Consent of EisnerAmper, LLP Independent Registered Public Accounting Firm</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent
    of Sichenzia Ross Ference LLP (included in Exhibit 5.1)</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">24.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#ya_001">Power of Attorney (included on signature page)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    following materials from the Company&#8217;s Annual Report on Form 10-K for the fiscal year ended March 31, 2021 formatted in XBRL:
    (i) Consolidated Balance Sheets as of March 31 2021 and 2020; (ii) Consolidated Statements of Operations for the two years ended
    March 31, 2021 and 2020; (iii) Consolidated Statements of Cash Flows for the two years ended March 31, 2021 and 2020; (iv) Consolidated
    Statements of Shareholders&#8217; Equity for the two years ended March 31, 2021 and 2020 and (v) Notes to the Consolidated Financial
    Statements.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">107</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex107.htm">Calculation of Registration Fee</a> </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
be filed by amendment</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**
&#160;&#160;&#160;&#160;Filed herewith</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(b)
Financial statement schedule. </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Schedules
not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Item
17. Undertakings. </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    undersigned registrant hereby undertakes:</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
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    post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
    forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
    the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
    of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b)
    if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price
    set forth in the &#8220;Calculation of Registration Fee&#8221; table in the effective registration statement; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
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    or any material change to such information in the registration statement.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
    for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
    to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(A)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
    prospectus filed by the registrant pursuant to Rule 424(b)(3) (&#167;230.424(b)(3) of this chapter) shall be deemed to be part of
    the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(B)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
    prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (&#167;230.424(b)(2), (b)(5), or (b)(7) of this chapter)
    as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
    (x) (&#167;230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a)
    of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date
    such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering
    described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an
    underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the
    registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the
    initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part
    of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
    or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective
    date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
    statement or made in any such document immediately prior to such effective date; or</span></td></tr>
</table>

<p style="margin: 0">&#160;</p>

<p style="margin: 0"></p>

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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    the registrant is subject to Rule 430C (&#167;230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of
    a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
    filed in reliance on Rule 430A (&#167;230.430A of this chapter), shall be deemed to be part of and included in the registration statement
    as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
    that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration
    statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior
    to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the
    registration statement or made in any such document immediately prior to such date of first use.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
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    of the securities:</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
    statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold
    to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and
    will be considered to offer or sell such securities to such purchaser:</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
    preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
    424 (&#167;230.424 of this chapter);</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
    the undersigned registrant;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
    persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
    of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that
    a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
    director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted
    by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in
    the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
    question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SIGNATURES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of Florida, on the 13<sup>th</sup> day of
April, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>THE
    SINGING MACHINE, INC.</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 3%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 47%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Gary Atkinson</i></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gary
    Atkinson</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Lionel Marquis</i></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lionel
    Marquis</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="ya_001"></span>POWER
OF ATTORNEY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gary Atkinson and Lionel Marquis
and each of them, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his
or her name, place and stead, in any and all capacities, to sign any and all amendments (including post- effective amendments) to this
registration statement, and to sign any registration statement for the same offering covered by the registration statement that is to
be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post- effective amendments thereto, and
to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of them, his, hers or their substitute or substitutes, may
lawfully do or cause to be done or by virtue hereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities
and on the dates indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 34%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SIGNATURE</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TITLE</b></span></td>
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    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 31%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DATE</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Gary Atkinson</i></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><p style="margin-top: 0; margin-bottom: 0"></p>
                                                                             <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
Executive Officer and Director</span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">April
                                            13, 2022</span></p></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">Gary Atkinson</td>
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    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: middle; text-align: center">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: middle; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">April
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">Lionel
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    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Harvey Judkowitz</i></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: bottom"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 4.7pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: middle"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">April
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    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">Harvey
    Judkowitz</td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: bottom">&#160;</td>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Joseph Kling</i></span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    Kling</td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: bottom">&#160;</td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: bottom">&#160;</td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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[{"type": "S-1", "sequence": "1", "filename": "forms-1.htm", "secsgml_size_bytes": 2738099}]
{"company-data": {"conformed-name": "SINGING MACHINE CO INC", "cik": "0000923601", "assigned-sic": "3652", "irs-number": "953795478", "state-of-incorporation": "DE", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-264277", "film-number": "22825141"}, "business-address": {"street1": "6301 NW 5TH WAY, STE 2900", "city": "FORT LAUDERDALE", "state": "FL", "zip": "33309", "phone": "(954) 596-1000"}, "mail-address": {"street1": "6301 NW 5TH WAY, STE 2900", "city": "FORT LAUDERDALE", "state": "FL", "zip": "33309"}}
As
filed with the Securities and Exchange Commission on April 13, 2022
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
The
Singing Machine Company, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
3652
95-3795478
(State
    or other jurisdiction of
incorporation
    or organization)
(Primary
    Standard Industrial
Classification
    Code Number)
(I.R.S.
    Employer
Identification
    Number)
6301
NW 5
th
Way, Suite 2900
,
Fort
Lauderdale
,
FL
33309
(
954
)
596-1000
(Address,
including zip code and telephone number, including
area
code, of registrant's principal executive offices)
Gary
Atkinson
Chief
Executive Officer
6301
NW 5
th
Way, Suite 2900
Fort
Lauderdale
,
FL
33309
(
954
)
596-1000
(Name,
address, including zip code and telephone number, including area code, of agent for service)
Copies
to:
Gregory
    Sichenzia, Esq.
Marcelle
    S. Balcombe, Esq.
Sichenzia
    Ross Ference LLP.
1185
    Avenue of the Americas
New
    York, NY 10036
(212)
    930-9700
Anthony
    W. Basch, Esq.
Alexander
    W. Powell, Jr., Esq.
Sumita
    S. Ashrafi, Esq.
Kaufman
    & Canoles, P.C.
1021
    E. Cary St.
Richmond,
    Virginia 23219
(804)
    771-5700
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of the registration statement.
If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, check the following box. ☒
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large
    accelerated filer ☐
Accelerated
    filer ☐
Non-accelerated
    filer
☒
Smaller
    reporting company
☒
Emerging
    growth company
☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date
as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY
    PROSPECTUS
SUBJECT
    TO COMPLETION
DATED
    APRIL 13, 2022
Shares
of Common Stock
The
Singing Machine Company, Inc. is offering           shares of common stock, $0.01 par value, at an assumed public offering price of $              per share,
the closing price of our common stock on the OTCQX on         , 2022, in a firm commitment underwritten offering.
Our
common stock is presently quoted on the OTCQX under the symbol "SMDM". On April 12, 2022, the last reported sales
price of our common stock on the OTCQX was $0.1330 per share. We have applied to have our common stock listed on the Nasdaq Capital
Market under the symbol "MICS". No assurance can be given that our application will be approved. If our application is not
approved, we will not complete this offering.
The
final public offering price per share will be determined through negotiation between us and the underwriters in this offering and will
take into account the recent market price of our common stock, the general condition of the securities market at the time of this offering,
the history of, and the prospects for, the industry in which we compete, and our past and present operations and our prospects for future
revenues. The recent market price used throughout this prospectus may not be indicative of the public offering price per share.
We
will complete a reverse split of our common stock simultaneously with this offering at a ratio that will be determined prior to this
offering. All share numbers in this registration statement will be adjusted to give effect to this reverse split, except in the financial
statements or as otherwise indicated.
Investing
in our securities involves a high degree of risk. See "Risk Factors" beginning on page 5 of this prospectus for a
discussion of information that should be considered in connection with an investment in our securities.
Per Share
Total
Public offering price
$
$
Underwriting discounts and commissions
(1)
$
$
Proceeds to us, before expenses
$
$
(1)
See
    "Underwriting" for a description of compensation payable to the underwriters.
We
have granted the underwriters a 45-day option to purchase up to                 additional shares of common stock representing 15% of the common stock
sold in this offering, solely to cover over-allotments, if any. The purchase price to be paid per additional share of common stock will
be equal to the public offering price of one share of common stock, less the underwriting discount. If the underwriters exercise the
option in full, the total underwriting discounts and commissions payable by us will be $               and the total proceeds to us, before expenses,
will be $            .
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
underwriters expect to deliver our securities to purchasers in the offering on or about              , 2022.
AEGIS
CAPITAL CORP.
The
date of this prospectus is           , 2022
TABLE
OF CONTENTS
Page
Prospectus Summary
1
The Offering
4
Risk Factors
5
Special Note Regarding Forward-Looking Statements
12
Use of Proceeds
12
Market for Common Stock and Related Stockholder Matters
13
Dilution
13
Capitalization
14
Management's Discussion and Analysis of Financial Condition and Results of Operations
15
Business
23
Management
26
Executive Compensation
30
Certain Relationships and Related Party Transactions
32
Security Ownership of Certain Beneficial Owners and Management
33
Description of Capital Stock
35
Underwriting
36
Legal Matters
39
Experts
39
Where You Can Find More Information
39
Financial Statements
F-1
You
should rely only on the information contained in this prospectus, as supplemented and amended. We have not authorized anyone to provide
you with information that is different. This prospectus may only be used where it is legal to sell these securities. The information
in this prospectus may only be accurate on the date of this prospectus. We take no responsibility for, and can provide no assurance as
to the reliability of, any other information that others may give you. Neither we nor any of the underwriters is making an offer to sell
or seeking offers to buy these securities in any jurisdiction where, or to any person to whom, the offer or sale is not permitted. The
information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time
of delivery of this prospectus or of any sale of our securities. Our business, financial condition, results of operations and future
growth prospects may have changed since those dates.
For
investors outside the United States: We have not and the underwriters have not done anything that would permit this offering or possession
or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons
outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the securities and the distribution of this prospectus outside the United States.
Unless
otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including
our general expectations and market position, market opportunity and market share, is based on information from our own management estimates
and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management
estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and
knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent source, and we have
not independently verified any third-party information. In addition, assumptions and estimates of our and our industry's future
performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in
"Risk Factors." These and other factors could cause our future performance to differ materially from our assumptions and
estimates. See "Special Note Regarding Forward-Looking Statements."
This
prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience,
trademarks and trade names referred to in this prospectus may appear without the
®
or
™
symbols, but
such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights
or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies'
trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
i
PROSPECTUS
SUMMARY
This
summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a
summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified
in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus.
Before you decide to invest in our securities, you should read the entire prospectus carefully, including "Risk Factors"
beginning on page 5, and the financial statements and related notes included in this prospectus.
As
used in this prospectus and unless otherwise indicated, the terms "we," "us," "our," "SMC",
"Singing Machine," or the "Company" refer to The Singing Machine Company, Inc. and its wholly owned subsidiaries
.
Overview
We
are a leading global karaoke and music Entertainment Company that specializes in the design and production of quality karaoke and music
enabled consumer products for adults and children. Our products are among the most widely available karaoke products in the world. Our
mission is to "create joy through music." In order to deliver on this mission, we are focused on the following multi-prong
approach:
●
in the short-term, improve profitability by optimizing operations and continue to expand gross margins.
●
in the mid-to-long-term, continue to grow our global distribution and expand into new product categories that take advantage of our vast
distribution relationships and sourcing abilities.
We
operate in one principal industry segment across geographically diverse marketplaces, selling our products globally to large, national
retailers as well as independent retailers, on our retailers' websites, and our own direct to consumer website. In North America,
our customers include Amazon.com, Costco, Sam's Club, Target and Wal-Mart. Our largest international territories are the U.K. and
Australia where we sell through international distributors, representatives, and to select international retail customers in geographic
locations where we do not have a direct sales presence.
Sales
to the Company's top five customers together comprised approximately 90% and 80% of our net sales in our fiscal years 2021 and
2020, respectively. In our fiscal year ended March 31, 2021, revenues from four of these customers each represented greater than
10% of net sales at a percentage of 36%, 20%, 13% and 12% of total net sales. In our fiscal year ended March 31, 2020, revenues from
three of these customers each represented greater than 10% of net sales at a percentage of 41%, 13%, and 10% of total net sales.
We
have no long-term contracts with our customers, and as a result, our success depends heavily on our customers' willingness to purchase
and provide shelf space for our products.
Our
Product Portfolio
Our
portfolio of owned and licensed brands and products are organized into the following categories:
Karaoke
—including
our flagship brand Singing Machine, our karaoke line is driven by quality products at affordable price points that we believe deliver
great value to our customers. All of our karaoke products are Bluetooth® enabled to allow access to digital music content via our
mobile apps available on iOS and Android platforms. We believe our core karaoke line offers best-in-class innovative features such as:
enable customers to output video to a TV screen, correct singer's pitch in real-time, stream karaoke content directly to the machine,
sing duets, display scrolling lyrics in-time with the song, and play custom karaoke CD+G discs. The Company's products are sold
directly to consumers via its retail channels, ecommerce, its own website, and distributors worldwide. This product category accounted
for approximately 76% of the Company's net sales in our fiscal year 2021.
Licensed
Products
—including brands such as Carpool Karaoke. In 2019, we entered into a 3-year license agreement with CBS® for its
Carpool Karaoke brand, made popular by James Corden on The Late Show with James Corden. We launched an innovative Carpool Karaoke Microphone
that works specifically in the car. This license agreement with CBS® expires on September 30, 2022. We are actively exploring renewing
the license agreement and exploring other new licensing opportunities. This product category accounted for approximately 10% of our net
sales in our fiscal year 2021.
Microphones
and Accessories
— we currently offer a line of traditional microphone accessories that are compatible with our karaoke machines.
These microphones feature an assortment of colors, come wired or wireless, and may include new features like party lighting and voice
changing effects. We are also seeing growth in portable Bluetooth® microphones which are marketed under the Party Machine brand.
This product category accounted for approximately 10% of our net sales in our fiscal year 2021.
1
Singing
Machine Kids Youth Electronics
—including the brand Singing Machine Kids. Our kids line of products offer fun music entertainment
features designed specifically for children. Our kids' products provide a high quality introduction to singing and music entertainment
for young singers and offer innovative features like voice changing effects, recording, Bluetooth® compatibility, and portability.
This product category accounted for approximately 3% of our net sales in our fiscal year 2021.
Music
Subscriptions
—in conjunction with its premium partner, Stingray Digital, the Company offers karaoke music subscription services
for the iOS and Android platforms as well as a web-based download store and integrated streaming services for our hardware. We currently
offer almost 20,000 licensed karaoke songs in the catalog. This product category accounted for approximately 1% of our net sales in our
fiscal year 2021.
Risk
Factor Summary
We
are subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect
our business, financial condition, results of operations, liquidity and prospects. You should carefully consider these risks, including
the risks described under the heading "Risk Factors" included elsewhere in this prospectus, before deciding to invest in
our common stock. Risks relating to our business include, among others:
●
significant
    disruption to financial market and other economic activity caused by the outbreak and continuance of the Covid-19 pandemic;
●
the
    impact of the worldwide financial markets and global events, including COVID-19 on our supply chain;
●
Economic
    uncertainty and capital market disruptions;
●
market
    shortages in raw materials or electronic components necessary to manufacture our products;
●
changes
    in government regulations relating to international tariffs;
●
concentration
    of sales among our four largest customers;
●
return
    of karaoke products and its impact on our revenues and net profits;
●
pricing
    pressure due to rising competition and inflation;
●
inaccurate
    forecast of karaoke product demand;
●
costs
    and risks associated with carrying inventory;
●
loss
    or damage to goods in transit from factories in China to warehouse in California;
●
disruptions
    to the shipping industry;
●
the
    seasonality of our business which is tied to the holiday period;
●
the
    competitive nature of the industry in which we operate;
●
our
    dependence on third party suppliers and reliance on the suppliers to have all required licenses and comply with all laws in manufacturing
    our products;
●
factors
    that may affect consumer discretionary spending;
●
credit
    risk of customers, who experience financial difficulties and potential failure to pay us;
●
disruption
    in the operation of our warehouse center in California;
●
exposure
    to foreign currency exchange risk;
●
prices
    of raw materials/production;
●
the
    inability to renew license agreements for intellectual property that we use in our products;
2
●
our
    ability to retain key staff, including management and employees;
●
the
    volatility of our share price;
●
liquidity
    risk associated with our common stock;
●
possible
    dilution to our stockholders;
●
the
    offering price of our common stock not being reflective of actual value;
●
the
    application of penny stock rules;
●
our
    management's broad discretion in use of proceeds;
●
the
    effect future stock sales could have on the price of our shares ;
●
the
    lack of payment of dividends on our common stock;
●
costs
    and risks associated with litigation; and
●
other
    risks described from time to time in periodic and current reports that we file with the SEC.
Corporate
Information
The
Company is incorporated under the laws of the State of Delaware and was formed in 1994.
Our
common stock is currently traded on the OTCQX Market under the symbol "SMDM".
Our
principal executive offices are located at 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, and our telephone number is (954) 596-1000.
We maintain our corporate website at www.singingmachine.com. The information on, or that can be accessed through, our website is not
part of this prospectus.
3
THE
OFFERING
Securities
    offered by us:
shares
of common stock
Public
    offering price
$            
    per share
Over-allotment
    option
We
    have granted the underwriters a 45-day option to purchase up to              additional shares of common stock (equal to 15% of the common stock
    sold in the offering), solely to cover over-allotments, if any. The purchase price to be paid per additional share of common stock
    shall be equal to the public offering price of one share, less the underwriting discount.
Common stock outstanding before the offering
(1)
shares
of common stock.
Common stock to be outstanding after the offering
(2)
shares
of common stock. If the underwriter's over-allotment option is exercised in full, the total number of shares of common stock outstanding
immediately after this offering would be            .
Use of proceeds
We intend to use the net
    proceeds of this offering for [general corporate purposes, including working capital]. See "Use of Proceeds."
Risk factors
Investing in our securities
    is highly speculative and involves a high degree of risk. You should carefully consider the information set forth in the "Risk
    Factors" section beginning on page  5 before deciding to invest in our securities.
Trading symbol
Our
    common stock is currently quoted on the OTCQX under the trading symbol "SMDM".
We
    have applied to have our common stock listed on the Nasdaq Capital Market under the symbol "MICS". No assurance can be
    given that our application will be approved. If our application is not approved, we will not complete this offering.
Reverse
    stock split
Effective concurrently
    with this offering, we will complete a reverse split of our common stock, in a ratio to be determined by our board of directors,
    up to a maximum of up to 1-for-30. The purpose of the reverse stock split is to meet Nasdaq's minimum stock price requirement.
    All share numbers in this registration statement will be adjusted to give effect to this reverse split, except in the financial statements
    or as otherwise indicated.
Lock-ups
We, our executive officers,
    directors and stockholders holding at least 10% of our outstanding common stock, will agree with the underwriters not to offer for
    sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common
    stock for a period of 180 days after the date of this prospectus. See "Underwriting."
(1)
Based
                                            on shares of common stock outstanding on April 12, 2022 (unadjusted with respect to
                                            our contemplated reverse split) and excludes:
●
34,666,667
    shares of common stock issuable upon the exercise of warrants outstanding as of April 12, 2022, with an exercise price of
    $.35 per share;
●
16,833,333
    shares of common stock issuable upon the exercise of pre-funded warrants outstanding as of April 12, 2022, with an exercise
    price of $0.01 per share;
●
1,610,000 shares of common
    stock issuable upon the exercise of outstanding options to directors, employees and consultants under our Equity Incentive Plan at
    a weighted average exercise price of $0.34; and
●
assumes no exercise by
    the underwriters of their overallotment option.
(2)
Based on assumed public offering price
    of $            per share.
Unless
otherwise indicated, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to            additional
shares of common stock to cover over-allotments, if any.
4
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should carefully consider the following risks and all of the other
information contained herein or incorporated by reference into this prospectus before deciding whether to invest in our common stock,
including the risks and uncertainties described below and under the caption "Risk Factors" in our most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC, in each case as these risk factors are amended or supplemented
by subsequent Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q s, including any amendments thereto. The occurrence of any
of such risks may materially and adversely affect our business, financial condition, results of operations and future prospects. In such
an event, the market price of our common stock could decline, and you could lose part or all of your investment. Some statements in this
prospectus, including such statements in the following risk factors, constitute forward-looking statements. See the section entitled
"Special Note Regarding Forward-Looking Statements."
Risks
Associated With Our Business
The
COVID-19 pandemic has affected our business in many different ways, and may amplify the risks and uncertainties facing our business and
their potential impact on our financial position, results of operations, and cash flows.
The
COVID-19 pandemic has significantly affected U.S. consumer shopping patterns and caused the health of the U.S. and world economy to deteriorate
in fiscal year 2021. During our fiscal year ended March 31, 2021, demand for consumer electronics products including home based entertainment
and toys was strong and resulted in a reduction in end-of-season overstock returns from three major customers as compared to overstock
returns in our fiscal year ended March 31, 2020. While many of the restrictions and measures initially implemented in response to the
pandemic have since been softened or lifted in varying degrees in different locations around the world, and the manufacture and distribution
of COVID-19 vaccines during calendar year 2021 helped to initiate a recovery from the pandemic, the uncertainty regarding existing and
new potential variants of COVID-19 and the success of any vaccines in respect thereof, may in the future cause a reduction in global
economic activity or prompt, the re-imposition of certain restrictions and measures. In addition, even if not required by governmental
authorities, increases in COVID-19 cases, such as if a new variant emerges, may result in significantly reduced economic activity, which
could impact our business and our financial results.
Our
supply chain may be materially adversely impacted by the worldwide financial markets and global events.
We
rely upon the facilities of our third-party manufacturers in China to manufacture our products and export our products throughout the
world. The COVID-19 pandemic has resulted in significant governmental measures being implemented to control the spread of COVID-19, including,
among others, restrictions on manufacturing and the movement of employees in many regions of China during our fiscal year ended March
31, 2021. In late 2021, the increased demand for consumer electronics products and current economic recovery continued to increase worldwide
demand for products using semiconductor "chip" components in the production of most consumer electronics which has resulted
in an international shortage of chips available to fulfill demand. As a result, we have experienced longer delivery lead times and some
unavailability of these components which have delayed delivery of some of our products. We have also experienced delays in delivery schedules
due to new outbreaks of COVID-19 in Southern China that have forced temporary closures of some key shipping ports. The port closures
have also led to a temporary shortage of shipping containers which have resulted in significant price increases due to increased demand.
While we have seen the easing of COVID-19 restrictions and the impact on our business, we cannot predict the impact of the resurgence
of variants of COVID-19 and other factors affecting local and global economies. In addition, the invasion of Ukraine and the resulting
sanctions imposed on Russia have resulted in increased volatility in the financial markets and the markets for certain commodities including
oil, which may impact significantly the manufacturers that we rely on.
Our
business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy
and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions
.
U.S.
and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the
military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported.
Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market
disruptions, including significant volatility in credit and capital markets.
Additionally,
Russia's military interventions in Ukraine have led to sanctions and other penalties being levied by the U.S., European Union and
other countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military
actions and the resulting sanctions could adversely affect the global economy and financial markets.
5
The
extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial
and could adversely affect our operating results.
A
small number of our customers account for a substantial portion of our revenues, and the loss of one or more of these key customers could
significantly reduce our revenues and cash flow.
We
rely on a few large customers to provide a substantial portion of our revenues. Sales to the Company's top five customers together
comprised approximately 90% and 80% of our net sales in our fiscal years 2021 and 2020, respectively. In our fiscal year ended March
31, 2021, revenues from four of these customers represented greater than 10% of net sales at a percentage of 36%, 20%, 13% and 12% of
total net sales. In our fiscal year ended March 31, 2020, revenues from three of these customers represented greater than 10% of net
sales at a percentage of 41%, 13%, and 10% of total net sales. We do not have long-term contractual arrangements with any of our customers
and they can cancel their orders at any time prior to delivery. A substantial reduction in or termination of orders from any of our largest
customers would decrease our revenues and cash flow.
We
are subject to the risk that some of our large customers may return karaoke products that they have purchased from us and if this happens,
it would reduce our revenues and profitability.
In
our fiscal years ended March 31, 2021 and March 31, 2020, a number of our customers and distributors returned karaoke products that they
had purchased from us. Our customers returned goods valued at approximately $4.1 million or 9.1% of our net sales in our fiscal year
ended March 31, 2021 and approximately $5.4 million or 14.1% of our net sales in our fiscal year ended March 31, 2020. The return of
products is due to a variety of reasons including defective units, customers' overstock and buyer's remorse. The primary
reason for the 5.0 percentage point decrease in returns was primarily due to one-time overstock returns of licensed goods from one major
customer and significant overstock returns of non-licensed products from three other major customers in our fiscal year ended March 31,
2020 which were not repeated in our fiscal year ended March 31, 2021. Our factories charge customary repair and freight costs which increase
our expenses and reduce profitability. If any of our customers were to increase the volume of their returned karaoke products to us,
it would reduce our revenues and profitability.
We
are subject to pressure from our customers relating to price reduction and financial incentives and if we are pressured to make these
concessions to our customers, it will reduce our revenues and profitability.
Because
there is intense competition in the karaoke industry, we are subject to pricing pressure from our customers. Many of our customers have
demanded that we lower our prices, or they will buy our competitor's products. If we do not meet our customer's demands to
lower our regular prices, we will not sell as many karaoke products. We are also subject to pressure from our customers regarding certain
financial incentives, such as return credits or large cooperative ("co-op") promotion incentives, which effectively reduce
our net sales and profit. We gave co-op promotion incentives of approximately $2.0 million during our fiscal year ended March 31, 2021
and $2.9 million during our fiscal year ended March 31, 2020. We have historically offered co-op promotion incentives to our customers
because it is standard practice in the retail industry.
We
experience difficulty forecasting the demand for our karaoke products and if we do not accurately forecast demand, our revenues, net
income and cash flow may be affected.
Because
of our reliance on manufacturers in China for our machine production, our production lead times range from one to four months. Therefore,
we must commit to production in advance of customers' orders. It is difficult to forecast customer demand because we do not have
any scientific or quantitative method to predict this demand. Our forecasting is based on management's general expectations about
customer demand, the general strength of the retail market and management's historical experiences. In past years we have overestimated
demand for our products which led to excess inventory in some of our products and caused liquidity problems that adversely affected our
revenues, net income and cash flow.
We
are subject to the costs and risks of carrying inventory for our customers and if we have too much inventory, it will affect our cash
flow for operations.
Many
of our customers place orders with us several months prior to the holiday season, but they schedule delivery two or three weeks before
the holiday season begins. As such, we are subject to the risks and costs of carrying inventory during the time period between the placement
of the order and the delivery date, which reduces our cash flow. As of December 31, 2021, we had approximately $11.1 million in inventory.
It is important that we sell our existing inventories, to ensure we have sufficient cash flow for operations.
6
We
are subject to insurance risk of loss for goods damaged while in transit from the manufacturer to the customer and our warehouse.
All
of our goods are manufactured in China and are transported to customers and our warehouse in California via ocean vessel. As such, we
are subject to damages that may occur to these goods when they are in transit to customers or our warehouse. Should substantial damage
incur while goods are in transit we could experience a significant loss of revenue, inventory and incur significant out of pocket expenses
associated with destruction of the damaged goods which could cause a significant loss from operations and reduction in cash flow. In
August 2019, a major customer received goods that were significantly water damaged due to excess moisture absorbed in pallets shipped
by the factory. As a result we incurred a loss of approximately $2.4 million during our fiscal year ending March 31, 2020. During our
fiscal year ended March 31, 2021 we recovered approximately $2.3 million from our cargo insurance coverage and secured vendor invoice
credits of $0.4 million from the factory that caused the damage. While we have taken measures to prevent a similar incident in the future
there can be no guarantee that this type of damage or other types of damage could occur in the future. Unfortunately, due to the size
of the claim, we can no longer obtain insurance coverage for goods that are shipped direct import to our customers whose shipping terms
are FOB shipping point however we have obtained insurance for goods in transit to our California warehouse.
Our
business is seasonal and therefore our annual operating results will depend, in large part, on our sales during the relatively brief
holiday season.
Sales
of consumer electronics and toy products in the retail channel are highly seasonal, with a majority of retail sales occurring during
the period from September through December in anticipation of the holiday season, which includes Christmas. A substantial majority of
our sales occur during the second quarter ending September 30 and the third quarter ending December 31. Sales in our second and third
quarter, combined, accounted for approximately 86% and 85% of net sales in our fiscal years ended March 31, 2021 and March 31, 2020,
respectively.
If
we are unable to compete in the karaoke products category, our revenues and net profitability will be reduced.
Our
major competitors for karaoke machines and related products are Singsation®, Singtrix®, eKids®, Bonaok, Karaoke USA™,
Ion® Audio, licensed property karaoke products and other consumer electronics companies. We believe that competition for karaoke
machines is based primarily on price, product features, reputation, delivery times, and customer support. To the extent that we lower
prices to attempt to enhance or retain market share, we may adversely impact our operating margins. Conversely, if we opt not to match
competitor's price reductions we may lose market share, resulting in decreased volume and revenue. To the extent our leading competitors
reduce prices on their karaoke machines, we must remain flexible to reduce our prices. If we are forced to reduce our prices, it will
result in lower margins and reduced profitability. Because of intense competition in the karaoke industry in the United States during
our fiscal year ended March 31, 2021, we expect that the intense pricing pressure in the low end of the market will continue in the karaoke
market in the United States in our fiscal year ending March 31, 2022. In addition, we must compete with all the other existing forms
of entertainment including, but not limited to: motion pictures, video arcade games, home video games, theme parks, nightclubs, television,
prerecorded tapes, CD's, and DVD's and streaming video.
If
we are unable to develop new karaoke products, our revenues may not continue to grow.
The
karaoke industry is characterized by rapid technological change, frequent new product introductions and enhancements and ongoing customer
demands for greater performance. In addition, the average selling price of any karaoke machine has historically decreased over its life,
and we expect that trend to continue. As a result, our products may not be competitive if we fail to introduce new products or product
enhancements that meet evolving customer demands. The development of new products is complex, and we may not be able to complete development
in a timely manner. To introduce products on a timely basis, we must:
●
accurately
    define and design new products to meet market demand;
●
design features that continue
    to differentiate our products from those of our competitors;
●
transition our products
    to new manufacturing process technologies;
●
identify emerging technological
    trends in our target markets;
●
anticipate changes in end-user
    preferences with respect to our customers' products;
●
bring products to market
    on a timely basis at competitive prices; and
●
respond effectively to
    technological changes or product announcements by others.
We
believe that we will need to continue to enhance our karaoke machines and develop new machines to keep pace with competitive and technological
developments and to achieve market acceptance for our products. At the same time, we need to identify and develop other products which
may be different from karaoke machines.
Our
products are shipped from China and any disruption of shipping could prevent or delay our customers' receipt of inventory.
We
rely principally on four contract ocean carriers to ship virtually all of the products that we import to our warehouse facility in Ontario,
California. Retailers that take delivery of our products in China rely on a variety of carriers to import those products. Any disruptions
in shipping, whether in California or China, caused by labor strikes, other labor disputes, war, terrorism, increased oil and gas prices
and international incidents may prevent or delay our customers' receipt of inventory. If our customers do not receive their inventory
on a timely basis, they may cancel their orders or return products to us. Consequently, our revenues and net income would be reduced
and our results of operations adversely affected.
7
Our
manufacturing operations are located in the People's Republic of China, subjecting us to risks common in international operations.
If there is any problem with the manufacturing process, our revenues and net profitability may be reduced.
We
are using five factories in the People's Republic of China to manufacture the majority of our karaoke machines. These factories
are currently producing all of our karaoke products. Our arrangements with these factories are subject to the risks of doing business
abroad, such as import duties, trade restrictions, work stoppages, and foreign currency fluctuations, limitations on the repatriation
of earnings and political instability, which could have an adverse impact on our business. Furthermore, we have limited control over
the manufacturing processes. As a result, any difficulties encountered by our third-party manufacturers that result in product defects,
production delays, cost overruns or the inability to fulfill orders on a timely basis could adversely affect our revenues, profitability
and cash flow. Also, since we do not have written agreements with any of these factories, we are subject to additional uncertainty if
the factories do not deliver products to us on a timely basis.
We
depend on third party suppliers for parts for our karaoke machines and related products, and if we cannot obtain supplies as needed,
our operations will be severely damaged.
Our
growth and ability to meet customer demand depends in part on our capability to obtain timely deliveries of karaoke machines and our
electronic products. We rely on third party suppliers to produce the parts and materials we use to manufacture and produce these products.
If our suppliers are unable to provide our factories with the parts and supplies, we will be unable to produce our products. Currently
there is a worldwide shortage of electronic chips due to the increased demand for semiconductors and we are currently competing with
large companies to obtain these parts and could see production and shipment delays. We cannot guarantee that we will be able to purchase
the parts we need at reasonable prices or in a timely fashion. If we are unable to anticipate any shortages of parts and materials in
the future, we may experience severe production problems and delivery delays, which would impact our sales.
We
depend on the ability of our suppliers to manufacture our products without infringing, misappropriating of otherwise violating the intellectual
property of proprietary rights of others in manufacturing our products.
We
source our products from a variety of contract manufacturers. We buy finished goods from our suppliers and generally do not source raw
materials and parts for manufacturing and assembly into the final product. We rely on our contract manufacturers' ability to secure
injected plastic, wood cabinets, integrated circuits, display panels, speaker drivers, and other components that are necessary for assembly
into our final products. While we are not responsible to source raw materials, we rely on these suppliers to have all required licenses
or proprietary rights to the materials that are incorporated into the final product. In addition, we rely on the representations of our
contract manufacturers that they are using materials and components that meet all necessary legal, safety, and compliance requirements.
If our suppliers do not have the proper licenses or rights or are not in compliance with all regulatory requirements, we may be named
a party or be subject to claims, including claims of infringement or violating the intellectual property or proprietary rights of third
parties with respect to our products.
Consumer
discretionary spending may affect karaoke purchases and is affected by various economic conditions and changes.
Our
business and financial performance may be damaged more than most companies by adverse financial conditions affecting our business or
by a general weakening of the economy. Purchases of karaoke machines and music are considered discretionary for consumers. Our success
will therefore be influenced by a number of economic factors affecting discretionary and consumer spending, such as employment levels,
business, interest rates, inflation and taxation rates, all of which are not under our control. Additionally, other extraordinary events
such as terrorist attacks or military engagements, which adversely affect the retail environment may restrict consumer spending and thereby
adversely affect our sales growth and profitability.
We
are exposed to the credit risk of our customers, who are experiencing financial difficulties, and if these customers are unable to pay
us, our revenues and profitability will be reduced.
We
sell products to retailers, including national chains, warehouse clubs, department stores, lifestyle merchants, specialty stores, and
direct mail catalogs and showrooms. Deterioration in the financial condition of our customers could result in bad debt expense to us
and have a material adverse effect on our revenues and future profitability. As of the filing date of this document we are not aware
of any customers that are operating under the protection of bankruptcy laws.
A
disruption in the operation of our warehouse center in California could impact our ability to deliver merchandise to our customers, which
could adversely affect our revenues and profitability.
A
significant amount of our merchandise is shipped to our customers from our warehouse located in Ontario, California. Events such as fire
or other catastrophic events, any malfunction or disruption of our centralized information systems or shipping problems may result in
delays or disruptions in the timely distribution of merchandise to our customers, which could substantially decrease our revenues and
profitability.
8
We
may encounter difficulties accessing capital
During
the fiscal year ended 2020, our financial condition and results of operations affected our ability to continue traditional financing
with PNC Bank and PNC chose not to renew financing with the Company. The PNC Revolving Credit Facility was terminated on June 16, 2020.
On June 16, 2020, the Company executed a tri-party Intercreditor Agreement for a Revolving Line of Credit (Intercreditor Revolving Credit
Facility") on eligible accounts receivable and inventory. The Company signed a two-year Loan and Security Agreement for a $10,000,000
(reduced to $5,000,000 during non-peak season) financing facility with Crestmark, a division of Meta Bank, NA ("Crestmark")
on eligible accounts receivable. Further, the Company also executed a two-year Loan and Security Agreement with Iron Horse Credit ("Iron
Horse") for up to $2,500,000 in inventory financing. We are currently negotiating new lending arrangements and expect new financing
to be in place upon expiration of our current lending agreement with Crestmark and Iron Horse on June 11, 2022. However, there can be
no assurances that any new financing will be consummated by the expiration of our current financing agreements or that we will be able
to successfully enter into any arrangements upon terms that are acceptable to the Company. Should there be a disruption in the current
levels of these markets or a deterioration of our business, there can be no assurance that we will not experience an adverse effect,
which may be material, on our ability to access capital and on our business, financial condition and results of operations.
Our
production costs may increase if we are required to make purchases using the Chinese Yuan instead of the U.S. dollar.
The
majority of our products are currently manufactured in the People's Republic of China. During the fiscal year ended March 31, 2021,
the Chinese local currency had no material effect on the Company as all of our purchases are denominated in U.S. currency. However, in
the event our purchases are required to be made in Chinese local currency, the Yuan, we will be subject to the risks involved in foreign
exchange rates. In the future the value of the Yuan may depend to a large extent on the Chinese government's policies and China's
domestic and international economic and political developments. As a result, our production costs may increase if we are required to
make purchases using the Yuan instead of the U.S. dollar and the value of the Yuan increases over time. Any significant increase in the
cost of manufacturing our products would have a material adverse effect on our business and results of operations. We sell our product
to Canadian customers some of whom require us to invoice them in Canadian Dollars. We are subject to risks involved in the exchange rate
between the Canadian and US dollar however, the exchange rate has been stable during our fiscal year ended March 31, 2021 and the associated
exchange rates did not have a material impact on the Company's financial results. Should the exchange rate between the Canadian
and US Dollar become more volatile and sales to Canadian customers increase, there could be a material adverse effect on our business.
Our
profit margin may be decreased due to increased prices of raw materials, shipping costs, costs associated with production and inflation.
Fluctuation
in the price of oil, electronic chip components and shipping costs have and will continue to affect the Company in connection with the
sourcing and delivery of raw materials and services. We expect to see increased cost in our finished goods during fiscal year 2022 due
to the significant increases in the price of oil, rising inflation, increased cost of trans-oceanic shipping, electronic component price
increases and increases in the cost of labor related to regulations instituted in China which impact wages related to the cost of production.
These issues are common to all companies in the same type of business and if the Company is not able to negotiate lower costs, reduce
other expenses, or pass on some or all of these price increases to our customers, our profit margin may be decreased.
Our
success depends largely on the continued services of our senior management team and certain key employees.
We
rely on our executive officers and key employees in the areas of business strategy, marketing, sales, services, and general and administrative
functions. From time to time, there may be changes in our executive management team or key employees resulting from the hiring or departure
of executives or key employees, which could disrupt our business. We do not maintain key-man insurance for any member of our senior management
team or any other employee. We do not have employment agreements with our executive officers or other key personnel that require them
to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time. The loss
of one or more of our executive officers or key employees could have a serious adverse effect on our business.
We
primarily rely on trade secret protection and non-disclosure agreements to protect our proprietary information, which may not be effective.
We
currently rely on trade secret protection and non-disclosure agreements with our employees, consultants and third-parties to protect
our confidential and proprietary information. If we do not protect our intellectual property and other confidential information adequately,
competitors may be able to use our proprietary technologies and information and thereby erode any competitive advantages they provide
us.
9
We
will be able to protect our proprietary rights from unauthorized use by third parties only to the extent these rights are effectively
maintained as confidential. We expect to rely primarily on trade secret and contractual protections for our confidential and proprietary
information and we have taken security measures we believe are appropriate to protect this information. These measures, however, may
not provide adequate protection for our trade secrets, know-how or other confidential information. We seek to protect our proprietary
information by, among other things, entering into confidentiality agreements with employees, consultants and other third parties. These
confidentiality agreements may not sufficiently safeguard our trade secrets and other confidential information and may not provide adequate
remedies in the event of unauthorized use or disclosure of this information. Enforcing a claim that a party illegally disclosed or misappropriated
a trade secret or other proprietary information could be difficult, expensive and time-consuming and the outcome could be unpredictable.
In addition, trade secrets or other confidential information could otherwise become known or be independently developed by others in
a manner that could prevent legal recourse by us. If any of our trade secrets or other confidential or proprietary information were disclosed
or misappropriated or if any such information was independently developed by a competitor, our competitive position could be harmed and
our business could suffer.
Risks
Related to this Offering and Ownership of Our Common Stock
Our
share price may be volatile, which could prevent you from being able to sell your shares at or above the offering price.
Our
stock could be subject to wide fluctuation in response to many risk factors listed in this section of the prospectus, and others beyond
our control, including:
●
significant
    disruption to financial market and other economic activity caused by the outbreak and continuance of the Covid-19 pandemic;
●
impact
    of Covid-19 pandemic on our supply chain;
●
market
    shortages in raw materials or electronic components necessary to manufacture our products;
●
changes
    in government regulations relating to international tariffs;
●
concentration
    of sales among three largest customers;
●
return
    of karaoke products and its impact on our revenues and net profits;
●
pricing
    pressure due to rising competition;
●
inaccurate
    forecast of karaoke product demand;
●
costs
    and risks associated with carrying inventory;
●
loss
    or damage to goods in transit from factories in China to warehouse in California;
●
disruption
    to shipping industry;
●
our
    business is highly seasonal and tied to the holiday period;
●
we
    face very high competition and failure to develop or introduce new products may affect us;
●
dependence
    on third party suppliers;
●
consumer
    discretionary spending may affect karaoke purchases and is affected by various economic conditions and changes;
●
credit
    risk of customers, who experience financial difficulties and potential failure to pay us;
●
disruption
    in the operation of our warehouse center in California;
●
exposure
    to foreign currency exchange risk;
●
costs
    and risks associated with litigation; and
●
other
    risks described from time to time in periodic and current reports that we file with the SEC.
10
Furthermore,
the stock markets have experienced extreme price and volume fluctuations in the past several years. These fluctuations often have been
unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well
as general economic, political, and market conditions such as inflation, war, economic slow-down, interest rate changes or international
currency fluctuations, may negatively impact the market price of shares of our common stock. If the market price of shares of our common
stock after this offering does not exceed the offering price, you may not realize any return on your investment in us and may lose some
or all of your investment.
Our
articles of incorporation allow for our board of directors to create new series of preferred stock without further approval by our stockholders,
which could adversely affect the rights of the holders of our common stock.
Our
board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors
has the authority to issue up to 1,000,000 shares of our preferred stock without further stockholder approval. As a result, our board
of directors could authorize the issuance of a series of preferred stock that would grant to holders of preferred stock the right to
our assets upon liquidation, or the right to receive dividend payments before dividends are distributed to the holders of common stock.
In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our
common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result
in dilution to our existing stockholders. Although we have no present intention to issue any shares of preferred stock or to create any
series of preferred stock, we may create such series and issue such shares in the future.
There
are liquidity risks associated with our common stock.
There
is a limited trading market for our shares of common stock and while the Company's common stock may be approved for listing on
NASDAQ Capital Market, there can be no assurance that (1) an active trading market will be developed or sustained, (2) the liquidity
of such market, (3) the ability of our stockholders to sell their shares of common stock, or (4) the price that our stockholders may
obtain for their common stock. If an active market for our common stock with meaningful trading volume does not develop or is not maintained,
the market price of our common stock may decline materially below the offering price and you may not be able to sell your shares. Further,
prior to NASDAQ listing, our stock traded on OTCQX and our shares of common stock were thinly traded. Therefore, prospective stockholders
who require immediate liquidity in their investments should not invest in our common stock.
If
you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of your investment.
The
public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock. Therefore,
if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible
book value per share after this offering. You will experience immediate dilution of $           per share, representing the difference between
our pro forma net tangible book value per share after giving effect to this offering and the public offering price. See "Dilution"
for more detail.
The
offering price per share of our common stock offered under this prospectus may not accurately reflect the value of your investment.
Prior
to this offering, our common stock was trading on the OTCQX. The offering price per share of our common stock offered by this prospectus
was based upon following factors:
●
Our latest
    trading price on OTCQX and trading volumes;
●
Required bid and closing
    prices for listing on NASDAQ;
●
Our
    capital structure, including a reverse split of our common stock in the amount of             for
               , effected on            , 2022;
●
General conditions of the
    capital markets at the time of this offering; and
●
Other factors deemed relevant.
The
offering price may not accurately reflect the value of our common stock and may not be realized upon any subsequent disposition of the
shares.
11
Our
management will have broad discretion in the use of the net proceeds we receive in this offering and may not apply the proceeds in ways
that increase the value of your investment.
Our
management will have broad discretion in the application of the net proceeds we receive in this offering, including for any of the purposes
described in the section titled "Use of Proceeds," and you will not have the opportunity as part of your investment decision
to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine
our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. If we do
not use the net proceeds that we receive in this offering effectively, our business, results of operations, financial condition and prospects
could be harmed, and the market price for our common stock could decline.
Future
sales, or the possibility of future sales, of a substantial number of our common shares could adversely affect the price of the shares
and dilute stockholders.
Future
sales of a substantial number of our common shares, or the perception that such sales will occur, could cause a decline in the market
price of our common shares. This is particularly true if we sell our stock at a discount. In addition, in connection with this offering,
our directors and executive officers will enter into lock-up agreements. If, after the end of such lock-up agreements, these stockholders
sell substantial amounts of common shares in the public market, or the market perceives that such sales may occur, the market price of
our common shares and our ability to raise capital through an issue of equity securities in the future could be adversely affected.
In
addition, in the future, we may issue additional common shares or other equity or debt securities convertible into common shares in connection
with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such issuance could result in substantial
dilution to our existing stockholders and could cause our common share price to decline.
We
have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to
the value of our common stock.
We
have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends
on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as
our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your
investment will only occur if our stock price appreciates.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, or the Exchange Act. Forward-looking statements give current expectations or forecasts of
future events or our future financial or operating performance. We may, in some cases, use words such as "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "plan," "potential,"
"predict," "project," "should," "will," "would" or the negative of those
terms, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements.
These
forward-looking statements reflect our management's beliefs and views with respect to future events, are based on estimates and
assumptions as of the date of this prospectus and are subject to risks and uncertainties, many of which are beyond our control, that
could cause our actual results to differ materially from those in these forward-looking statements. We discuss many of these risks in
greater detail in this prospectus under "Risk Factors." Moreover, new risks emerge from time to time. It is not possible
for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may
make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
We
undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments
or otherwise, except as may be required by applicable laws or regulations.
USE
OF PROCEEDS
We
estimate that the net proceeds from our issuance and sale of               shares of our common stock in this offering will be approximately $             (or
approximately $             if the underwriters exercises the over-allotment option in full), based upon an assumed public offering price of $             per
share, and after deducting underwriting discounts and commissions and offering expenses payable by us.
We
intend to use the net proceeds from this offering for general corporate purposes, including working capital.
This
expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions. Pending
our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments,
including short-term, investment grade, interest bearing instruments and U.S. government securities.
12
MARKET
FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our
common stock is presently quoted on the OTCQX under the symbol "SMDM". We have applied to have our common stock listed on
the Nasdaq Capital Market under the symbol "MICS". No assurance can be given that our application will be approved. If our
application is not approved, we will not complete this offering.
As
of April 12, 2022, there were approximately 184 holders of record of our common stock.
Dividend
Policy
We
have never declared or paid cash dividends on our common stock and our Board of Directors intends to continue its policy for the foreseeable
future. Future dividend policy will depend upon our earnings, financial condition, contractual restrictions and other factors considered
relevant by our Board of Directors and will be subject to limitations imposed under Delaware law.
DILUTION
If
you purchase in this offering, your interest will be diluted to the extent of the difference between the public offering price per share
of common stock and the net tangible book value per share of our common stock after this offering. Our net tangible book value as of
December 31, 2021 was $11,799,697 or $0.32 per share of common stock.
"Net
tangible book value" is total assets minus the sum of liabilities and intangible assets. "Net tangible book value per share"
is net tangible book value divided by the total number of shares of common stock outstanding.
After
giving effect to the sale by us in this offering of shares at an assumed public offering price of $             per share (the closing price of our
common stock on           , 2022), and after deducting the estimated underwriting discounts and commissions and estimated offering expenses that
we will pay, our as adjusted net tangible book value as of December 31, 2021 would have been approximately $             , or $             per share of common
stock. This amount represents an immediate increase in net tangible book value of $            per share to existing stockholders and an immediate
dilution of $            per share to purchasers in this offering.
The
following table illustrates the dilution:
Assumed public offering price per share of common stock
$
Net tangible book value per share as of December 31, 2021
$
0.32
Increase in net tangible book value per share attributable to this offering
$
As adjusted net tangible book value per share after this offering
$
Dilution per share to new investors
$
The
above table is based on 36,636,264 shares of common stock outstanding as of December 31, 2021, and excludes (except as otherwise set
forth), as of such date:
●
34,666,667
    shares of common stock issuable upon the exercise of warrants, with an exercise price of $0.35 per share;
●
16,833,333
    shares of common stock issuable upon the exercise of pre-funded warrants, with an exercise price of $0.01 per share; and
●
1,710,000
    shares of common stock issuable upon the exercise of outstanding options to directors, employees and consultants under our Equity
    Incentive Plan at a weighted average exercise price of $0.33.
If
the underwriters exercise in full their over-allotment option, our net tangible book value per share after giving effect to this offering
would be approximately $            or $             per share, which amount represents an immediate increase in net tangible book value of $             per share to existing
stockholders and dilution to new investors of $            per share.
13
CAPITALIZATION
The
following table sets forth our cash and our capitalization as of December 31, 2021 on:
●
an actual basis; and
●
on an adjusted basis to
    give effect to the sale by us of                shares of common stock in this offering, at the assumed public offering price of $             per share, after
    deducting underwriting discounts and commissions and estimated offering expenses payable by us.
You
should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations,"
and our unaudited financial statements as of and for the period ended December 31, 2021, and the related notes thereto, included in this
prospectus.
As of December 31, 2021
(unaudited)
Actual
As adjusted
Cash and cash equivalents
$
7,375,305
$
Total liabilities
$
22,260,979
$
Stockholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding
$
-
$
-
Common Stock, Class A, $0.01 par value: 100,000 shares authorized; no shares issued and outstanding
-
-
Common Stock, Class B, $0.01 par value; 100,000,000 shares authorized; 36,636,264 shares issued and outstanding
366,362
Additional Paid-in Capital
24,542,633
Accumulated comprehensive income
Accumulated (deficit)
(13,109,298
)
Total stockholders' equity (deficit)
$
11,799,697
$
The
number of shares to be outstanding immediately after giving effect to this offering as shown above is based on 36,636,264 shares outstanding
as of December 31, 2021 and excludes:
●
34,666,667
    common stock issuable upon the exercise of warrants outstanding as of December 31, 2021, with an exercise price of $.35 per
    share;
●
16,833,333
    common stock issuable upon the exercise of pre-funded warrants outstanding as of December 31, 2021, with an exercise price
    of $0.01 per share;
●
1,710,000
    shares of common stock issuable upon the exercise of outstanding options to directors, employees and consultants under our Equity
    Incentive Plan at a weighted average exercise price of $.33;
●
20,000
    shares of common stock reserved for future issuance under our 2001 Stock Option Plan; and
●
assumes
    no exercise by the underwriters of their overallotment option.
14
Available
Information
The
Company is incorporated under the laws of the State of Delaware and was formed in 1994. Our common stock trades on the OTCQX Market under
the symbol "SMDM". Our principal executive offices are located at 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, and our
telephone number is (954) 596-1000. We maintain our corporate website at
www.singingmachine.com
. The information on, or that can
be accessed through, our website is not part of this prospectus.
We
file reports with the Securities and Exchange Commission ("SEC"), including an annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports that we file with, or furnish to, the SEC. The SEC maintains
an Internet website, www.sec.gov that contains reports, proxy and information statements and other information that we file electronically
with the SEC. Our website also includes corporate governance information, including our Code of Ethics and our Board committee charters.
The information contained on our website does not constitute a part of this report.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking
Statements
The
following discussion should be read in conjunction with the condensed consolidated financial statements and notes included elsewhere
in this quarterly report. This document contains certain forward-looking statements including, among others, anticipated trends in our
financial condition and results of operations and our business strategy. (See Part II, Item 1A, "Risk Factors "). These forward-looking
statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could
differ materially from these forward-looking statements.
Statements
included in this quarterly report that do not relate to present or historical conditions are called "forward-looking statements."
Such forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results or
outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements may
include, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. Words such as "believes,"
"forecasts," "intends," "possible," "estimates," "anticipates," "expects,"
"plans," "should," "could," "will," and similar expressions are intended to identify
forward-looking statements. Our ability to predict or project future results or the effect of events on our operating results is inherently
uncertain. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be
accurate indications of the times at, or by which, such performance or results will be achieved.
Important
factors to consider in evaluating such forward-looking statements include, but are not limited to: (i) changes in external factors or
in our internal budgeting process which might impact trends in our results of operations; (ii) unanticipated working capital or other
cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the
industries in which we operate; and (iv) the effects of adverse general economic conditions, both within the United States and globally,
(v) vendor price increases and decreased margins due to competitive pricing during the economic downturn (vi)various competitive market
factors that may prevent us from competing successfully in the marketplace and (vii) other factors described in the risk factors section
of our annual report on Form 10-K, our quarterly reports on 10-Q, or in our other filings made with the SEC.
Readers
are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the
date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.
Overview
The
Singing Machine Company, Inc., a Delaware corporation (the "Company", "SMC", "The Singing Machine")
and its three wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada ("Macau Subsidiary"), SMC Logistics, Inc.
("SMC-L") and SMC-Music, Inc.("SMC-M") are primarily engaged in the development, marketing, and sale of consumer
karaoke audio systems, accessories, musical instruments and musical recordings. The products are sold by SMC to retailers and distributors
for resale to consumers.
Our
products are sold throughout North America, Europe and Australia primarily through major mass merchandisers and warehouse clubs, on-line
retailers and to a lesser extent department stores, lifestyle merchants, direct mail catalogs and showrooms, music and record stores,
and specialty stores.
Representative
customers include Amazon, Best Buy, BJ's Wholesale, Costco, Sam's Club, Target, and Wal-Mart. Our business has historically
been subject to seasonal fluctuations causing our revenues to vary from quarter to quarter and between the same periods in different
fiscal years. Our products are manufactured for the most part based on the purchase indications of our customers. We are uncertain of
how significantly our business would be harmed by a prolonged economic recession, but we anticipate that continued contraction of consumer
spending would negatively affect our revenues and profit margins.
15
Sales
of consumer electronics and toy products in the retail channel are highly seasonal, with a majority of retail sales occurring during
the period from September through December in anticipation of the holiday season, which includes Christmas. A substantial majority of
our sales occur during the second quarter ending September 30 and the third quarter ending December 31. Sales in our second and third
quarter, combined, accounted for approximately 86% and 85% of net sales in fiscal 2021 and 2020, respectively.
RESULTS
OF OPERATIONS
The
following table sets forth, for the periods indicated, certain items related to our consolidated statements of income as a percentage
of net sales for the three and nine months ended December 31, 2021 and 2020:
The
Singing Machine Company, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
For Three Months Ended
For the Nine Months Ended
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Net Sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of Goods Sold
75.0
%
70.7
%
77.1
%
72.2
%
Gross Profit
25.0
%
29.3
%
22.9
%
27.8
%
Operating Expenses
Selling expenses
6.6
%
8.8
%
6.1
%
7.7
%
General and administrative expenses
10.1
%
11.3
%
12.0
%
12.1
%
Depreciation and amortization
0.3
%
0.4
%
0.4
%
0.5
%
Total Operating Expenses
17.0
%
20.5
%
18.5
%
20.3
%
Income (Loss) from Operations
8.0
%
8.8
%
4.4
%
7.5
%
Other Income (Expenses)
Gain from Paycheck Protection Plan loan forgiveness
0.0
%
0.0
%
1.0
%
0.0
%
Gain - related party
0.0
%
1.1
%
0.0
%
0.4
%
Gain from damaged goods insurance claim
0.0
%
0.0
%
0.0
%
2.5
%
Gain from extinguishment of accounts payable
0.0
%
0.0
%
0.5
%
0.9
%
Interest expense
-0.7
%
-1.4
%
-0.8
%
-0.9
%
Finance costs
0.0
%
-0.1
%
-0.1
%
-0.1
%
Total Other Income (expenses), net
-0.7
%
-0.4
%
0.6
%
2.8
%
Income Before Income Tax Provision
7.3
%
8.4
%
5.0
%
10.3
%
Income Tax Provision
-0.5
%
-1.6
%
-0.6
%
-2.4
%
Net Income
6.8
%
6.8
%
4.5
%
7.9
%
16
QUARTER
ENDED DECEMBER 31, 2021 COMPARED TO THE QUARTER ENDED DECEMBER 31, 2020
Net
Sales
Net
sales for the quarter ended December 31, 2021 increased to approximately $21,244,000 from approximately $16,973,000 an increase of approximately
$4,271,000 as compared to the same period ended December 31, 2020. The increase in net sales was primarily due to strong demand for products
and goods that shipped late in the season due to the late arrival of goods that were scheduled to ship in the previous quarter but were
significantly delayed at the Port of Los Angeles due to global logistics issues affecting all industries.
Gross
Profit
Gross
profit for the quarter ended December 31, 2021 increased to approximately $5,309,000 from approximately $4,974,000 an increase of approximately
$335,000 as compared to the same period in the prior year. The increase in net sales contributed approximately $1,252,000 to the increase
in gross profit but was offset by a reduction in gross profit margin of approximately $917,000.
Gross
profit margin for the three months ended December 31, 2021 was 25.0% compared to 29.3% for the three months ended December 31, 2020.
There was a decrease in Carpool Karaoke ("CPK) product sales, of approximately $2,256,000, which accounted for approximately 2.9
margin points of the 4.3 gross profit margin point decrease with the remaining 1.4 point decrease primarily due to product cost increases
in raw materials and a significant increase in freight costs due to global logistics issues that were only partially passed on to customers.
Operating
Expenses
For
the quarter ended December 31, 2021, total operating expenses increased to approximately $3,616,000 compared to approximately $3,481,000
from the same period in the prior year. This represents an increase in total operating expenses of approximately $135,000 from the quarter
ended December 31, 2020. The increase in operating expenses is primarily due to an increase in general and administrative expenses of
approximately $229,000. There was an increase in pallet expenses, warehouse supplies and expense and temporary labor at our California
facility of approximately $206,000 due to an increase in third party logistics business as well as price increases due to inflation and
supply chain shortages. There was an increase in legal, accounting, consulting fees and investor relations expenses of approximately
$138,000 primarily related to the private placement transaction (see Note 10 - AUGUST 2021 PRIVATE PLACEMENT). There was an increase
in bad debt reserve expense of approximately $165,000 related to the increase in net sales and accounts receivable. These increases were
offset by a decrease in payroll expenses of approximately $295,000 primarily due to significant decrease in executive bonus accruals
during the three months ended December 31, 2021 compared to the three month period ended December 31, 2020.
Income
From Operations
There
was income from operations of approximately $1,694,000 for the three months ended December 31, 2021 compared to income from operations
of approximately $1,493,000 for the three months ended December 31, 2020. The increase in income from operations of approximately $201,000
was primarily due to the increase in gross profit offset by the increase in operating expenses as explained above.
Other
Income (Expenses)
Other
expenses increased by approximately $103,000 to approximately $165,000 in other expenses, net for the three months ended December 31,
2021 compared to approximately $61,000 in other expenses, net for the same period ended December 31, 2020. During the three months ended
December 31, 2020 there was a gain from related party of approximately $188,000 from related party accounts receivable that had previously
been written off as uncollectible. During the three months ended December 31, 2021 there was a reduction in interest expense and finance
amortization costs of approximately $85,000 compared to the three months ended December 31, 2020 which offset the gain from related party.
Income
Taxes
For
the three months ended December 31, 2021 and 2020 the Company recognized an income tax provision of approximately $103,000 and $264,000,
respectively, due to management's best estimate of the Company's full year effective tax rate of approximately 11.1% and
23.0%, respectively.
Net
Income
For
the three months ended December 31, 2021 there was net income of approximately $1,426,000 compared to net income of approximately $1,167,000
for the same period a year ago. The decrease in net income was primarily due to the same reasons discussed in Income from Operations,
Other Income (Expenses) and Income Taxes.
17
NINE
MONTHS ENDED DECEMBER 31, 2021 COMPARED TO THE NINE MONTHS ENDED DECEMBER 31, 2020
Net
Sales
Net
sales for the nine months ended December 31, 2021 increased to approximately $44,679,000 from $42,310,000 an increase of approximately
$2,369,000 as compared to the same period ended December 31, 2020 primarily due to sales increases in two "club store" customers
that increased their assortment due to increased consumer demand and was offset by a decrease in CPK product sales.
Gross
Profit
Gross
profit for the nine months ended December 31, 2021 decreased to approximately $10,215,000 from approximately $11,759,000 a decrease of
approximately $1,544,000 as compared to the same period in the prior year. Despite the increase in net sales, which contributed approximately
$658,000 increase in gross profit margin, this increase was offset by a decrease of approximately $2,202,000 in gross profit margin or
approximately 4.9 margin points on products sold.
Gross
profit margin for the nine months ended December 31, 2021 was 22.9% compared to 27.8% for the nine months ended December 31, 2020. There
was a decrease in CPK product sales, (that yield a substantially higher gross profit margin than our traditional product) of approximately
$2,493,000, which accounted for approximately 2.5 margin points of the 4.9 gross profit margin point decrease. The remaining decrease
of approximately 2.4 points of gross margin was primarily due to product cost increases in raw materials and a significant increase in
freight costs due to global logistics issues that were only partially passed on to customers.
Operating
Expenses
For
the nine months ended December 31, 2021, total operating expenses decreased to approximately $8,261,000 compared to approximately $8,599,000
from the same period in the prior year. This represents a decrease in total operating expenses of approximately $338,000 from the nine
months ended December 31, 2020. The decrease in operating expenses is primarily due to a decrease in selling expenses of $547,000. There
was a decrease in freight expenses of approximately $460,000 associated with a decrease in outbound freight as two major club accounts
did not have special projects requiring the company to ship freight prepaid instead of collect as well as inbound freight expense reduction
due to a decrease in product returns. There was a reduction in royalty expense of approximately $325,000 primarily due to the reduction
in CPK sales as explained in net sales. These decreases in selling expenses were offset by an increase in discretionary marketing expense
of approximately $284,000.
These
decreases in selling expenses of approximately $547,000 were offset by an increase in general and administrative expenses of approximately
$223,000 primarily due to an increase in legal, accounting, consulting fees and investor relations expenses primarily related to the
private placement transaction (see Note 10 - August 2021 Private Placement).
Income
From Operations
There
was income from operations of approximately $1,954,000 for the nine months ended December 31, 2021 compared to income from operations
of approximately $3,160,000 for the nine months ended December 31, 2020. The decrease in income from operations of approximately $1,206,000
was primarily due to the reduction in operating expenses offset by the decrease in gross profit as explained above.
Other
Income (Expenses)
Other
income decreased by approximately $920,000 to approximately $294,000 in other income, net for the nine months ended December 31, 2021
compared to approximately $1,214,000 in other income, net for the same period ended December 31, 2020. During the nine months ended December
31, 2021 there were one-time gains of approximately $696,000 primarily due to forgiveness of the loan under the Paycheck Protection Program
of approximately $448,000 which included principal and interest and there was an accounts payable forgiveness of approximately $236,000
from one vendor on goods that were damaged in the prior year compared to a recovery of approximately $1,068,000 in out-of-pocket expenses
relating to a prior year damaged goods insurance claim during the nine months ended December 31 2020 and accounts payable forgiveness
of $390,000 from the vendor who caused the damaged goods problem. During the nine months ended December 31, 2020 there was a gain from
related party of approximately $188,000 from related party accounts receivable that had previously been written off as uncollectible.
The remaining variance in other income, net was primarily due to a decrease in interest expense and amortization of deferred financing
costs associated with the financing terms of the Crestmark Facility and IHC Facility.
Income
Taxes
For
the nine months ended December 31, 2021 and 2020 the Company recorded an income tax provision of approximately $249,000 and an approximately
$1,006,000, respectively, due to management's best estimate of the Company's full year effective tax rate of approximately
11.1% and 23.0%, respectively.
18
Net
Income
For
the nine months ended December 31, 2021 there was net income of approximately $2,000,000 compared to net income of approximately $3,368,000
for the same period a year ago. The decrease in net income was primarily due to the same reasons discussed in Income from Operations,
Other Income (Expenses) and Income Taxes.
FISCAL
YEAR ENDED MARCH 31, 2021 COMPARED WITH FISCAL YEAR ENDED MARCH 31, 2020
The
following table sets forth, for the periods indicated, certain income and expense items expressed as a percentage of the Company's
total revenues:
For the Fiscal Years Ended
March 31, 2021
March 31, 2020
Net Sales
100.0
%
100.0
%
Cost of Sales
73.2
%
78.8
%
Operating Expenses
23.7
%
29.7
%
Operating Income (Loss)
3.1
%
-8.5
%
Other Income (Expenses), Net
2.5
%
-0.6
%
Income (Loss) Before Income Tax (Provision) Benefit
5.6
%
-9.1
%
Income Tax (Provision) Benefit
-1.0
%
1.7
%
Net Income (Loss)
4.6
%
-7.4
%
Net
Sales
Net
sales for the year ended March 31, 2021 ("Fiscal 2021") were approximately $45.8 million. This represents an increase of
approximately $7.3 million as compared to approximately $38.5 million in the fiscal year ended March 31, 2020 ("Fiscal 2020").
There was an increase in sales of our Carpool Karaoke Product ("CPK") of approximately $2.7 million as the product gained
popularity on social media. There was an increase in product demand and a decrease in overstock returns of approximately $2.0 million
due to the increase in demand for home entertainment products like karaoke related to COVID 19 activity restrictions. There was no one-time
revenue loss as in the prior fiscal year when we experienced a loss of revenue of approximately $1.6 million of chargebacks from a major
customer due to a water damaged goods incident. There was a decrease in co-op promotion incentives of approximately $0.9 million as several
major customers did not run customary holiday promotions.
Gross
Profit
Gross
profit for Fiscal 2021 was approximately $12.3 million or 26.8% of total revenues compared to approximately $8.2 million or 21.2% of
sales for Fiscal 2020, an increase of approximately $4.1 million as compared to the same period in the prior year. The increase in net
sales and decrease in co-op promotion incentives as explained above accounted for approximately $1.6 million and $0.8 million, respectively
of the increase in gross profit. The remaining increase of approximately $1.6 million was primarily due to an increase in profit margin
primarily from the increased sales of CPK product which yield significantly higher gross profit margin.
Gross
profit margin for Fiscal 2021 was 26.8% compared to 21.2% for Fiscal 2020, an increase of 5.6 margin points. The decrease in in co-op
promotion incentives of approximately $0.9 million as explained above accounted for approximately 3.3 points of the increase in gross
profit margin. There was an increase in gross profit margin of approximately $1.6 million or 1.5 margin points due to increased sales
of our CPK product which yielded average gross profit margins of 59.8%. The remaining 0.8 margin point increase was primarily due to
the mix of products sold.
Operating
Expenses
In
fiscal year 2021, our operating expenses decreased from approximately $11.5 million to approximately $10.9 million, a decrease of approximately
$0.6 million compared to the same period last year. Selling expenses decreased by approximately $0.3 million due to a decrease in discretionary
marketing expenses of approximately $0.5 million associated with one-time expenses associated with the rollout of the new CPK Product
in the prior year and offset by an increase of approximately in $0.2 million in royalty expense associated with the increase in licensed
CPK product.
There
was a decrease in bad debt expense of approximately $0.2 million as only one smaller customer filed for bankruptcy in fiscal 2021 compared
to the bankruptcy filing of two customers of approximately $0.3 million in fiscal 2020.
19
Other
Income (Expenses)
Other
income and (expenses), net increased by approximately $1.5 million to approximately $1.2 in other income, net for the fiscal year ended
March 31, 2021 compared to approximately $0.3 million in other expenses, net for the same period ended March 31, 2020. This increase
in other income, net was primarily due to one-time gains associated with the recovery of approximately $1.1 million in out-of-pocket
expenses relating to a prior year damaged goods insurance claim and a vendor settling accounts payable of $0.4 million from the factory
that caused the damage. There was an additional one-time gain of approximately $0.2 million from Cosmo, a related party, related to payment
in fiscal 2021 of prior year sales which were reversed and the related receivable was initially deemed uncollectible and written off
in the prior fiscal year. These increases in other income were offset by an increase in interest expense and amortization of deferred
financing costs of approximately $0.2 million associated with the financing terms of the Crestmark Facility and IHC Facility.
Income
(Loss) Before Income Tax (Provision) Benefit
We
had income before income tax provision of approximately $2.6 million in Fiscal 2021 compared to a loss before tax benefit of approximately
$3.5 million in Fiscal 2020 for a total increase in income before income tax provision of approximately $6.1 million. Net income from
operations contributed approximately $4.6 million of the increase due increases in net sales and gross profit and decreased operating
expenses as explained above. The increase in other income and expenses, net of $1.5 million as explained above accounted for the remaining
increase in income before income tax provision.
Income
Tax Benefit (Provision)
Significant
management judgment is required in developing our provisions for income taxes, including the determination of foreign tax liabilities,
deferred tax assets and liabilities and any valuation allowances that might be required against deferred tax assets. Management evaluates
its ability to realize its deferred tax assets on a quarterly basis and adjusts its valuation allowance when it believes that it is not
likely to be realized. On March 31, 2021 and 2020, we had net deferred tax assets of approximately $0.9 million and approximately $1.3
million, respectively. The deferred tax assets on March 31, 2021 and 2020 were net of a valuation allowance of approximately $23,000
and approximately $88,000, respectively due to management's belief that certain tax assets will more than likely expire prior to
the Company's these assets being realized.
In
Fiscal 2021 we recognized an income tax provision of approximately $0.5 million compared to an income tax benefit of approximately $0.6
million in Fiscal 2020. The Company's effective tax rate for the fiscal year ended March 31, 2021 was approximately 17.4% as compared
to 18.1% for Fiscal 2020.
We
operate within multiple taxing jurisdictions and are subject to audit in those jurisdictions. Because of the complex issues involved,
any claims can require an extended period to resolve. In management's opinion, adequate provisions for income taxes have been made.
Net
Income
As
a result of the foregoing, we had net income of approximately $2.2 million and a net loss of approximately $2.9 million for Fiscal 2021
and Fiscal 2020, respectively.
LIQUIDITY
AND CAPITAL RESOURCES
As
of December 31, 2021, Singing Machine had cash on hand of approximately $7,375,000 as compared to cash on hand of approximately $823,000
on December 31, 2020. We had working capital of approximately $9,811,000 as of December 31, 2021. Net cash used in operating activities
was approximately $3,113,000 for the nine months ended December 31, 2021. During the nine months ended December 31, 2021 there was an
increase in accounts receivable of approximately $10,124,000 due to a seasonal increase in sales and an increase in inventories of approximately
$5,933,000 due to in-transit and receipt of inventory intended for peak season shipments but were received too late to ship due to global
logistics issues. These increases in net cash used in operating activities were offset by an increase in in accounts payable and accrued
expenses of approximately $4,531,000 due to delayed receipt of seasonal purchases of product for the peak season due to global logistics
issues. There was a decrease in amounts due from Crestmark Bank of approximately $4,557,000 as cash collected in excess of amounts due
on the revolving credit during the first quarter was used to pay for the seasonal increase in inventory. There was a seasonal increase
in reserve for sales returns of approximately $1,962,000.
Net
cash provided by operating activities was approximately $165,000 for the nine months ended December 31, 2020. During the nine months
ended December 31, 2020 there was a decrease in insurance receivable of approximately $1,268,000 as we received proceeds for the one-time
damaged goods incident that occurred in the prior fiscal year as well as a gain from the extinguishment of accounts payable of $390,000
from one vendor related to the damaged goods issue. There was a decrease in inventory of approximately $1,781,000 as the Company sold
excess inventory left over from the prior fiscal year. There was a seasonal increase in reserves for sales returns of approximately $1,742,000.
There was an increase in accrued expenses of approximately $580,000 primarily due to seasonal co-op promotion allowances, commissions
and royalties. These increases in cash provided by operations were offset by an increase in accounts receivable of approximately $7,056,000
due to peak season sales. There was an increase in amounts due from banks of approximately $1,172,000 due to cash collected in excess
of amounts due on the revolving credit facilities with Crestmark Bank. There was a reduction in refunds due to customers of approximately
$705,000 primarily due to settlement of prior year damaged goods claims with one major customer. There was a decrease in accounts payable
of approximately $1,470,000 as the Company sold off excess inventory from the prior year and did not need to purchase as much new inventory
to fulfill orders.
20
Net
cash used in investing activities for the nine months ended December 31, 2021 was approximately $78,000 as compared to approximately
$89,000 used in investing activities for the same period ended a year ago and consisted primarily of purchases of molds and tooling for
new products.
Net
cash provided by financing activities for the nine months ended December 31, 2021 was approximately $6,979,000 compared to cash provided
by financing activities of approximately $402,000 for the same period ended of the prior year. We borrowed approximately $8,562,000 from
our Crestmark Facility and IHC Facility for working capital. In August 2021, the Company received net proceeds of approximately $1,838,000
from the execution of private placement and stock redemption agreements as summarized in the next two paragraphs. These financing activities
were offset by a payment of $150,000 on the subordinated related party debt, payment of deferred finance charges associated with the
closing of the Crestmark and IHC Facilities of approximately $38,000 with the remaining difference used to pay scheduled installments
on installment notes and finance leases.
In
August 2021, the Company entered into a securities purchase agreement (the "Purchase Agreement") with large institutional
investors and a strategic investor for private placement of (i) 16,500,001 shares of its common stock (the "Shares") together
with common warrants to purchase up to 16,500,000 shares of common stock for an exercise price of $0.35 per share, and (ii) 16,833,333
pre-funded warrants ("Pre-Funded Warrants") with each Pre-Funded Warrant exercisable for one share of common stock at an
exercise price of $0.01 per share, together with Common Warrants to purchase up to 16,833,333 shares of common stock at an exercise price
of $0.35 per share (the "Private Placement"). Shares issuable upon the exercise of the Pre-Funded Warrants and Common Warrants
are hereinafter referred to as the "Warrant Shares". The closing of the Private Placement took place on August 10, 2021,
when the Shares, Common Warrants, and Pre-Funded Warrants were delivered to the purchasers and funds, in the amount of approximately
$9,800,000, were received by the Company. Approximately $7,200,000 of the funds received were used to execute the Redemption Agreement
as explained in the next paragraph. The Company received an increase in working capital of approximately $1,800,000 of working capital
after settlement of expenses associated with closing of these transactions.
In
August, 2021, the Company entered into a stock redemption agreement (the "Redemption Agreement") with Koncepts International
Limited ("Koncepts") and Treasure Green Holdings, Ltd. ("Treasure Green"), pursuant to which the Company agreed
to redeem 19,623,155 shares of common stock of the Company (the "Redeemed Shares"). The closing of the transactions set forth
in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were assigned and transferred back to the
Company and the Company paid approximately $7,200,000 to Koncepts and Treasure Green. The Redeemed Shares were retired and are available
for reissuance in the future.
Net
cash provided by financing activities for the nine months ended December 31, 2020 was approximately $402,000. We received loan proceeds
from Crestmark in the amount of approximately $444,000 under the Paycheck Protection Program with the remaining variance primarily due
to repayments of installment and capital lease payments. In the prior fiscal year we received approximately $284,000 from a financing
arrangement with Dimension Funding to finance implementation of a new Enterprise Resource Planning system. This increase in cash provided
by financing activities were offset by payments of finance leases and the bank term note of approximately $136,000.
On
June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility with Crestmark and IHC on eligible accounts receivable
and inventory which replaced the Company's previous revolving credit facility with PNC Bank which was terminated on June 16, 2020
(See Note 6 - Bank Financing). As of this filing, we have borrowed approximately $2,500,000 on the IHC Facility, is the maximum loan
amount on eligible inventory allowed by this facility and borrowed approximately $1,000,000 on our Crestmark Facility which will make
available up to $10,000,000 of eligible accounts receivable as the fiscal year progresses. As of this filing the Company has approximately
no additional borrowings currently available from the Crestmark facility until the end of February as per the facility agreement at which
time the Company will have approximately $1,000,000 available on the facility.
On
May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $444,000 under the Paycheck Protection
Program ("PPP"). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"),
which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying
business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including
payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced if the borrower
terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan is payable over two years
at an interest rate of 1%, with a deferral of payments until a forgiveness application has been accepted and reviewed by the Small Business
Administration ("SBA"), and the SBA provided Crestmark with the loan forgiveness amount. In June 2021 the Company received
notification from the SBA that the loan had been forgiven in its entirety. For the nine months ended December 31, 2021, a gain of approximately
$448,000 (including principal and interest) from the forgiveness of the loan was included in other income and expenses in the accompanying
condensed consolidated statements of income.
21
In
August 2019, a major customer received goods that were significantly water damaged due to excess moisture absorbed in pallets shipped
by the factory. As a result we incurred a loss in cash flow of approximately $1,559,000 in revenue and approximately $849,000 in additional
out of pocket expenses to retrieve, inspect, warehouse and properly destroy the goods in the prior fiscal year. As of this filing we
have we recovered approximately $2,336,000 from our cargo insurance coverage which settled approximately $1,268,000 in insurance claim
receivable with the remaining proceeds reflected in other income and (expenses) as a gain from damaged goods insurance claim in the condensed
consolidated statement of income. For the three and nine months ended December 31, 2020 the gain from damaged goods insurance claim was
approximately $0 and $1,068,000, respectively. We also secured vendor invoice credits of $390,000 from the factory that caused the damage
which is reflected as gain from extinguishment of accounts payable in the condensed consolidated statement of income for the nine months
ended December 31, 2020.
We
believe that current working capital, cash expected to be generated from our operating forecast, along with the availability of cash
from our credit facilities (See Note 6 - BANK FINANCING) assuming that they are revised and or extended, will be adequate to meet the
Company's liquidity requirements for at least twelve months from the filing of this report. As both the Crestmark Bank ("Crestmark
Facility") and the Iron Horse Credit ("IHC") Facility ("IHC Facility") are set to expire on June 15, 2022,
the Company expects to negotiate a revision or extension of these debt facilities upon their maturity, however, there can be no assurance
that such revision or extension will occur or at what terms.
CRITICAL
ACCOUNTING POLICIES
The
Company's interim financial statements were prepared in accordance with United States generally accepted accounting principles,
which require management to make subjective decisions, assessments and estimates about the effect of matters that are inherently uncertain.
As the number of variables and assumptions affecting the judgement increases such judgements become even more subjective. While management
believes that its assumptions are reasonable and appropriate, actual results may be materially different than estimated. The critical
accounting estimates and assumptions have not materially changed from those identified in the Company's 2021 Annual Report on Form
10-K.
22
BUSINESS
History
The
Singing Machine Company, Inc., a Delaware corporation, and wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada ("Macau
Subsidiary"), SMC Logistics, Inc. ("SMCL") and SMC-Music, Inc. ("SMCM"), are primarily engaged in the development,
marketing, and sale of consumer karaoke audio equipment, accessories and musical recordings. The products are sold directly to distributors
and retail customers.
Singing
Machine is a leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke
and music enabled consumer products for adults and children. Our products are among the most widely available karaoke products in the
world. Our mission is to "create joy through music." In order to deliver on this mission, we are focused on the following
multi-prong approach:
●
In
    the short-term, improve profitability by optimizing operations and continue to expand gross margins.
●
In
    the mid-to-long-term, continue to grow our global distribution and expand into new product categories that take advantage of our
    vast distribution relationships and sourcing abilities.
Our
portfolio of owned and licensed brands and products are organized into the following categories:
Karaoke
—including
our flagship brand Singing Machine, our karaoke line is driven by quality products at affordable price points that deliver great value
to our customers. All of Singing Machine's karaoke products are Bluetooth® enabled to allow access digital music content via
our mobile apps available on iOS and Android platforms. The core karaoke line offers best-in-class innovative features such as: enable
customers to output video to a TV screen, correct singer's pitch in real-time, stream karaoke content directly to the machine,
sing duets, display scrolling lyrics in-time with the song, and play custom karaoke CD+G discs. Its products are sold directly to consumers
via its retail channels, ecommerce, own website, and distributors worldwide. This product category accounted for approximately 76% of
the Company's net sales in our fiscal year ending March 31, 2021.
Licensed
Products
—including brands such as Carpool Karaoke. In 2019, we entered into a 3-year license agreement with CBS® for its
Carpool Karaoke brand, made popular by James Corden on The Late Late Show with James Corden. The Company launched an innovative Carpool
Karaoke Microphone that works specifically in the car. While this license agreement with CBS® expires on September 30, 2022, we are
exploring renewing the license agreement and exploring other new licensing opportunities. This product category accounted for approximately
10% of the Company's net sales in our fiscal year ending March 31, 2021.
Microphones
and Accessories
— the Company currently offers a line of traditional microphone accessories that are compatible with Singing
Machine karaoke machines. These microphones feature an assortment of colors, come wired or wireless, and may include new features like
party lighting and voice changing effects. The Company is also seeing growth in portable Bluetooth® microphones which are marketed
under the Party Machine brand. This product category accounted for approximately 10% of the Company's net sales in our fiscal year
ending March 31, 2021.
Singing
Machine Kids Youth Electronics
—including the brand Singing Machine Kids. Our Kids line of products offer fun music entertainment
features designed specifically for children. SMC Kids products provide a high quality introduction to singing and music entertainment
for young singers and offer innovative features like voice changing effects, recording, Bluetooth® compatibility, and portability.
This product category accounted for approximately 3% of the Company's net sales in our fiscal year ending March 31, 2021.
Music
Subscriptions
—in conjunction with its premium partner, Stingray Digital, the Company offers 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.
The Company currently offers almost 20,000 licensed karaoke songs in the catalog. This product category accounted for approximately 1%
of the Company's net sales in our fiscal year ending March 31, 2021.
Product
Development and Design
Product
development is a key element of our strategic growth plan. We strive to deliver many new exciting consumer products to market every single
year to retain our presence as the market-leader in consumer karaoke products. Strategic product development is done in-house from our
corporate headquarters in Fort Lauderdale, FL where we identify new potential categories, features, and price points. Products are created
in conjunction with contract product designers and inventors in collaboration with our contract manufacturers in China to deliver fun
products that represent tremendous value to our customers. In addition to new products, we always look for ways to improve existing products
to hit more affordable price points or improve features based upon market feedback.
23
Business
Segments
We
operate in one principal industry segment across geographically diverse marketplaces, selling our products globally to large, national
retailers as well as independent retailers, on our retailer's websites, and our own direct to consumer website. In North America,
our customers include Amazon.com, Costco, Sam's Club, Target and Wal-Mart. Our largest international territories are the U.K. and
Australia where we sell through international distributors, representatives, and to select international retail customers in geographic
locations where we do not have a direct sales presence.
Suppliers
and Manufacturing
We
source our products from a variety of contract manufacturers in southern China. We are not dependent on any one supplier as we use many
manufacturers (currently over 5) to make our products. We maintain a Hong Kong office that provides us with factory management, sourcing,
quality control, engineering, and product development. We buy finished goods from our suppliers and generally do not source raw materials
for manufacturing, however in limited circumstances where we develop proprietary hardware and software, we will secure the proprietary
circuits and provide to our contract manufacturers for assembly into the final product. While we are not responsible to source raw materials,
we rely on our contract manufacturers' ability to secure injected plastic, wood cabinets, integrated circuits, display panels,
speaker drivers, and other components that are necessary for assembly into our final products.
Our
goods are produced by our contract manufacturers and are either shipped via ocean vessels to our distribution center in Ontario, California
or we utilize a direct import program where our retail customers coordinate to pick up the goods FOB China. The direct import program
allows our customers to take advantage of better ocean container rates through bigger volume and allows us to bypass our California warehouse.
We maintain a third-party logistics warehouse in Canada where we sell directly to retail customers and independent channels in Canada.
Historically, most of our customers pick up goods from our warehouse (freight collect).
Sales
and Marketing
Our
products are marketed and sold through our direct sales team, working in conjunction with independent sales representatives that provide
sales and customer support for our retail customers in North America. Sales are recognized upon transfer of title to our customers and
are made utilizing standard credit terms of approximately 60-90 days. Our sales terms indicate that we only accept returns for defective
merchandise, however we have accepted overstock returns from our retail partners in the past. Please see risk factor titled "
We
are subject to the risk that some of our large customers may return karaoke products that they have purchased from us and if this happens,
it would reduce our revenues and profitability" under
"Risk Factors"
We
seek to expand our direct-to-consumer sales, which we believe will increase overall gross margins and also increase brand awareness.
Marketing,
promotion and consumer engagement are key elements in the youth electronics, toy, and music categories. Historically, a significant percentage
of our promotional spending has been structured as co-op promotion incentives with our large retail partners. We continue to focus our
marketing efforts on growing brand awareness among our target consumer demographic, optimizing marketing investments, and executing an
integrated marketing strategy. We believe an important component of our future growth is based on speaking to the right customer, with
the right content, in the right channel, at the right time. We have implemented online marketing, social media, and digital analytics
tools, which allow us to better measure the performance of our marketing activities, learn from our consumers, and receive valuable insights
into industry and competitor activities.
Customer
service is a critical component of our marketing strategy. We maintain a U.S.-based internal customer service department within our corporate
headquarters that responds to customer inquiries, investigates and resolves issues, and is available to assist customers and consumers
during business hours.
Competition
The
youth electronics, toy, and music industry has many participants, none of which has dominant market share, though certain companies may
have disproportionate strength in specific product categories. We compete with a number of different companies in a variety of categories,
although there is no single company that competes with us across all of our product categories. Our largest direct competitors are Singsation®,
Singtrix®, eKids®, Bonaok, Karaoke USA™, and Ion® Audio.
The
primary method of competition in the industry consists of brand positioning, product innovation, quality, price, and timely distribution.
Our competitive strengths include our ability to develop innovative new products, speed to market, our relationships with major retailers,
and the quality and pricing of our products.
24
Intellectual
Property
We
rely on a combination of trademarks and trade secrets to protect our intellectual property. In certain circumstances, we will partner
with third parties to develop proprietary products, and, where appropriate, we have license agreements related to the use of third-party
innovation in our products. The duration of our trademark registrations varies from country to country. However, trademarks are generally
valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.
Customers
Sales
to the Company's top five customers together comprised approximately 90% and 80% of our net sales in our fiscal years ending March
31, 2021 and March 31, 2020, respectively. In our fiscal year ending March 31, 2021, revenues from four of these customers represented
greater than 10% of net sales at a percentage of 36%, 20%, 13% and 12% of total net sales. In our fiscal year ending March 31, 2020,
revenues from three of these customers represented greater than 10% of net sales at a percentage of 41%, 13%, and 10% of total net sales.
We
have no long-term contracts with these customers, and as a result, our success depends heavily on our customers' willingness to
purchase and provide shelf space for our products.
Seasonality
We
do experience heightened seasonal demand for our products in our second and third quarters of our fiscal year. In our fiscal year ending
March 31, 2021 and our fiscal year ending March 31, 2020, approximately 86% and 85%, respectively of our net sales shipped in our second
and third quarters. However, we continually look for products and new categories to reduce our reliance on seasonality.
Regulatory
Matters
Each
of our products is designed to comply with all applicable mandatory and voluntary safety standards. In the United States, these safety
standards are promulgated by federal, state and independent agencies such as the US Consumer Product Safety Commission, ASTM, the Federal
Communications Commission, the Food and Drug Administration, the Federal Trade Commission, and various states Attorney Generals and state
regulatory agencies. All of our products are independently tested by third party laboratories accepted by the Consumer Product Safety
Commission to verify compliance to applicable safety standards. A similar approach is used to design and test products sold internationally.
Insurance
We
carry product liability insurance that provides us with $10,000,000 coverage with a minimal deductible. We consult with our insurers
to ascertain appropriate liability coverage for our product mix. We believe our current coverage is adequate for our existing business
and will continue to evaluate our coverage in the future in line with our expanding sales and product breadth.
Human
Capital Resources
We
believe that the development, attraction and retention of employees is an important factor to our Company's success. We offer our
employees a wide range of benefits, including 100% paid health benefits for the employee, generous leave, vacation, and personal paid
time-off, 12 paid company holidays a year, and flexible work hours to work-from-home. To support the advancement of our employees, we
offer training and development programs encouraging advancement from within. As of the filing of this prospectus, we had 23 employees,
15 of which are located at our corporate office and 8 at our logistics center in Ontario, California. During peak shipping season
(July thru December), we rely heavily on temporary labor at our logistics warehouse to handle the increased shipment volume.
Environmental
Issues
We
may be subject to legal and financial obligations under environmental, health and safety laws in the United States and in other jurisdictions
where we operate. We are not currently aware of any material environmental liabilities associated with any of our operations.
Properties
We
entered into an operating lease agreement, effective October 1, 2017, for our corporate headquarters located in Fort Lauderdale, Florida
where we lease approximately 6,500 square feet of office space. The lease expires on March 31, 2024. The base rent payment is approximately
$9,400 per month, subject to annual adjustments.
25
We
entered into an operating lease agreement, effective June 1, 2013, for 86,000 square feet of warehouse space in Ontario, California for
our logistics operations. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. The renewal
base rent payment is $65,300 per month with a 3% increase every 12 months for the remaining term of the extension.
We
entered into an operating lease agreement, effective May 1, 2018, for 424 square feet of office space in Macau. The rent is fixed at
approximately $1,600 per month for the duration of the lease which expired on April 30, 2021. In May 2021 we executed a one-year lease
extension which will expire on April 30, 2022. The lease provides for a renewal option to extend the lease. Rent expense on the new lease
is fixed at approximately $1,700 per month for the duration of the lease term.
We
believe that our facilities are well maintained, in substantial compliance with environmental laws and regulations, and adequately covered
by insurance. We also believe that our leased facilities are not unique and could be replaced, if necessary, at the end of the term of
the existing leases.
Legal
Proceedings
On
September 11, 2020 a complaint was filed against the Company's SMCL subsidiary and various staffing agencies used by SMCL in a
Superior Court of San Bernadino County. The complaint alleges an employee of the Company committed employment practice violations against
a former temporary employee not employed by us. Management has investigated the allegation and has engaged an employment attorney to
defend the lawsuit. The case is still in discovery and no trial date has been set. Management does not believe the claims have
merit and does not believe the lawsuit will have a material adverse effect on our financial results.
Other
than as disclosed above, we are not a party to, and our property is not the subject of, any material legal proceedings.
Available
Information
The
Company is incorporated under the laws of the State of Delaware and was formed in 1994. We are publicly traded on the OTCQX Market under
the symbol "SMDM". Our principal executive offices are located at 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, and our
telephone number is (954) 596-1000. We maintain our corporate website at
www.singingmachine.com
. The information on, or that can
be accessed through, our website is not part of this prospectus.
We
file reports with the Securities and Exchange Commission ("SEC"), including an annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports that we file with, or furnish to, the SEC. The SEC maintains
an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information that we file electronically
with the SEC. Our website also includes corporate governance information, including our Code of Ethics and our Board committee charters.
The information contained on our website does not constitute a part of this report.
MANAGEMENT
Directors
and Executive Officers
The
following table and biographical summaries set forth information, including principal occupation and business experience about our directors
and executive officers:
Name
Age
Position(s)
Gary
    Atkinson
40
Chief
    Executive Officer, Director
Bernardo
    Melo
45
VP
    Global Sales and Marketing
Lionel
    Marquis
69
Chief
    Financial Officer
Harvey
    Judkowitz
77
Director
Joseph
    Kling
92
Director
Mathieu
    Peloquin
51
Director
26
Gary
Atkinson
joined the Company in January 2008 and served as General Counsel and Corporate Secretary. In November 2009, Mr. Atkinson
was appointed as Interim Chief Executive Officer and was promoted as the Company's permanent Chief Executive Officer in May, 2012.
Since taking over as Chief Executive Officer, Mr. Atkinson has led the Company to seven consecutive years of profitability and growth
in sales. Mr. Atkinson is a licensed attorney in Florida and Georgia. He graduated from the University of Rochester with a Bachelor's
Degree in Economics and has been awarded a dual-degree J.D./M.B.A. from Case Western Reserve University School of Law and Weatherhead
School of Management. Effective August 11, 2021, Mr. Atkinson was appointed to the Board of Directors.
The
Company believes that Mr. Atkinson is qualified to serve on the Board of Directors because of his 14+ years of karaoke industry experience
and management experience.
Bernardo
Melo
has been with the Company since February 2003 and has served as the Vice President of Global Sales and Marketing ("VP
of Sales") since 2008. During his tenure at the Singing Machine, Mr. Melo has overseen the sales and operations of the music division
as well as managed the customer service department. Before taking over the responsibility of VP of Sales, Mr. Melo held dual roles with
the Company managing the operations, licensing and sales of the music division while concentrating on hardware sales for the Latin America
and Canada market as well as key U.S. accounts such as Walmart. Prior to joining the Company, Mr. Melo held a consulting role for Rewards
Network formerly Idine. Mr. Melo's assignment during his tenure was improving their operational procedures while increasing efficiencies
and lowering operating cost. Mr. Melo also worked at Coverall North America as Director of Sales managing a startup initiative for the
company covering 15 regional office and 40 sales reps across North America focusing on franchise sales. Overall Mr. Melo has over 15
years of sales, marketing and management experience.
Lionel
Marquis
joined the Company in June 2008 as Controller and Principal Accounting Officer and was appointed as the Company's Chief
Financial Officer in May, 2012. For the past 26 years Mr. Marquis has served as Controller and or Chief Financial Officer for several
manufacturing and distribution companies in the South Florida area. Some of these companies include Computer Products, Inc (Artesyn Technologies
Inc), US Plastic Lumber Corp., Casi-Rusco, (division of Interlogix Inc.), DHF Industries, Inc and Ingear Fashions, Inc. Mr. Marquis graduated
from Bryant University with a Bachelor's Degree in Business Administration with a major in accounting. Mr. Marquis is a Certified
Public Accountant in the state of Florida.
Harvey
Judkowitz
has served as a director of the Company since March 29, 2004 and is the chairman of the Audit Committee. He is licensed
as a CPA in New York and Florida. From 1988 to the present date, Mr. Judkowitz has conducted his own CPA practices. He has served as
the Chairman and CEO of UniPro Financial Services, a diversified financial services company up until the company was sold in September
of 2005. He was formerly the President and Chief Operating Officer of Photovoltaic Solar Cells, Inc.
The
Company believes that Mr. Judkowitz is qualified to serve on the Board of Directors because he is a qualified CPA with over 18+ years'
experience on the Board.
Joseph
Kling
was appointed as a director of the Company on May 9, 2017. Mr. Kling has spent his entire career in the toy industry, most
notably serving as CEO of View-Master, the iconic stereoscopic toy company, which later purchased Ideal Toy from CBS and later became
View-Master Ideal, publicly traded on the Nasdaq. View-Master Ideal later acquired California Plush Toys and the entire group was later
acquired by Tyco Toys in 1989. Kling later went into private M&A consulting and sat on the board of Russ Berrie & Co (currently
known as Kids Brands, Inc.) for 21 years advising on the acquisition of several toy companies. Mr. Kling has also served on the Board
of Crown Crafts, a large distributor of infant, toddler, and juvenile consumer products and on the board of Lancit Media Entertainment,
a children's and family media production company (formerly listed on the Nasdaq). Notably, Mr. Kling has been involved in many
major toy company acquisitions of brands such as Melissa & Doug and Brio.
The
Company believes that Mr. King is qualified to serve on the Board of Directors because of his success and relationships in the toy industry
and his deep understanding of consumer products and market awareness of mergers and acquisitions in the toy industry.
Mathieu
Peloquin
was appointed as a director of the Company on December 1, 2021. Mr. Peloquin was appointed Senior Vice-President, Marketing
and Communications at Stingray Group, Inc. ("Stingray") in 2013 and oversees marketing, communication strategies, content
and investor relations. Mr. Peloquin brings more than 20 years of experience as an expert marketer, strategist and inspiring leader.
Prior to joining Stingray, Mr. Peloquin was Vice President of Marketing at Transcontinental Media Inc. and Vice President of Transcontinental
Media Inc.'s Digital Marketing Solutions Group from 2010 to 2013. He also held several executive positions at Reader's Digest
Magazines Canada Limited and co-founded Equinox Marketing Services. Mr. Peloquin is a CPA, CMA and holds a Bachelor of Commerce from
the School of Management of the Université du Québec à Montréal.
The
Company believes that Mr. Peloquin is qualified to serve as a member of the Board of Directors due to his extensive business experience.
27
NOMINATION
OF DIRECTORS
As
provided in our nominating and governance committee charter and our Company's corporate governance principles, the Nominating Committee
is responsible for identifying individuals qualified to become directors. The Nominating Committee seeks to identify director candidates
based on input provided by a number of sources, including (1) the Nominating Committee members, (2) our other directors, (3) our shareholders,
(4) our Chief Executive Officer or Chairman, and (5) third parties such as professional search firms. In evaluating potential candidates
for director, the Nominating Committee considers the entirety of each candidate's credentials.
Qualifications
for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing
composition of the Board of Directors. However, at a minimum, candidates for director must possess:
●
high
    personal and professional ethics and integrity;
●
the
    ability to exercise sound judgment;
●
the
    ability to make independent analytical inquiries;
●
a
    willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and
●
the
    appropriate and relevant business experience and acumen.
In
addition to these minimum qualifications, the Nominating Committee also takes into account when considering whether to nominate a potential
director candidate the following factors:
●
whether
    the person possesses specific industry expertise and familiarity with general issues affecting our business;
●
whether
    the person's nomination and election would enable the Board to have a member that qualifies as an "audit committee financial
    expert" as such term is defined by the Securities and Exchange Commission (the "SEC") in Item 401 of Regulation
    S-K;
●
whether
    the person would qualify as an "independent" director under the listing standards of the OTC;
●
the
    importance of continuity of the existing composition of the Board of Directors to provide long term stability and experienced oversight;
    and
●
the
    importance of diversified Board membership, in terms of both the individuals involved and their various experiences and areas of
    expertise.
Committees
of the Board of Directors
Our
board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee.
The composition and responsibilities of each of the committees of our board of directors are described below. Members serve on these
committees until their resignation or until otherwise determined by our board of directors. Our board of directors may establish other
committees as it deems necessary or appropriate from time to time.
Audit
Committee
The
members of our Audit Committee are Messrs. Judkowitz, Kling and          , with Mr. Judkowitz serving as the Chairperson. Each of Messrs.
Judkowitz, Kling and           is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq Stock
Market applicable to audit committee members. Our board of directors has determined that each of Ms. Macleod and Ms. Cunningham qualify
as an audit committee financial expert within the meaning of SEC regulations and meet the financial sophistication requirements of the
Nasdaq Stock Market.
Our
Audit Committee has the responsibility for, among other things, (i) selecting, retaining and overseeing our independent registered public
accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm's internal quality
control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent
auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the
integrity of the Company's financial statements, (v) reviewing and discussing with the Company's independent auditors any
other matters required to be discussed by PCAOB Auditing Standard No. 1301, (vi) reviewing, approving and overseeing any transaction
between the Company and any related person and any other potential conflict of interest situations, (vii) overseeing the Company's
internal audit department, (v) reviewing, approving and overseeing related party transactions, and (viii) establishing and overseeing
procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls
or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or
auditing matters.
28
Compensation
Committee
The
members of our Compensation Committee are Messrs. Judkowitz, Kling and          , with           serving as the Chairperson. Our Compensation
Committee has the responsibility for, among other things, (i) reviewing and approving the chief executive officer's compensation
based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all
other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing
and discussing with management the Company's Compensation Discussion and Analysis and related information to be included in the
annual report on Form 10-K and proxy statements, and (v) reviewing and recommending to the Board for approval procedures relating to
Say on Pay Votes.
Nominating
and Corporate Governance Committee
The
members of our Nominating and Corporate Governance Committee are Messrs.          ,           and          , with           serving as
the Chairperson. Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other
things, (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved
by our board of directors, (ii) recommending to the Board the approval of nominees for director, (ii) developing and recommending to
our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.
No
Family Relationships
There
is no family relationship between any director and executive officer or among any directors or executive officers.
Involvement
in Certain Legal Proceedings
Our
directors and executive officers have not been involved in any of the following events during the past ten years:
1.
any
    bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer
    either at the time of the bankruptcy or within two years prior to that time;
2.
any
    conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor
    offenses);
3.
being
    subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
    permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking
    activities or to be associated with any person practicing in banking or securities activities;
4.
being
    found by a court of competent jurisdiction in a civil action, the SEC or the CFTC to have violated a Federal or state securities
    or commodities law, and the judgment has not been reversed, suspended, or vacated;
5.
being
    subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed,
    suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law
    or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or
    fraud in connection with any business entity; or
6.
being
    subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,
    any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
    or persons associated with a member.
Director
Independence
The
Board evaluates the independence of each nominee for election as a director of our Company in accordance with the Nasdaq Listing Rules.
Pursuant to these rules, a majority of our Board must be "independent directors" within the meaning of the Nasdaq Listing
Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must
also be independent directors.
Code
of Ethics
We
have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, and principal accounting
officer. Our Code of Ethics is available on our website at https://singingmachine.com/.
29
EXECUTIVE
COMPENSATION
Executive
Compensation Philosophy
The
Executive Compensation Committee believes that the Singing Machine must maintain short and long-term executive compensation plans that
enable us to attract and retain well-qualified executives. Furthermore, we believe that our compensation plans must also provide a direct
incentive for our executives to create shareholder value. A well designed executive compensation plan will align the interests between
the executives and the shareholders as well as creating a positive environment of goals, performances and rewards.
We
believe that the executive compensation should reflect the success of the management team, rather than the individual, in attaining the
key operating objectives such as revenues growth, operation cost reduction, fund raising and the appreciation of the stock price. A clear
measurement should be established to reward the performance. We will also evaluate our executive compensation package by comparison to
similar companies to ensure the competitiveness of our compensation.
In
furtherance of this philosophy, the compensation of our executives generally consists of three components: base salary, annual cash incentives
and long-term performance-based incentives.
Base
Salaries
Annual
base salaries for executive officers are initially determined by evaluating the responsibility of the position and the experience and
the skill sets of the individual. Also taken into consideration is the competitiveness of the market place for executive talent, including
a comparison of base annual salaries with comparable positions within similar companies.
Incentive
Cash Bonuses
Generally,
we award cash bonuses to our management employees and other employees, based on their personal performance in the past year and overall
performance of our Company. The overall performance of our Company includes the revenue growth, reduction of the operation expenses,
fund raising and the stock price appreciation.
Long
Term Compensation - Stock Option Grants
We
have utilized stock options to motivate and retain executive officers and other employees for the long-term. We believe that stock options
closely align the interests of our executive officers and other employees with those of our stockholders and provide a major incentive
to building stockholder value. Options are typically granted annually, and are subject to vesting provisions to encourage officers and
employees to remain employed with the Company. Our stock options are usually granted at a price equal to or above the fair market value
of our common stock on the date of grant. As such, our officers only benefit from the grant of stock options if our stock price appreciates.
Generally, we try to tie bonus payments to our financial performance. However, if an individual has made significant contributions to
our Company, we will provide them with a bonus payment for their efforts even if our Company's financial performance has not been
strong.
Summary
Compensation Table
The
following table provides information regarding the compensation earned by or paid to our named executive officers with respect to the
years ended March 31, 2022 and 2021.
Name and Principal Position
Year
Salary
Bonus
Stock Awards
Option Awards
Non-Equity Incentive Plan Comp
Non-Qualified Deferred Compensation Earnings
Other Comp
TOTAL COMP
Gary Atkinson (1)
2022
$
156,075
$
$
-
$
-
$
-
$
-
$
-
$
156,075
Chief Executive Officer
2021
$
150,000
$
100,00-
$
-
$
-
$
-
$
-
$
-
$
250,000
Lionel Marquis (2)
2022
$
154,154
$
$
-
$
-
$
-
$
-
$
-
$
154,154
Chief Financial Officer
2021
$
150,518
$
110,00-
$
-
$
-
$
-
$
-
$
-
$
260,518
Bernardo Melo (3)
2022
$
163,004
$
146,725
$
-
$
-
$
-
$
-
$
-
$
309,729
VP Global Sales & Marketing
2021
$
157,200
$
136,737
$
-
$
-
$
-
$
-
$
-
$
293,937
(1)
Mr.
    Atkinson does not have an employment contract with the Company and had an annual salary of $156,075 for the fiscal year ended March
    31, 2022 and $150,000 for the fiscal year ended March 31, 2021.
30
(2)
Mr.
    Marquis does not have an employment contract with the Company and had an annual salary of $154,154 for the fiscal year ended March
    31, 2022 and $150,518 for the fiscal year ended March 31, 2021.
(3)
Mr.
    Melo does not have an employment contract with the Company and had an annual salary of $163,004 for the fiscal year ended March 31,
    2022 and $157,200 for the fiscal year ended March 31, 2021.
Outstanding
Option and Stock Awards at Fiscal Year-End
The
following table sets forth information with respect to outstanding grants of options to purchase our common stock under stock option
awards issued with Board of Directors approval to the named executive officers as of the fiscal year ended March 31, 2022:
Name and Principal Position
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
Option Exercise Price ($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested (#)
Market Value of Shares or Units of Stock That Have Not Vested ($)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Gary Atkinson, CEO - Other stock option awards
150,000
-
N/A
0.21
7/1/2023
N/A
N/A
N/A
N/A
-Other stock option awards
50,000
-
N/A
0.24
3/31/2026
N/A
N/A
N/A
N/A
-Other stock option awards
100,000
-
N/A
0.47
5/3/2027
N/A
N/A
N/A
N/A
Lionel Marquis, CFO - Other stock option awards
100,000
-
N/A
0.21
7/1/2023
N/A
N/A
N/A
N/A
-Other stock option awards
15,000
-
N/A
0.24
3/31/2026
N/A
N/A
N/A
N/A
-Other stock option awards
50,000
-
N/A
0.47
5/3/2027
N/A
N/A
N/A
N/A
Bernardo Melo, VP Sales - Other stock option awards
250,000
-
N/A
0.21
7/1/2023
N/A
N/A
N/A
N/A
-Other stock option awards
25,000
-
N/A
0.17
6/30/2025
N/A
N/A
N/A
N/A
-Other stock option awards
100,000
-
N/A
0.32
8/10/2026
N/A
N/A
N/A
N/A
-Other stock option awards
200,000
-
N/A
0.47
5/3/2027
N/A
N/A
N/A
N/A
-Other stock option awards
50,000
-
N/A
0.22
12/21/2032
N/A
N/A
N/A
N/A
Employment
Agreements
The
Company has not entered into any employment contracts with any of its executive officers.
Separation
And Consulting Agreements
The
Company has not entered into any employment contracts with any of its employees. However, on January 3, 2014, the Company entered into
agreements with the three executive officers named above that if an executive's employment is terminated by the executive or the
Company following a change in control, the executive will be entitled to the following within 10 days of termination:
●
All
    accrued and unpaid compensation due to the executive as of the date of termination.
●
A
    lump sum payment equal to one year's executive base salary if the executive terminates employment.
●
A
    lump sum of one and a half year's executive base salary and targeted annual bonus if the Company terminates employment.
●
All
    outstanding stock options shall be fully vested and exercisable for the remainder of their full term.
●
All
    outstanding equity-based compensation awards (other than stock options) shall become fully vested with any restrictions removed.
31
Director
Compensation
The
following table provides all fees paid to all directors in our fiscal year ended March 31, 2022:
Name
Fees Earned or Paid in Cash
Stock Awards (1)
Option Awards (2)
Non-Equity Incentive Plan Compensation ($)
Nonqualified Deferred Compensation Earnings
All Other Compensation
Total
Peter Hon (3)
$
2,500-
$
-
$
-
$
-
$
-
$
-
$
2,500
Harvey Judkowitz
$
17,750-
$
2,500
$
5,036
$
-
$
-
$
-
$
25,286
Phillip Lau (3)
$
2,500-
$
-
$
-
$
-
$
-
$
-
$
2,500
Yat Tung Lau (3)
$
2,500-
$
-
$
-
$
-
$
-
$
-
$
2,500
Joseph Kling
$
11,250-
$
2,500
$
5,036
$
-
$
-
$
-
$
18,786
Mathieu Peloquin
$
-
$
-
$
4,461
$
-
$
-
$
-
$
4,461
Refer
to Note 1 "Stock Based Compensation" in the Notes to the Consolidated Financial Statements included elsewhere in this prospectus
for the relevant assumptions used to determine the valuation of our option awards.
(1)
As of March 31, 2022 the aggregate number of stock awards held by Messrs. Judkowitz and Kling is 350,337 and 15,668, respectively. The
aggregate stock awards held by Messrs. Hon, Yat Tung Lau and Philip Lau is 54,942, 44,525 and 15,668, respectively.
(2)
As of March 31, 2022 the aggregate number of Company stock options held by Messrs. Judkowitz and Kling is 140,000 and 100,000, respectively
and Messrs. Hon, Yat Tung Lau and Philip Lau is 100,000, 80,000 and 80,000 respectively.
(3)
Messrs. Hon, Yat Tung Lau, and Philip Lau resigned effective August 10, 2021.
During
our fiscal year ended March 31, 2022, our compensation package for our non-employee directors consisted of grants of stock options, cash
payments, stock issuances and reimbursement of costs and expenses associated with attending our board meetings.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
A
transaction may be a related person transaction if any of our directors, executive officers, owners of more than 5% of our common stock,
or their immediate family were involved in a transaction in which the Company was or is to be a participant, and the amount involved
exceeds the lesser of $120,000 or 1% of the average of the Company's total assets at year end for the last two completed fiscal
years. The Company engaged in the following related persons transactions in the last three fiscal years or expects to engage in the following
transactions since the end of that three year period:
Due
to/from related parties
During
our fiscal year 2021, the Company did business with entities owned by our former Chairman, Philip Lau. Those entities were: Starlight
R&D Ltd ("SLRD"), Starlight Consumer Electronics USA, Inc. ("SCE"), Cosmo Communications Corporation of Canada,
Inc. ("Cosmo"), Winglight Pacific, Ltd. ("Winglight"), and Starlight Electronics Company Ltd. ("SLE")On
March 31, 2021 the Company had approximately $0.1 million due to related parties SLRD, SCE and SLE for services provided by these companies
and licensing fees for use of pedestal model molds and tools owned by them. On March 31, 2020, the Company had approximately $0.5 million
due from related parties SLRD, SCE and SLE for goods and services sold these companies.
Mr.
Lau resigned as Chairman effective August 10, 2021.
32
Subordinated
Related Party Debt and Note Payable
In
connection with the Revolving Credit Facility with PNC Bank, the Company was required to subordinate related party debt to Starlight
Marketing Development, Ltd. ("Subordinated Debt"). The Subordinated Debt of approximately $924,000 bore interest
at 6% and was scheduled to be paid in quarterly installments of $123,000 which included interest and commenced September 30, 2017 and
ending on the debt maturity date of June 30, 2019. Quarterly installment payments of $123,000 due on the last day of each fiscal quarter
were not made since September 2017 however, a payment of $25,000 which included principal and interest, was made during Fiscal 2020.
On June 1, 2020 the remaining amount due on the Subordinated Debt of approximately $803,000, which was classified as a non-current
liability on the consolidated financial statements as of March 31, 2020, was converted to a note payable which bears interest at 6%.
As part of the agreement to convert the Subordinated Debt to a note payable it was agreed that interest expense would be accrued
on the unpaid principal retroactively from the date that scheduled payments had been missed resulting in an incremental charge to interest
expense of approximately $72,000 for Fiscal 2020.
During
the years ended March 31, 2021 and 2020 interest expense was approximately $12,000 and $74,000, respectively on the related party Subordinated
Debt.
In
connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the note payable ("Subordinated
Note Payable") to Starlight Marketing Development, Ltd. Both agreements allow for the repayment of the Subordinated Note
Payable provided any amounts borrowed against these credit facilities are paid in full, the Company maintains a 1:1 debt coverage
ratio and exhibits sufficient cash liquidity to support on-going operations. There is no set schedule with regards to payment of the
note however, during Fiscal 2021 the Company was able to make principal payments of $300,000 on the Subordinated Note Payable.
As of March 31, 2021 the remaining principal balance of approximately $503,000 is classified as a current liability on the accompanying
consolidated balance sheets. During the years ended March 31, 2021 and 2020 interest expense was approximately $35,000 and $0, respectively
on the Subordinated Note Payable.
Trade
During
both Fiscal 2021 and 2020 the Company paid approximately $0.4 million to SLE as reimbursement for engineering, quality control and other
administrative services performed on our behalf in China. These expense reimbursements were included in general and administrative expenses
on our consolidated statements of operations.
During
Fiscal 2021 and 2020 the Company sold approximately $0.0 million and $0.9 million, respectively of product to Winglight for direct shipment
to Cosmo at discounted pricing granted to major direct import customers shipped internationally with freight prepaid. These amounts were
included as a component of net sales in the accompanying consolidated statements of operations.
On
July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company's Canadian distributor and the
Company became the sole and exclusive distributor of the Company's products in Canada. As part of the agreement, the companies
executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo's karaoke inventory for approximately $0.7 million.
During Fiscal 2021 there was a gain of approximately $0.2 million from Cosmo related to payments received in Fiscal 2021 on prior year
sales and the related receivable previously reversed and written off as they were initially deemed uncollectible.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial ownership of our common stock as of April 12, 2022, unless
otherwise noted below, for the following:
●
each
    person or entity known to own beneficially more than 5% of our outstanding common stock as of the date indicated in the corresponding
    footnote;
●
each
    of the named executive officers;
●
each
    director; and
●
all
    current directors and executive officers as a group.
Security
ownership is based on 36,636,264 shares of our common stock issued and outstanding. In computing the number and percentage of shares
beneficially owned by a person, shares of common stock subject to convertible securities and options currently convertible or exercisable,
or convertible or exercisable within 60 days of April 12, 2022 are counted as outstanding, but these shares are not counted as
outstanding for computing the percentage
ownership
of any other person.
33
As
used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power
(including the power to dispose or direct the disposition of) with respect to the security through any contract, arrangement, understanding,
relationship or otherwise, including a right to acquire such power(s) during the next 60 days. Unless otherwise noted below, and subject
to applicable property laws, to our knowledge each person has sole investment and sole voting power over the shares shown as beneficially
owned by them. Unless otherwise noted, the principal address of each of the directors and officers listed below is c/o The Singing Machine
Company, Inc., 6301 NW 5
th
Way, Suite 2900, Fort Lauderdale, FL 33309.
Name and Address of Beneficial Owner
Shares Beneficially Owned
Percentage Beneficially Owned
Gary Atkinson (1)
459,481
1.2
%
Lionel Marquis (1)
285,000
*
Bernardo Melo (1)
902,916
2.4
%
Harvey Judkowitz (1)
607,579
1.7
%
Joseph Kling (1)
112,910
*
Mathieu Peloquin
-
-
Officers & Directors as a Group (7 individuals)
2,367,886
6.4
%
5% or Greater Shareholders:
Armistice Capital Master Fund Ltd. (2)
2,469,085
6.7
%
Stingray Group Inc. (3)
6,666,667
18.2
%
Arts Electronics Ltd. (4)
3,745,917
10.2
%
Gentle Boss Investments Ltd (5)
2,100,000
5.7
%
*
Less than 1%
(1)
Includes as to the person indicated, the following outstanding stock options to purchase shares of the Company's Common Stock issued
under 2001 Stock Option Plan and other stock option awards, which will be exercisable within 60 days of April 12, 2022: 300,000
options held by Gary Atkinson, 575,000 options held by Bernardo Melo, 165,000 options held by Lionel Marquis, 180,000 options held by
Harvey Judkowitz, and 80,000 options held by Joseph Kling
(2)
Based solely upon Schedule 13G filed with the Securities and Exchange Commission on February 14, 2022 . The address of Armistice Capital
Master Fund Ltd. is 510 Madison Ave, 7th Floor, New York, NY 10022.
Armistice Capital, LLC ("Armistice
Capital") is the investment manager of Armistice Capital Master Fund Ltd. (the "Master Fund"), the direct holder of
the shares, and pursuant to an Investment Management Agreement, Armistice Capital exercises voting and investment power over the securities
of the Issuer held by the Master Fund and thus may be deemed to beneficially own the securities of the Issuer held by the Master Fund.
Mr. Boyd, as the managing member of Armistice Capital, may be deemed to beneficially own the securities of the Issuer held by the Master
Fund. The Master Fund specifically disclaims beneficial ownership of the securities of the Issuer directly held by it by virtue of its
inability to vote or dispose of such securities as a result of its Investment Management Agreement with Armistice Capital
.
(3)
Does not include 6,666,667 shares that are acquirable upon exercise of common warrants. As of December 31, 2021, Eric Boyko indirectly
controlled approximately 57.2% of the combined voting power of Stingray's outstanding shares. As a result, Eric Boyko may be deemed
to share beneficial ownership of the shares of common stock and the Stingray Warrants held by Stingray. The address of Stingray Group
Inc. is 730 Wellington Street, Montréal, Québec H3C 1T4. The security holder may not exercise the warrants to the extent
such exercise would cause the security holder, together with its affiliates, to beneficially own a number of shares of common stock which
would exceed 4.99% of our then outstanding common stock following such exercise, excluding for purposes of such determination shares
of common stock issuable upon exercise of such securities which have not been so exercised.
(4)
The address for Arts Electronics Ltd. is Room 101, Fo Tan Ind CTR 1/F, 26-28 Au Pui Wan, Fo Tan, Shatin N.T. Hong Kong.4
(5)
The address for Gentle Boss Investments Ltd. is Unit 6, 9/F, Tower B, 55 Hoi Yuen Road, Kwun Tong, Kowloon Hong Kong.
34
DESCRIPTION
OF CAPITAL STOCK
Common
Stock
Our
Certificate of Incorporation, as amended, authorizes the issuance of up to 100.1 million shares of common stock of which 100 million
shares are Class B common stock and 100,000 shares are Class A common stock, each with a par value of $0.01 per share. As of April
12, 2022, there were 36,636,264 shares of common stock outstanding, and 1,610,000 unissued shares of common stock underlying outstanding
options and warrants. No shares of Class A common stock are currently issued and outstanding. The following summary of certain provisions
of our common stock does not purport to be complete. You should refer to our certificate of incorporation and our bylaws, as amended
from time to time.
Holders
of our common stock have the exclusive right to vote for the election of directors and for all other purposes and each holder of common
stock shall be entitled to one vote for each share of common stock held. Except as otherwise required by law, the Class A common stock
shall have no voting right on any matter. The rights, preferences and privileges of the holders of common stock are subject to, and may
be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in
the future. All of our outstanding shares of common stock are fully paid and non- assessable.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock, with par value of $1.00 each. As of April 12, 2022, there
were no shares of Preferred Stock issued and outstanding.
Our
certificate of incorporation, as amended, provides our board of directors the authority, subject to limitations prescribed by Delaware
law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series,
and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations,
or restrictions, in each case without further vote or action by our stockholders. Our board of directors also has the authority to increase
or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding,
without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting
or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of
preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other
things, have the effect of delaying, deferring, or preventing a change in control of our company and might adversely affect the market
price of our common stock and the voting and other rights of the holders of our common stock.
Anti-Takeover
Provisions
Certain
provisions of Delaware General Corporation Law (DGCL), and our certificate of incorporation and bylaws, each as amended, may have the
effect of delaying, deferring, or discouraging another person from acquiring control of us. They are also designed, in part, to encourage
persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection
of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal
to acquire us because negotiation of these proposals could result in an improvement of their terms.
Delaware
Takeover Statute
We
are governed by the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a public Delaware corporation from engaging
in a "business combination" with an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless:
●the
transaction was approved by the board of directors prior to the time that the stockholder became an interested stockholder;
●upon
consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by directors
who are also officers of the corporation and shares owned by employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
●at
or subsequent to the time the stockholder became an interested stockholder, the business combination was approved by the board of directors
and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds
of the outstanding voting stock which is not owned by the interested stockholder.
In
general, Section 203 defines a "business combination" to include mergers, asset sales and other transactions resulting in
financial benefit to a stockholder and an "interested stockholder" as a person who, together with affiliates and associates,
owns, or, within three years, did own, 15% or more of the corporation's outstanding voting stock. These provisions may have the
effect of delaying, deferring, or preventing changes in control of our company.
Transfer
Agent and Registrar
The
transfer agent for our common stock is Continental Stock Transfer & Trust Company. The transfer agent's address is 1 State
Street, 30th Floor, New York, NY 10004-1561 and its telephone number is 212-509-4000.
Listing
Our
common stock is currently listed on the OTCQX under the symbol "SMDM." We have applied to have our common stock listed on
The NASDAQ Capital Market under the symbol "MICS" and are awaiting approval.
35
UNDERWRITING
Aegis
Capital Corp. is the underwriter of the offering. We have entered into an underwriting agreement dated                 , 2022 with the Aegis. Subject
to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriter and the underwriter has agreed to
purchase, at the public offering price less the underwriting discounts set forth on the cover page of this prospectus, the number of
shares of common stock listed next to its name in the following table:
Underwriter
Number of
Shares
Aegis Capital Corp.
The
underwriter is committed to purchase all the common stock offered by us, other than those shares covered by the over-allotment option
to purchase additional shares of common stock. The obligations of the underwriter may be terminated upon the occurrence of certain events
specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriter's obligations are
subject to customary conditions, representations and warranties contained in the underwriting agreement, such as receipt by the underwriter
of officers' certificates and legal opinions.
We
have agreed to indemnify the underwriter against specified liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriter may be required to make in respect thereof.
The
underwriter is offering the common stock subject to prior sale, when, as and if issued to and accepted by them, subject to approval of
legal matters by its counsel and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw,
cancel or modify offers to the public and to reject orders in whole or in part.
We
have granted the underwriter an over-allotment option. This option, which is exercisable for up to 45 days after the date of this offering,
permits the underwriter to purchase up to an aggregate of up to               additional shares of common stock sold in the offering, representing
15% of the shares of common stock sold in the offering. The purchase price to be paid per additional share will be equal to the public
offering price of one share of common stock less the underwriting discount. If this option is exercised in full to purchase shares of
common stock, the total price to the public will be $              and the total net proceeds, before expenses, to us will be $                .
Discounts,
Commissions and Reimbursement
The
following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes
either no exercise or full exercise by the underwriter of their over-allotment option.
Total
Per Share
No Exercise
Full Exercise
Public offering price
$
$
$
Underwriting discounts and commissions to be paid by us (7%):
$
$
$
Non-accountable expense allowance (1.0%)
$
$
$
Proceeds, before expenses, to us
$
$
$
The
underwriter proposes to offer the shares of common stock to the public at the public offering price set forth on the cover of this prospectus.
In addition, the underwriter may offer some of the shares of common stock to other securities dealers at such price less a concession
not in excess of $                   per share of common stock. If all of the common stock offered by us are not sold at the public offering price, the
underwriter may change the offering price and other selling terms by means of a supplement to this prospectus.
36
We
have also agreed to pay up to $75,000 of the underwriter's expenses relating to the offering, including for road show, diligence,
and legal expenses.
We
estimate that the total expenses of the offering payable by us, excluding the discount and non-accountable expense allowance, will be
approximately $                , including a 1.0% non-accountable expense allowance.
Discretionary
Accounts
The
underwriter does not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.
Lock-Up
Agreements
Pursuant
to "lock-up" agreements, we and our executive officers, directors, and shareholders holding at least 10 percent of the outstanding
common stock have agreed, subject to limited exceptions, without the prior written consent of the underwriter not to directly or indirectly
offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of (or enter into any transaction or device that is designed
to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) our common stock, enter
into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of shares of our common stock, or publicly disclose the intention to do any of the foregoing, subject to customary exceptions,
for a period of 180 days from the date of this prospectus.
Underwriter
Warrants
The
Company has agreed to issue to Aegis or its designees warrants to purchase up to a total of 10.0% of the shares of common stock sold
in this offering (excluding the shares sold through the exercise of the over-allotment option). Such warrants and underlying shares of
common stock are included in this prospectus. The warrants are exercisable at $              per share (125% of the public offering price) commencing
on a date which is six (6) months from the effective date of the offering under this prospectus supplement and expiring on a date which
is no more than five (5) years from the commencement of sales of the offering in compliance with FINRA Rule 5110. The warrants have been
deemed compensation by FINRA and are therefore subject to a 6-month lock-up pursuant to Rule 5110 of FINRA. The underwriter (or their
permitted assignees under the Rule) will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying
these warrants, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective
economic disposition of the warrants or the underlying securities for a period of 180 days from effectiveness. The warrants may be exercised
as to all, or a lesser number of shares of common stock, and will provide for cashless exercise and will contain provisions for "piggyback"
registration rights, for a period of no greater than seven (7) years from the effective date of the offering in compliance with FINRA
Rule 5110. The Company will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrants other
than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of
the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary cash dividend or the
Company's recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will
not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.
Right
of First Refusal and Tail Financing
We
have granted the underwriter a right of first refusal, for a period of eighteen (18) months from the consummation of this offering, to
act as sole book-runner, sole manager, sole placement agent, sole agent, sole book-runner, sole book-running manger and/or sole underwriter,
at the underwriter's sole discretion, for each and every future public and private equity or debt offering or debt refinancing,
including all equity linked financings (each, a "Subject Transaction"), during such eighteen (18) month period, of the Company,
or any successor to or subsidiary of the Company, on terms and conditions customary to the underwriter for such Subject Transactions.
In
addition, we have agreed to pay the above cash compensation to the extent that any fund which the underwriter contacted or introduced
to us during the term of our engagement agreement with the underwriter provides financing or capital in any public or private offering
or capital raising transaction during the five (5) month period following expiration or termination of our engagement letter with the
underwriter.
37
Electronic
Offer, Sale and Distribution of Securities
A
prospectus in electronic format may be made available on the websites maintained by the underwriter or selling group members. The underwriter
may agree to allocate a number of securities to underwriter and selling group members for sale to its online brokerage account holders.
Internet distributions will be allocated by the underwriter and selling group members that will make internet distributions on the same
basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor incorporated
by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed
by us, and should not be relied upon by investors.
Stabilization
In
connection with this offering, the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate-covering
transactions, penalty bids and purchases to cover positions created by short sales.
Stabilizing
transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for
the purpose of preventing or retarding a decline in the market price of the shares while the offering is in progress.
Over-allotment
transactions involve sales by the underwriter of shares in excess of the number of shares the underwriter are obligated to purchase.
This creates a syndicate short position which may be either a covered short position or a naked short position. In a covered short position,
the number of shares over-allotted by the underwriter is not greater than the number of shares that they may purchase in the over-allotment
option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The
underwriter may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market.
Syndicate
covering transactions involve purchases of shares in the open market after the distribution has been completed in order to cover syndicate
short positions. In determining the source of shares to close out the short position, the underwriter will consider, among other things,
the price of shares available for purchase in the open market as compared with the price at which they may purchase shares through exercise
of the over-allotment option. If the underwriter sell more shares than could be covered by exercise of the over-allotment option and,
therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position
is more likely to be created if the underwriter are concerned that after pricing there could be downward pressure on the price of the
shares in the open market that could adversely affect investors who purchase in the offering.
Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when the shares originally sold by that syndicate
member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price
of our shares of common stock or preventing or retarding a decline in the market price of our shares of common stock. As a result, the
price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we
nor the underwriter make any representation or prediction as to the effect that the transactions described above may have on the price
of our common stock. These transactions may be effected in the over-the-counter market or otherwise and, if commenced, may be discontinued
at any time.
Passive
market making
In
connection with this offering, underwriter and selling group members may engage in passive market making transactions in our common stock
on the Nasdaq Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement
of offers or sales of the shares and extending through the completion of the distribution. A passive market maker must display its bid
at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive
market maker's bid, then that bid must then be lowered when specified purchase limits are exceeded.
Other
Relationships
Certain
of the underwriter and their affiliates may in the future provide various investment banking, commercial banking and other financial
services for us and our affiliates for which they may in the future receive customary fees.
Offer
restrictions outside the United States
Other
than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities offered
by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with
the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result
in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in
any jurisdiction in which such an offer or a solicitation is unlawful.
38
Offering
Price Determination
The
public offering price was negotiated between Aegis and us. In determining the public offering price of our common shares, Aegis considered:
●       the
history and prospects for the industry in which we compete;
●       our
financial information;
●       the
ability of our management and our business potential and earning prospects;
●       the
prevailing securities markets at the time of this offering; and
●       the
recent market prices of, and the demand for, publicly traded shares of generally comparable companies, as well as the recent market price
of our common shares.
Securities
Issuance Standstill
We
have agreed, for a period of one hundred eighty (180) days after the closing date of this offering, that we will not, without the prior
written consent of the underwriter, issue, enter into any agreement to issue or announce the issuance or proposed issuance of any common
shares or share equivalents except for the adoption of an equity incentive plan and the grant of awards or equity pursuant to any equity
incentive plan, and the filing of a registration statement on Form S-8 and the issuance of equity securities in connection with an acquisition
or a strategic relationship, which may include the sale of equity securities. In no event should any equity transaction within this period
result in the sale of equity at an offering price to the public less than that of the offering referred herein.
LEGAL
MATTERS
Sichenzia
Ross Ference LLP, New York, New York, will pass upon the validity of the securities offered hereby. Certain legal matters in connection
with this offering have been passed upon for the underwriter by Kaufman & Canoles, P.C., Richmond, Virginia.
EXPERTS
The
consolidated balance sheets of The Singing Machine Company, Inc. and Subsidiaries as of March 31, 2021 and 2020, and the related consolidated
statements of operations, cash flows and shareholders' equity for each of the years then ended, have been audited by EisnerAmper
LLP, independent registered public accounting firm, as stated in their report which is incorporated herein. Such financial statements
have been incorporated herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock
offered hereby. The registration statement, including the exhibits and schedules attached to the registration statement and the information
incorporated by reference, contains additional relevant information about us and the securities not included in this Prospectus. Statements
contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration
statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract
or other document filed as an exhibit to the registration statement. The SEC maintains a website that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the SEC. The address is http://www.sec.gov.
We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or Exchange Act, and file annual, quarterly
and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement,
over the Internet at the SEC's website at http://www.sec.gov. We also maintain a website at http://www.singingmachine.com, at which
you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished
to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus. You may also
request a copy of these filings, at no cost, by writing or telephoning us at: 6301 NW 5th Way, Ste. 2900 Fort Lauderdale Florida 33309,
(954) 596-1000.
39
Financial
Statements
PAGE
Condensed Consolidated Balance Sheets – December 31, 2021 (Unaudited)and March 31, 2021
F-2
Condensed Consolidated Statements of Income – Three and nine months ended December 31, 2021 and 2020(Unaudited)
F-3
Condensed Consolidated Statements of Cash Flows - Nine months ended December 31, 2021 and 2020(Unaudited)
F-4
Condensed Consolidated Statements of Shareholders' Equity – Three and nine months ended December 31, 2021 and 2020 (Unaudited)
F-5
Notes to Condensed Consolidated Financial Statements - December 31, 2021 and 2020 (Unaudited)
F-6
Report of Independent Registered Public Accounting Firm
F-19
Consolidated
    Balance Sheets - March 31, 2021 and 2020
F-21
Consolidated
    Statements of Operations - Twelve months ended March 31, 2021 and 2020
F-22
Consolidated
    Statements of Cash Flows
- Twelve months ended March 31, 2021 and 2020
F-23
Consolidated
    Statements of Shareholders' Equity - Twelve months ended March 31, 2021 and 2020
F-24
Notes
    to Consolidated Financial Statements - March 31, 2021 and 2020
F-25
F-
1
The
Singing Machine Company, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED BALANCE SHEETS
December
    31, 2021
March
    31, 2021
(unaudited)
Assets
Current Assets
Cash
$
7,375,305
$
396,579
Accounts receivable, net
    of allowances of $
306,975
and $
138,580
, respectively
12,254,098
2,210,881
Due from Crestmark Bank
-
4,557,120
Accounts receivable related
    party - Stingray Group, Inc.
159,125
88,041
Inventories, net
11,126,298
5,490,255
Prepaid expenses and other
    current assets
284,206
221,071
Deferred
    financing costs
17,188
15,359
Total
    Current Assets
31,216,220
12,979,306
Property and equipment,
    net
580,922
674,153
Deferred tax assets
638,391
887,164
Operating Leases - right
    of use assets
1,488,258
2,074,115
Other
    non-current assets
136,885
147,173
Total
    Assets
$
34,060,676
$
16,761,911
Liabilities and Shareholders'
    Equity
Current Liabilities
Accounts payable
$
5,982,552
$
2,461,103
Accrued expenses
2,417,409
1,659,499
Due to related party -
    Starlight Consumer Electronics Co., Ltd.
14,400
14,400
Due to related party -
    Starlight R&D, Ltd.
48,650
48,650
Revolving lines of credit
8,626,840
64,915
Customer deposits
9,520
139,064
Refunds due to customers
90,075
145,408
Reserve for sales returns
2,922,457
960,000
Current portion of finance
    leases
7,421
2,546
Current portion of installment
    notes
72,760
68,332
Current portion of note
    payable - Paycheck Protection Program
-
172,685
Current portion of operating
    lease liabilities
860,528
794,938
Subordinated
    related party debt - Starlight Marketing Development, Ltd.
352,659
502,659
Total
    Current Liabilities
21,405,271
7,034,199
Finance leases, net of current
    portion
12,592
-
Installment notes, net of
    current portion
157,812
212,949
Note payable - Payroll Protection
    Program, net of current portion
-
271,215
Operating
    lease liabilities, net of current portion
685,304
1,334,010
Total
    Liabilities
22,260,979
8,852,373
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $
1.00
par value;
1,000,000
shares authorized;
no
shares issued and outstanding
-
-
Common stock, Class A,
    $
0.01
par value;
100,000
shares authorized;
no
shares issued and outstanding
-
-
Common stock, Class B,
    $
0.01
par value;
100,000,000
shares authorized;
36,636,264
and
39,040,748
shares issued and outstanding, respectively
366,362
390,407
Additional paid-in capital
24,542,633
19,773,322
Accumulated
    deficit
(
13,109,298
)
(
12,254,191
)
Total
    Shareholders' Equity
11,799,697
7,909,538
Total
    Liabilities and Shareholders' Equity
$
34,060,676
$
16,761,911
See
notes to the condensed consolidated financial statements
F-
2
The
Singing Machine Company, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For
    the Three Months Ended
For
    the Nine Months Ended
December
    31, 2021
December
    31, 2020
December
    31, 2021
December
    31, 2020
Net Sales
$
21,244,306
$
16,972,603
$
44,678,929
$
42,309,825
Cost
    of Goods Sold
15,934,842
11,998,640
34,464,291
30,550,406
Gross Profit
5,309,464
4,973,963
10,214,638
11,759,419
Operating Expenses
Selling expenses
1,406,175
1,490,560
2,717,642
3,264,364
General and administrative
    expenses
2,154,553
1,925,233
5,352,902
5,130,396
Depreciation
55,007
65,465
190,087
204,353
Total
    Operating Expenses
3,615,735
3,481,258
8,260,631
8,599,113
Income From Operations
1,693,729
1,492,705
1,954,007
3,160,306
Other Income (Expenses)
Gain from Paycheck Protection
    Plan loan forgiveness
-
-
448,242
-
Gain - related party
-
187,988
11,236
187,988
Gain from damaged goods
    insurance claim
-
-
-
1,067,829
Gain from extinguishment
    of accounts payable
-
-
236,472
390,000
Interest expense
(
155,573
)
(
231,034
)
(
365,966
)
(
388,355
)
Finance
    costs
(
9,375
)
(
18,432
)
(
35,672
)
(
43,268
)
Total
    Other (Expenses) Income, net
(
164,948
)
(
61,478
)
294,312
1,214,194
Income Before Income Tax
    Provision
1,528,781
1,431,227
2,248,319
4,374,500
Income
    Tax Provision
(
102,886
)
(
263,932
)
(
248,664
)
(
1,006,135
)
Net
    Income
$
1,425,895
$
1,167,295
$
1,999,655
$
3,368,365
Net Income per Common Share
Basic
$
0.03
$
0.03
$
0.04
$
0.09
Diluted
$
0.03
$
0.03
$
0.04
$
0.09
Weighted Average Common and Common Equivalent
    Shares:
Basic
53,410,249
38,885,185
46,787,545
38,667,221
Diluted
53,635,368
39,156,481
47,109,854
39,041,074
See
notes to the condensed consolidated financial statements
F-
3
The
Singing Machine Company, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For
    the Nine Months Ended
December
    31, 2021
December
    31, 2020
Cash flows from operating
    activities
Net Income
$
1,999,655
$
3,368,365
Adjustments to reconcile
    net income to net cash (used in) provided by operating activities:
Depreciation
190,087
204,353
Amortization of deferred
    financing costs
35,672
43,268
Change in inventory reserve
297,661
482,926
Change in allowance for
    bad debts
168,395
(
55,960
)
Loss from disposal of property
    and equipment
4,394
-
Stock based compensation
38,376
17,605
Change in net deferred
    tax assets
248,773
872,386
Gain from Paycheck Protection
    Plan loan forgiveness
(
448,242
)
-
Gain - related party
(
11,236
)
(
187,988
)
Gain from extinguishment
    of accounts payable
(
236,472
)
(
390,000
)
Changes in operating assets
    and liabilities:
Accounts receivable
(
10,123,571
)
(
7,055,589
)
Due from banks
4,557,120
(
1,172,374
)
Accounts receivable - related
    parties
(
159,125
)
100,000
Insurance receivable
-
1,268,463
Inventories
(
5,933,704
)
1,781,439
Prepaid expenses and other
    current assets
(
63,135
)
111,305
Other non-current assets
10,288
52,712
Accounts payable
3,769,157
(
689,770
)
Accrued expenses
762,252
579,732
Due to related parties
-
(
184,312
)
Customer deposits
(
129,544
)
-
Refunds due to customers
(
55,333
)
(
704,744
)
Reserve for sales returns
1,962,457
1,742,434
Operating
    lease liabilities, net of operating leases - right of use assets
2,741
(
18,755
)
Net
    cash (used in) provided by operating activities
(
3,113,334
)
165,496
Cash flows from investing
    activities
Purchase
    of property and equipment
(
77,599
)
(
88,843
)
Net
    cash used in investing activities
(
77,599
)
(
88,843
)
Cash flows from financing
    activities
Proceeds from Issuance
    of stock - net of transaction expenses
9,000,580
-
Payment of redemption and
    retirement of treasury stock
(
7,162,452
)
-
Net proceeds from revolving
    lines of credit
8,561,925
64,915
Proceeds from note payable
    - Paycheck Protection Program
-
443,900
Payment of deferred financing
    charges
(
37,501
)
(
73,726
)
Payments on installment
    notes
(
50,709
)
(
48,802
)
Proceeds from exercise
    of stock options
14,000
26,400
Payment on subordinated
    debt - related party
(
150,000
)
-
Payments
    on finance leases
(
6,184
)
(
11,167
)
Net
    cash provided by financing activities
10,169,659
401,520
Net change in cash
6,978,726
478,173
Cash
    at beginning of year
396,579
345,200
Cash at end of period
$
7,375,305
$
823,373
Supplemental disclosures
    of cash flow information:
Cash
    paid for interest
$
378,076
$
429,264
Equipment
    purchased under capital lease
$
23,651
$
-
Issuance
    of common stock and warrants for stock issuance expenses
$
547,838
$
-
Operating
    leases - right of use assets and lease liabilities at inception of lease
$
16,364
$
2,184,105
See
notes to the condensed consolidated financial statements
F-
4
The
Singing Machine Company, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For
the three months ended December 31, 2021 and 2020
(Unaudited)
Preferred
    Stock
Common
    Stock
Additional
    Paid
Accumulated
Shares
Amount
Shares
Amount
in
    Capital
Deficit
Total
Balance at September 30, 2021
-
$
-
36,576,264
$
365,762
$
24,530,384
$
(
14,535,193
)
$
10,360,953
Net income
1,425,895
1,425,895
Employee compensation-stock option
-
-
3,649
-
3,649
Exercise of stock options
60,000
600
8,600
-
9,200
Balance
    at December 31, 2021
-
$
-
36,636,264
$
366,362
$
24,542,633
$
(
13,109,298
)
$
11,799,697
Balance at September 30, 2020
-
$
-
38,557,643
$
385,576
$
19,729,043
$
(
12,225,486
)
$
7,889,133
Net income
1,167,295
1,167,295
Employee compensation-stock option
5,105
5,105
Issuance of common stock - directors
43,105
431
12,069
12,500
Exercise of stock options
440,000
4,400
22,000
26,400
Balance at December
    31, 2020
-
$
-
39,040,748
$
390,407
$
19,768,217
$
(
11,058,191
)
$
9,100,433
The
Singing Machine Company, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For
the nine months ended December 31, 2021 and 2020
(Unaudited)
Preferred
    Stock
Common
    Stock
Additional
    Paid in
Accumulated
Shares
Amount
Shares
Amount
Capital
Deficit
Total
Balance at March 31, 2021
-
$
-
39,040,748
$
390,407
$
19,773,322
$
(
12,254,191
)
$
7,909,538
Net income
-
-
-
1,999,655
1,999,655
Issuance of stock
16,500,001
165,000
4,785,000
-
4,950,000
Issuance of pre-funded warrants
-
-
4,881,667
-
4,881,667
Payment of stock issuance expenses
-
-
(
831,087
)
-
(
831,087
)
Issuance of stock for stock issuance expenses
571,428
5,714
(
5,714
)
-
-
Redemption and retirement of treasury shares
(
19,623,155
)
(
196,231
)
(
4,111,459
)
(
2,854,762
)
(
7,162,452
)
Issuance of common stock - directors
17,242
172
4,828
-
5,000
Issuance of common stock - non-employee
50,000
500
16,500
-
17,000
Employee compensation-stock option
-
-
16,376
-
16,376
Exercise of stock options
80,000
800
13,200
-
14,000
Balance at December
    31, 2021
-
$
-
36,636,264
$
366,362
$
24,542,633
$
(
13,109,298
)
$
11,799,697
Balance at March 31, 2020
-
$
-
38,557,643
$
385,576
$
19,729,043
$
(
14,426,556
)
$
5,688,063
Net income
-
-
-
3,368,365
3,368,365
Employee compensation-stock option
5,105
5,105
Issuance of common stock directors
43,105
431
12,069
12,500
Exercise of stock options
440,000
4,400
22,000
26,400
Balance at December
    31, 2020
-
$
-
39,040,748
$
390,407
$
19,768,217
$
(
11,058,191
)
$
9,100,433
See
notes to the condensed consolidated financial statements
F-
5
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
NOTE
1 –
BASIS OF PRESENTATION
OVERVIEW
The
Singing Machine Company, Inc., a Delaware corporation (the "Company", "SMC", "The Singing Machine")
and its three wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada ("Macau Subsidiary"), SMC Logistics, Inc.
("SMC-L") and SMC-Music, Inc.("SMC-M") are primarily engaged in the development, marketing, and sale of consumer
karaoke audio systems, accessories, musical instruments and musical recordings. The products are sold by SMC to retailers and distributors
for resale to consumers.
NOTE
2 –
LIQUIDITY AND RECENT EQUITY EVENTS
The
Company for the nine months ended December 31, 2021 reported net income of approximately $
2,000,000
and used cash in operating activities
of approximately $
3,113,000
. In May, 2020 the Company received loan proceeds from Crestmark Bank in the amount of approximately $
444,000
under the Paycheck Protection Program ("PPP") established by the government to assist companies with financial relief due
to COVID-19. The Company used the loan proceeds for loan forgiveness eligible purposes, including payroll, benefits, rent and utilities,
and maintained its existing payroll levels during the forgiveness eligible period. In June 2021 the Company received notification from
the SBA that the loan had been forgiven in its entirety. For the nine months ended December 31, 2021, a gain of approximately $
448,000
(including principal and interest) from the forgiveness of the loan was included in other income and expenses in the accompanying condensed
consolidated statements of income.
In
August 2021, the Company entered into a stock redemption agreement (the "Redemption Agreement") with its majority shareholders,
Koncepts International Limited ("Koncepts") and Treasure Green Holdings, Ltd. ("Treasure Green"), pursuant to
which the Company redeemed
19,623,155
shares of common stock of the Company (the "Redeemed Shares"). The closing of the transactions
set forth in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were assigned and transferred
back to the Company and retired.
In
August 2021, the Company entered into a securities purchase agreement (the "Purchase Agreement") with large institutional
investors and a strategic investor for private placement of (i)
16,500,001
shares of its common stock (the "Shares") together
with common warrants to purchase up to
16,500,000
shares of common stock with an exercise price of $
0.35
per share, and (ii)
16,833,333
pre-funded warrants ("Pre-Funded Warrants") with each Pre-Funded Warrant exercisable for one share of common stock at an
exercise price of $
0.01
per share, together with Common Warrants to purchase up to
16,833,333
shares of common stock at an exercise price
of $
0.35
per share (the "Private Placement"). Shares issuable upon the exercise of the Pre-Funded Warrants and Common Warrants
are hereinafter referred to as the "Warrant Shares". The closing of the Private Placement took place on August 10, 2021,
when the Shares, Common Warrants, and Pre-Funded Warrants were delivered to the purchasers and funds, in the amount of approximately
$
9,832,000
, were received by the Company. Approximately $
7,162,000
of the funds received were used to execute the Redemption Agreement
and the Company paid approximately $
7,162,000
to Koncepts and Treasure Green. The Redeemed Shares were retired and are available for
reissuance in the future.
We
believe that current working capital, cash expected to be generated from our operating forecast, along with the availability of cash
from our credit facilities (See Note 6 – BANK FINANCING) assuming that they are revised and or extended, will be adequate to meet
the Company's liquidity requirements for at least twelve months from the filing of this report. As both the Crestmark Bank ("Crestmark
Facility") and the Iron Horse Credit ("IHC") Facility ("IHC Facility") are set to expire on June 15, 2022,
the Company expects to negotiate a revision or extension of these debt facilities upon their maturity, however, there can be no assurance
that such revision or extension will occur or at what terms.
NOTE
3 -
SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES
OF CONSOLIDATION AND BASIS OF PRESENTATION
The
condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All inter-company
accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial
statements for the three months and nine months ended December 31, 2021 and 2020 have been prepared in accordance with accounting principles
generally accepted in the United States of America ("US GAAP") applicable to interim financial information and the requirements
of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the
information and disclosures required by US GAAP for complete consolidated financial statements. In the opinion of management, such condensed
consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation
of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results
of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
F-
6
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
The
condensed consolidated balance sheet information as of March 31, 2021 was derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended March 31, 2021. The interim condensed consolidated financial
statements should be read in conjunction with that report.
USE
OF ESTIMATES
The
Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty
reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination
of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company's
financial condition. However, circumstances could change which may alter future expectations.
COLLECTABILITY
OF ACCOUNTS RECEIVABLE
The
Singing Machine's allowance for doubtful accounts is based on management's estimates of the creditworthiness of its customers,
current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient
to respond to normal business conditions. Management sets 100% reserves for customers in bankruptcy and other reserves based upon historical
collection experience. Should business conditions deteriorate or any major customer default on its obligations to the Company, this allowance
may need to be significantly increased, which would have a negative impact on operations.
The
Company is subject to chargebacks from customers for co-op program incentives, defective returns, return freight and handling charges
that are deducted from open invoices and reduce collectability of open invoices.
FOREIGN
CURRENCY TRANSLATION
The
functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S.
dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs,
and expenses. Net gains and losses resulting from foreign exchange transactions are recorded in the condensed consolidated statements
of income and translations are recorded in a separate component of shareholders' equity. Any such amounts were not material during
the periods presented.
CONCENTRATION
OF CREDIT RISK
At
times, the Company maintains cash in United States bank accounts that are more than the Federal Deposit Insurance Corporation insured
amounts. The Company also maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at
December 31, 2021 and March 31, 2021 are approximately $
125,000
and $
225,000
, respectively.
Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable.
INVENTORY
Inventories
are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable
value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected
future inventory returns due to warranty and allowance programs. As of December 31, 2021 and March 31, 2021 the estimated amounts for
these future inventory returns were approximately $
1,978,000
and $
528,000
, respectively. The Company reduces inventory on hand to its
net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below
its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below
cost. Management regularly reviews the Company's investment in inventories for such declines in value. As of December 31, 2021
and March 31, 2021 the Company had inventory reserves of approximately $
934,000
and $
636,000
, respectively for estimated excess and obsolete
inventory.
DEFERRED
FINANCING COSTS
The
Company classifies deferred financing costs incurred when obtaining or renewing revolving credit facilities as assets in the accompanying
condensed consolidated balance sheets as it is likely that during certain periods during non-peak season there will be no balance due
on these credit facilities to offset the deferred financing costs. In June 2021, the Company incurred approximately $
38,000
in deferred
financing costs associated with the one-year renewal of the IHC Facility which are being amortized over twelve months and were classified
as current assets on the accompanying condensed consolidated balance sheets.
LONG-LIVED
ASSETS
The
Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the
carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying
amount,
the carrying amounts are reduced to fair value and an impairment
loss is recognized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
360-10-05, "Accounting for the Impairment or Disposal of Long-Lived Assets." No
impairment
was recorded as of December 31, 2021 and 2020.
F-
7
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December,
2021 and 2020
(Unaudited)
LEASES
The
Company follows FASB ASC 842, "Leases". The ASC requires lessees to recognize leases on the balance sheet and disclose key
information about leasing arrangements. The standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU
asset and lease liability on the balance sheet for all leases with a term longer than twelve months. Leases are classified as finance
or operating, with classification affecting the pattern and classification of expense recognition in the income statement. (See Note
7– LEASES).
The
Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company's
right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments
arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date. The liability is equal to
the present value of the remaining minimum lease payments. The asset is based on the liability, subject to certain adjustments. Operating
leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result
in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). As the interest rate implicit in the
Company's operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease
payments. The Company utilizes the financing interest rate for its finance leases.
PROPERTY
AND EQUIPMENT
Property
and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred.
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated
and straight-line methods.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
We
follow FASB ASC 825, "Financial Instruments", which requires disclosures of information about the fair value of certain financial
instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument
is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale
or liquidation.
The
carrying amounts of the Company's short-term financial instruments, including accounts receivable, due from related parties, accounts
payable, accrued expenses, customer deposits, refunds due to customers, and due to related parties approximates fair value due to the
relatively short period to maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment
notes approximate fair value either due to the relatively short period to maturity or the related interest is accrued at a rate similar
to market rates. The carrying amounts on the revolving line of credit approximates fair value due the relatively short period to maturity
and related interest accrued at market rates.
REVENUE
RECOGNITION AND RESERVE FOR SALES RETURNS
The
Company recognizes revenue in accordance with FASB ASC 606, "Revenue from Contracts with Customers". All revenue is generated
from contracts with customers. The Company recognizes revenue when the goods are delivered and control of the goods sold is transferred
to the customer, in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected
to be entitled in exchange for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification
of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are
distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5)
recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation.
The
Company's contracts with customers consist of one performance obligation (the sale of the Company's products). The Company's
contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations
once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive
for the sale of these goods.
The
Company selectively participates in a retailer's co-op promotion incentives to maximize sales of the Company's products on
the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our
customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair
value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers
are recorded as a reduction to net sales. For the three months ended December 31, 2021 and 2020 co-op promotion incentives were approximately
$
796,000
and $
858,000
, respectively. For the nine months ended December 31, 2021 and 2020 co-op promotion incentives were approximately
$
1,805,000
and $
2,032,000
, respectively.
Costs
incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in
general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions
are included in selling expenses in the accompanying condensed consolidated statements of income as our underlying customer agreements
are less than one year.
The
Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke
hardware and the Company has no other material business segments (See Note 11 – Geographical Information).
F-
8
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
While
the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the
occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending
on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant
reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
The Company estimates variable consideration under our return allowance programs for goods returned from our customers for various reasons,
whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.
The
Company's reserve for sales returns were approximately $
2,922,000
and $
960,000
as of December 31, 2021 and March 31, 2021, respectively.
Revenue
is derived from five different major product lines. Disaggregated revenue from these product lines for the three and nine months ended
December 31, 2021 and 2020 consisted of the following:
Revenue
    by Product Line
Three
    Months Ended
Nine
    Months Ended
Product Line
December
    31, 2021
December
    31, 2020
December
    31, 2021
December
    31, 2020
Classic Karaoke Machines
$
17,732,000
$
11,998,000
$
37,216,000
$
32,337,000
Licensed Product
645,000
1,644,000
1,510,000
4,332,000
SMC Kids Toys
1,051,000
662,000
2,145,000
1,229,000
Microphones and Accessories
1,657,000
2,481,000
3,424,000
4,122,000
Music Subscriptions
159,000
188,000
384,000
290,000
Total
    Net Sales
$
21,244,000
$
16,973,000
$
44,679,000
$
42,310,000
SHIPPING
AND HANDLING COSTS
Shipping
and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to
fulfill the Company's promise to transfer the goods. For the three months ended December 31, 2021 and 2020 shipping and handling
expenses were approximately $
369,000
and $
512,000
, respectively. For the nine months ended December 31, 2021 and 2020 shipping and handling
expenses were approximately $
654,000
and $
900,000
, respectively. These expenses are classified as a component of selling expenses in
the accompanying condensed consolidated statements of income.
STOCK
BASED COMPENSATION
The
Company follows the provisions of the FASB ASC 718-20, "Compensation – Stock Compensation Awards Classified as Equity".
ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed
in the condensed consolidated statements of income over the service period (generally the vesting period). The Company uses the Black-Scholes
option valuation model to value stock options. Employee stock option compensation expense for the three and nine months ended December
31, 2021 and 2020 includes the estimated fair value of options granted, amortized on a straight-line basis over the requisite service
period for the entire portion of the award. For the three months ended December 31, 2021 and 2020, the stock option expense was approximately
$
3,000
and $
5,000
, respectively. For the nine months ended December 31, 2021 and 2020, the stock option expense was approximately $
16,000
and $
5,000
, respectively.
RESEARCH
AND DEVELOPMENT COSTS
Research
and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and administrative
expenses in the condensed consolidated statements of income. For the three months ended December 31, 2021 and 2020, these amounts totaled
approximately $
11,000
and $
33,000
, respectively. For the nine months ended December 31, 2021 and 2020, these amounts totaled $
61,000
and $
48,000
respectively.
INCOME
TAXES
The
Company follows the provisions of FASB ASC 740 "Accounting for Income Taxes." Under the asset and liability method of ASC
740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized,
a valuation allowance is recognized.
The
Company analyzes its deferred tax assets and liabilities at the end of each interim period and, based on management's best estimate
of its full year effective tax rate, recognizes cumulative adjustments to its deferred tax assets and liabilities. For the nine months
ended December 31, 2021 and 2020 we estimated our effective tax rate to be approximately
11
% and
23
%, respectively. As of December 31,
2021 and March 31, 2021 the Singing Machine had net deferred tax assets of approximately $
638,000
and $
887,000
, respectively. The Company
recorded an income tax provision of approximately $
103,000
and $
264,000
for the three months ended December 31, 2021 and 2020, respectively.
The Company recorded an income tax provision of approximately $
249,000
and $
1,006,000
for the nine months ended December 31, 2021 and
2020, respectively.
F-
9
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
The
Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed
tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is
reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the
largest benefit that has a
greater than 50%
likelihood of being realized upon ultimate resolution. As of December 31, 2021, there were
no uncertain tax positions that resulted in any adjustment to the Company's provision for income taxes. The Company recognizes
interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities
recorded for accrued interest or penalties related to uncertain tax provisions.
COMPUTATION
OF EARNINGS PER SHARE
Computation
of dilutive shares for the three and nine months ended December 31, 2021 and 2020 are as follows:
For
                                            the three
months
                                            ended
December
                                            31, 2021
For
                                            the three
months
                                            ended December 31, 2020
For
                                            the nine
months
                                            ended December 31, 2021
For
                                            the nine
months
                                            ended December 31, 2020
Basic
    weighted average common shares outstanding
53,410,249
38,885,185
46,787,545
38,667,221
Effect
    of dilutive stock options
225,119
271,296
322,309
373,853
Diluted
    weighted average common shares outstanding
53,635,368
39,156,481
47,109,854
39,041,074
Basic
net income per share is based on the weighted average number of shares of common stock outstanding during the period. Pre-funded warrants
to purchase
16,833,333
shares of common stock are included in basic weighted average shares outstanding as deemed outstanding. Diluted
net income per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money
options and the proceeds thereof were used to purchase shares of the Company's common stock at the average market price during
the period using the treasury stock method. For the three and nine months ended December 31, 2021, options to purchase approximately
225,000
and
322,000
shares of common stock, respectively, have been included in the calculation of diluted net income per share as compared
to approximately
271,000
and
374,000
shares of common stock, respectively, that were included in the calculation of diluted net income
per share for the three and nine months ended December 31, 2020. For the three and nine months ended December 31, 2021, options and warrants
to purchase approximately
35,416,667
shares of common stock, have been excluded in the calculation of diluted net income per share as
compared to approximately
730,000
shares that were excluded in the calculation of diluted net income per share for the three and nine
months ended December 31, 2020 as the result would have been anti-dilutive.
RECENT
ACCOUNTING PRONOUNCEMENTS
In
June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses"
(Topic 326)
. This ASU represents
a significant change in the current accounting model by requiring immediate recognition of management's estimates of current expected
credit losses. Under the prior model, losses were recognized only as they were incurred, which delayed recognition of expected losses
that might not yet have met the threshold of being probable.
The
amendments in ASU 2016-03 for smaller reporting companies are effective for the Company beginning April 1, 2023, including interim periods
within that fiscal year. Early adoption is permitted. We are currently evaluating the potential effects of this updated guidance on our
condensed consolidated financial statements and related disclosures.
NOTE
4 -
INVENTORIES, NET
Inventories
are comprised of the following components:
December 31,
March 31,
2021
2021
Finished Goods
$
8,427,000
$
5,348,000
Inventory in Transit
1,655,000
250,000
Estimated Amount of
    Future Returns
1,978,000
528,000
Subtotal
12,060,000
6,126,000
Less:Inventory
    Reserve
934,000
636,000
Inventories, net
$
11,126,000
$
5,490,000
F-
10
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
NOTE
5 –
PROPERTY AND EQUIPMENT
A
summary of property and equipment is as follows:
USEFUL
December 31,
March 31,
LIFE
2021
2021
Computer and office equipment
5
-
7
years
$
440,000
$
445,000
Furniture and fixtures
7
years
98,000
98,000
Warehouse equipment
7
years
210,000
199,000
Molds and tooling
3
-
5
years
1,946,000
1,878,000
2,694,000
2,620,000
Less: Accumulated depreciation
2,113,000
1,946,000
$
581,000
$
674,000
Depreciation
expense for the three months ended December 31, 2021 and 2020 was approximately $
55,000
and $
65,000
, respectively. Depreciation expense
for the nine months ended December 31, 2021 and 2020 was approximately $
190,000
and $
204,000
, respectively.
NOTE
6 –
BANK FINANCING
Intercreditor
Revolving Credit Facility Crestmark Bank and Iron Horse Credit
On
June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility on eligible accounts receivable and inventory which replaced
the Company's previous revolving credit facility with PNC Bank which was terminated on June 16, 2020. The Company signed a two-year
Loan and Security Agreement for a $
10.0
million financing facility under the Crestmark Facility on eligible accounts receivable. The
outstanding loan balance cannot exceed $
10.0
million during peak selling season between July 1 and December 31and is reduced to a maximum
of $
5.0
million between January 1 and July 31 with the ability to exceed when required. Costs associated with closing of the Intercreditor
Revolving Credit Facility of approximately $
74,000
were deferred and were amortized over one year. During the three months ended December
31, 2021 and 2020 the Company incurred amortization expense of approximately $
10,000
and $
19,000
, respectively associated with the amortization
of deferred financing costs from the Intercreditor Revolving Credit Facility. During the nine months ended December 31, 2021 and 2020
the Company incurred amortization expense of approximately $
36,000
and $
40,000
, respectively associated with the amortization of deferred
financing costs from the Intercreditor Revolving Credit Facility.
Under
the Crestmark Facility:
●
Advance
    rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date.
●
Crestmark
    shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%.
●
Crestmark
    will implement an availability block of 20% of amounts due on Iron Horse Credit Intercreditor Revolving Credit Facility.
The
Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable
and Inventory. Notwithstanding the foregoing, Crestmark shall subordinate its first security interest in inventory to IHC as agreed between
all parties. The Crestmark Facility bears interest at the Wall Street Journal Prime Rate plus
5.50
% with a floor of
8.75
%. Interest and
Maintenance Fees shall be calculated on the higher of the actual average monthly loan balance from the prior month or a minimum average
loan balance of $
2,000,000
. For the three months ended December 31, 2021 and 2020 the Company recorded interest expense of approximately
$
106,000
and $
100,000
, respectively. For the nine months ended December 31, 2021 and 2020 the Company recorded interest expense of approximately
$
202,000
and $
151,000
, respectively. The Crestmark Facility expires on
June 15, 2022
. As of December 31, 2021, the Company had an outstanding
balance of approximately $
6,637,000
on the Crestmark Facility.
In
addition, the Company executed a two-year Loan and Security Agreement with Iron Horse Credit for up to $
2,500,000
in inventory financing.
Under
the IHC Facility:
●
Advance
    rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined
    by an independent third-party appraiser engaged by IHC.
●
The
    Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before
    interest, taxes, depreciation and amortization ("EBITDA") less non-financed capital expenditures, cash dividends and
    distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. The Company was not in
    compliance with this covenant as of October 31, 2021 and November 30, 2021; however, waivers from default were obtained from IHC
    for these months. As of December 31, 2021, the Company was in compliance with this covenant.
F-
11
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
The
IHC Facility is secured by a perfected security interest in the Company's inventory. The IHC Facility bears interest at
1.292
%
per month or
15.51
% annually. Interest shall be calculated on the higher of the actual average monthly loan balance from the prior month
or a minimum average loan balance of $
1,000,000
. Costs associated with the renewal of the IHC Facility of approximately $
38,000
were
deferred and are being amortized over one year. Interest expense for the three months ended December 31, 2021 and 2020 were approximately
$
34,000
and $
41,000
, respectively. Interest expense for the nine months ended December 31, 2021 and 2020 were approximately $
120,000
and $
103,000
, respectively. The IHC Facility expires on
June 15, 2022
. As of December 31, 2021 and March 31, 2021, there was an outstanding
balance of approximately $
1,990,000
and $
65,000
, respectively.
As
of December 31, 2021 there was approximately $
510,000
of available borrowings under these facilities.
As
both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a revision or extension
of these debt facilities upon their maturity however, there can be no assurance that such revision or extension will occur or at what
terms.
Note
Payable Payroll Protection Plan
On
May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $
444,000
under the Paycheck Protection
Program (the "PPP"). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES
Act"), which provided for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of
the qualifying business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible
purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced
if the borrower terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan was payable
over two years at an interest rate of 1%, with a deferral of payments until a forgiveness application was accepted and reviewed by the
Small Business Administration ("SBA"), and the SBA provided Crestmark with the loan forgiveness amount. In June 2021 the
Company received notification from the SBA that the loan had been forgiven in its entirety and we were notified by Crestmark that the
debt was discharged. For the nine months ended December 31, 2021, a gain of approximately $
448,000
(including principal and interest)
from the forgiveness of the loan was included in other income and expenses in the accompanying condensed consolidated statements of income.
Installment
Notes Payable
On
June 18, 2019, the Company entered into a financing arrangement with Dimension Funding, LLC ("Dimension") to finance an entire
ERP System project over a term of
60
months at a cost of approximately $
365,000
. As of December 31, 2021, the Company had executed three
installment notes totaling approximately $
365,000
for payments issued to the project vendor. The installment notes have 60-month terms
with interest rates of
7.58
%,
8.55
% and
9.25
%, respectively. The installment notes are payable in monthly installments of $
7,459
which
include principal and interest. As of December 31, 2021, and March 31, 2021 there was an outstanding balance on the installment notes
of approximately $
231,000
and $
281,000
, respectively. For the three months ended December 31, 2021 and 2020 the Company incurred interest
expense of approximately $
5,000
and $
6,000
, respectively. For the nine months ended December 31, 2021 and 2020 the Company incurred interest
expense of approximately $
16,000
and $
20,000
, respectively.
Subordinated
Debt/Note Payable to Related Party
In
conjunction with the Crestmark Facility and IHC Facility there is a subordination agreement on related party debt due to Starlight Marketing
Development, Ltd. of approximately $
803,000
. On June 1, 2020 the remaining amount due on the subordinated debt of approximately $
803,000
was converted to a note payable ("subordinated note payable") which bears interest at
6
%. As part of the agreement to convert
the subordinated debt to a note payable it was agreed that interest expense would be accrued at the same 6% interest rate on the unpaid
principal retroactively from the date that previously scheduled payments had been missed. During the three months ended December 31,
2021 and 2020 interest expense was approximately $
3,000
and $
12,000
, respectively on the subordinated note payable and the related party
subordinated debt. During the nine months ended December 31, 2021 and 2020 interest expense was approximately $
17,000
and $
36,000
, respectively
on the subordinated note payable and the related party subordinated debt.
In
connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the note payable. Both the Crestmark
Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any amounts borrowed against these
credit facilities are paid in full, the Company maintains a 1 : 1 debt coverage ratio and exhibits sufficient cash liquidity to support
on-going operations. As of December 31, 2021 the Company met repayment requirements of the Intercreditor Revolving Credit Facility and
has made cumulative principal payments totaling $
450,000
. During the next twelve months the Company intends on making additional payments
and pay off the remaining balance outstanding provided the Company meets all repayment requirements of the Crestmark Facility and IHC
Facility agreements.
As
of December 31, 2021 and March 31, 2021, the remaining amount due on the note payable was approximately $
353,000
and $
503,000
respectively.
The remaining amount due on the subordinated note payable was classified as a current liability as of December 31, 2021 and March 31,
2021 on the condensed consolidated balance sheets.
F-
12
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
NOTE
7 -
COMMITMENTS AND CONTINGENCIES
COVID-19
In
January 2020, the World Health Organization ("WHO") announced a global health emergency because of a new strain of coronavirus
originating in Wuhan, China ("COVID-19") and the risks to the international community. The WHO declared COVID-19 a global
pandemic on March 11, 2020 and since that time many of the previously imposed restrictions and other measures which were instituted in
response have been subsequently reduced or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic and its duration
and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional
strains of COVID-19, the administration and ultimate effectiveness of vaccines, and the eventual timeline to achieve a sufficient level
of herd immunity among the general population. Accordingly, the COVID-19 pandemic may continue to have negative effects on the health
of the U.S. economy for the foreseeable future. We continue to experience various degrees of manufacturing cost pressures due to raw
material and electronic component shortages as well as inflationary price increases. Although we regularly monitor the financial health
and operations of companies in our supply chain, and use alternative suppliers when necessary and available, any financial hardship or
government restrictions on our suppliers or sub-suppliers caused by the COVID-19 pandemic could cause a disruption in our ability to
obtain raw materials or components required to manufacture our products and adversely affect our operations.
LEGAL
MATTERS
Management
is not aware of any legal proceedings other than matters that arise in the ordinary course of business.
LEASES
Operating
Leases
We
have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through
2024.
We
entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida
where we lease approximately
6,500
square feet of office space. The lease expires on
March 31, 2024
. The base rent payment is approximately
$
9,700
per month, subject to annual adjustments.
We
entered into an operating lease agreement, effective June 1, 2013, for
86,000
square feet of warehouse space in Ontario, California for
our logistics operations. On June 15, 2020
we executed a three-year lease extension which will expire on
August 31, 2023
. The renewal
base rent payment is $
65,300
with a 3% increase every 12 months for the remaining term of the extension.
In
May 2021 we executed a one-year lease for
424
square feet of office space in Macau which will expire on
April 30, 2022
. The lease provides
for a renewal option to extend the lease. Rent expense on the new lease is fixed at approximately $
1,700
per month for the duration of
the lease term.
Lease
expense for our operating leases is recognized on a straight-line basis over the lease terms.
Finance
Leases
On
July 1, 2021 we entered into a long-term capital leasing arrangement with Union Credit Corporation to finance the leasing of a used forklift
in the amount of approximately $
24,000
. The lease require monthly payments in the amount of approximately $
755
per month over a total
lease term of
36
months which commenced on July 1, 2021. The agreement has an effective interest rate of
9.9
% and the Company has the
option to purchase the equipment at the end of the lease term for one dollar. As of December 30, 2021 and March 31, 2021, the remaining
amounts due on this capital leasing arrangement was approximately $
20,000
and $
0
, respectively. For the three and nine months ended December
31, 2021 and 2020 the Company incurred interest expense of $
696
and $
1,072
, respectively.
F-
13
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
Supplemental
balance sheet information related to leases as of December 31, 2021 is as follows:
Assets:
Operating lease
    - right-of-use assets
$
1,488,258
Finance leases as a component
    of Property and equipment, net of accumulated depreciation of $
1,735
18,278
Liabilities
Current
Current
    portion of operating leases
$
860,528
Current
    portion of finance leases
7,421
Noncurrent
Operating
    lease liabilities, net of current portion
$
685,304
Finance
    leases, net of current portion
12,592
Supplemental statement
of operations information related to leases for the three and nine months ended December 31, 2021 is as follows:
Three
    Months Ended
Nine
    Months Ended
December
    31, 2021
December
    31, 2021
Operating lease
    expense as a component of general and administrative expenses
$
140,016
$
604,347
Finance lease cost
Depreciation
    of leased assets as a component of depreciation
$
1,041
$
1,735
Interest
    on lease liabilities as a component of interest expense
$
692
$
1,068
Supplemental
cash flow information related to leases for the nine months ended December 31, 2021 is as follows:
Cash
    paid for amounts included in the measurement of lease liabilities:
Operating
    cash flow paid for operating leases
$
693,657
Financing
    cash flow paid for finance leases
$
6,184
Lease
    term and Discount Rate
Weighted
    average remaining lease term (months)
Operating
    leases
21.1
Finance
    leases
31.0
Weighted
    average discount rate
Operating
    leases
6.25
%
Finance
    leases
9.86
%
Scheduled
maturities of operating and finance lease liabilities outstanding as of December 31, 2021 are as follows:
Year
Operating
    Leases
Finance
    Leases
2022
$
937,590
$
9,065
2023
674,488
9,065
2024
30,739
4,533
Total Minimum Future Payments
1,642,817
22,663
Less:
    Imputed Interest
96,985
2,650
Present
    Value of Lease Liabilities
$
1,545,832
$
20,013
NOTE
8 -
STOCK OPTIONS AND WARRANTS
During
the nine months ended December 31, 2021 the Company issued
40,000
and
20,000
stock options, respectively, at an exercise price of $
.29
and $
.27
, respectively to directors as compensation for their service.
During
the three and nine months ended December 31, 2021 the Company issued
50,000
stock options at an exercise price of $
.22
to the Vice President
of Sales and Marketing as compensation due under his fiscal 2021 incentive bonus plan.
During
the three and nine months ended December 31, 2020 the Company issued
100,000
stock options at an exercise price of $
.29
to directors
as compensation for their service.
The
fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions
outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected
term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. The following
inputs were used to value each option grant:
●
For
    the nine months ended December 31, 2021: expected dividend yield of
0
%, risk-free interest rate between
0.43
% and
0.96
%, respectively
    with volatility between
149.5
% and
157.0
% respectively with an expected term of
three years
.
●
For
    the nine months ended December 31, 2020: expected dividend yield of
0
%, risk-free interest rate of
0.18
%, volatility of
146.7
% and
    an expected term of
three years
.
F-
14
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
A
summary of stock option activity for the nine months ended December 31, 2021 is summarized below:
December
    31, 2021
Number
                                            of
Options
Weighted
Average
Exercise
                                            Price
Stock Options:
Balance at beginning of period
1,680,000
$
0.32
Granted
110,000
$
0.25
Exercised
(
80,000
)
$
0.18
Balance at end of period
1,710,000
$
0.33
Options
    exercisable at end of period
1,600,000
$
0.33
The
following table summarizes information about employee stock options outstanding at December 31, 2021:
Range
    of Exercise Price
Number
    Outstanding at December 31, 2021
Weighted
    Average Remaining Contractural Life
Weighted
    Average Exercise Price
Number
    Exercisable at December 31, 2021
Weighted
    Average Exercise Price
$
.12
- $
.38
1,160,000
2.9
$
0.24
1,050,000
$
0.24
$
.47
- $
.55
550,000
5.2
$
0.50
550,000
$
0.50
*
1,710,000
1,600,000
*
Total number of
options outstanding as of December 31, 2021 includes
650,000
options issued to three current and four former directors as compensation,
and
1,090,000
options issued to key employees.
As
of December 31, 2021, there was unrecognized expense of approximately $
17,000
remaining on options currently vesting over time with approximately
nine months remaining until these options are fully vested.
The
intrinsic value of vested options as of December 31, 2021 was approximately $
40,000
.
As
per the execution of the August 2021 private placement as disclosed in Note 2 and Note 10, common warrants and pre-funded warrants issued
and outstanding as of December 31, 2021 are as follows:
Number
    of Shares
Warrants outstanding at March 31, 2021
-
Common warrants issued
34,666,667
Pre-funded warrants
    issued
16,833,333
Warrants outstanding at December 31, 2021
51,500,000
As
of December 31, 2021, the Company's warrants by expiration date were as follows:
Number
    of CommonWarrants
Number
                                            of
Pre-funded
                                            Warrants
Exercise
    Price
Expiration
    Date
34,666,667
-
$
0.35
9/15/2026
-
16,833,333
$
0.01
N/A
*
34,666,667
16,833,333
*
Pre-funded warrants
expire on the dates they are exercised.
All
outstanding warrants are fully vested.
NOTE
9 –
AUGUST 2021 STOCK REDEMPTION
On
August 5, 2021, the Company entered into a stock redemption agreement (the "Redemption Agreement") with Koncepts and Treasure
Green, pursuant to which the Company redeemed
19,623,155
shares of common stock of the Company (the "Redeemed Shares"). The
closing of the transaction set forth in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were
assigned and transferred back to the Company and the Company paid approximately $
7,162,000
to Koncepts and Treasure Green. The Redeemed
Shares were retired and are available for reissuance in the future. Pursuant to the Redemption Agreement, neither Koncepts nor Treasure
Green remained shareholders of the Company.
F-
15
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
NOTE
10 –
AUGUST 2021 PRIVATE PLACEMENT
On
August 5, 2021, the Company entered into a securities purchase agreement (the "Purchase Agreement") with large institutional
investors and the strategic investor for private placement of (i)
16,500,001
shares of its common stock (the "Shares") together
with Common Warrants to purchase up to
16,500,000
shares of common stock with an exercise price of $
0.35
per share, and (ii)
16,833,333
pre-funded warrants ("Pre-Funded Warrants") with each Pre-Funded Warrant exercisable for one share of common stock at an
exercise price of $
0.01
per share, together with Common Warrants to purchase up to
16,833,333
shares of common stock at an exercise price
of $
0.35
per share (the "Private Placement").
The
Common Warrants and Pre-Funded Warrants are collectively referred to as (the "Warrants"). The Warrants are exercisable at
any time at the option of the holder, have a term of 5 years from the issuance date and provide for cashless exercise under certain conditions.
The Company determined that the Warrants meet the conditions for equity classification. Shares issuable upon exercise of the Warrants
are hereinafter referred to as the "Warrant Shares". The exercise price and number of the Warrant Shares are subject to anti-dilution
and other adjustments for certain stock dividends, stock splits, subsequent rights offerings, pro rata distributions or certain equity
structure changes.
Pursuant
to the terms of the Purchase Agreement, on September 3, 2021, the Company filed a registration statement providing for the resale by
the purchasers of the Shares and Warrant Shares sold in the Private Placement, which registration statement became effective on September
15, 2021. Additionally, under the terms of the Purchase Agreement, the Company is obligated to use its reasonable best efforts to submit
an application to have the Company's common stock listed on a national exchange by December 31, 2021, and to use its reasonable
best efforts to have the Shares and Warrant Shares listed on such national exchange as soon as practicable following the submission of
such application. As of December 31, 2021 an application with NASDAQ has been submitted and is pending approval. Should the NASDAQ application
be approved, the shareholders of the Company have approved a reverse stock split simultaneous with the up-listing.
The
closing of the Private Placement took place on August 10, 2021, when the Shares and Warrants were delivered to the purchasers and funds,
in the amount of approximately $
9,832,000
, were received by the Company. Approximately $
7,162,000
of the funds was used to execute the
Redemption Agreement (See Note 9 – August 2021 Stock Redemption).
Stingray
Group Inc. ("Stingray" or the "strategic investor"), a leading music, media and technology is part of the group
of investors who participated in the Private Placement and have acquired a minority interest in the Company. Stingray is a long-standing
business partner with the Company that provides our customers with music content from their extensive library of expertly produced and
licensed karaoke content and is now a related party (see Note 12- Related Party Transactions).
In
connection with the Private Placement, on July 6, 2021, the Company entered into a Placement Agency Agreement with A.G.P./Alliance Global
Partners ("AGP"), which provided for AGP to serve as the exclusive placement agent, advisor or underwriter (the "placement
agent services"). Pursuant to the Placement Agency Agreement, upon closing of the Private Placement, the Company paid AGP placement
fees of $
630,000
(representing 7% of the gross proceeds raised in the Private Placement excluding proceeds raised from the strategic
investor, plus 3.5% of the aggregate gross proceeds raised from the strategic investor)
, and issued AGP warrants to purchase
1,333,333
shares of the Company's common stock (the "Advisor Warrants") (representing
5
% of the aggregate number of Shares and
Pre-Funded Warrants sold in the Private Placement, excluding the Shares sold to the strategic investor). The Advisor Warrants have the
same exercise price ($
0.35
) and terms as the Common Warrants issued in the Private Placement. The Company estimated the fair value of
the Advisor Warrants to be approximately $
359,000
using the Black-Scholes Model based on the following input assumptions: common stock
price of $
0.33
, expected life of the warrants of
2.5
years; stock price volatility of
168
%; dividend yield of
0
%; and the risk-free interest
rate of
2.65
%.
In
addition to the placement fees paid to AGP, the Company incurred additional offering costs for direct incremental legal, consulting,
accounting and filing fees related to the Private Placement of approximately $
390,000
, of which one consultant was issued
571,428
shares
of restricted common stock with an aggregate fair value of approximately $
189,000
and a cash payment of $
100,000
. Total offering costs
related to the Private Placement amounted to approximately $
1,379,000
, which is recorded as an offset to additional paid in capital in
the accompanying condensed consolidated statements of stockholders' equity.
F-
16
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
NOTE
11 -
GEOGRAPHICAL INFORMATION
Sales
to customers outside of the United States for the three and nine months ended December 31, 2021 and 2020 were primarily made by the Macau
Subsidiary in US dollars. Sales by geographic region for the periods presented are as follows:
FOR
    THE THREE MONTHS ENDED
FOR
    THE NINE MONTHS ENDED
December
    31,
December
    31,
2021
2020
2021
2020
North America
$
20,997,000
$
16,623,000
$
43,691,000
$
41,014,000
Europe
219,000
31,000
375,000
924,000
Australia
28,000
319,000
613,000
372,000
$
21,244,000
$
16,973,000
$
44,679,000
$
42,310,000
The
geographic area of sales was based on the location where the product is delivered.
NOTE
12 –
RELATED PARTY TRANSACTIONS
All
transactions listed below are related to the Company as Cosmo Communications, Inc ("Cosmo") and Starlight Electronics Co.,
Ltd ("SLE") are affiliates of our former Chairman of the Board, Mr. Phillip Lau. Additionally, Stingray is part of the group
of investors who participated in the Private Placement and have acquired a minority interest in the Company (see Note 10 – August
2021 Private Placement ).
DUE
TO/FROM RELATED PARTIES
On
December 31, 2021 and March 31, 2021, the Company had amounts due to related parties in the amounts of approximately $
63,000
respectively
for services provided by these companies and licensing fees for use of pedestal model molds and tools owned by the former parent company.
On
December 31, 2021 and March 31, 2021, the Company had amounts due from Stingray of approximately $
159,000
and $
88,000
, respectively for
shared revenue from music content provided to our customers from their library of produced and licensed karaoke content.
TRADE
The
Company has a music subscription sharing agreement with Stingray. For the three months ended December 31, 2021 and 2020 the Company received
music subscription revenue of approximately $
160,000
and $
188,000
, respectively. For the nine months ended December 31, 2021 and 2020
the Company received music subscription revenue of approximately $
384,000
and $
290,000
, respectively. These amounts were included as
a component of net sales in the accompanying condensed consolidated statements of income.
On
July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company's Canadian distributor and the
Company became the sole and exclusive distributor of the Company's products in Canada. As part of the agreement, the companies
executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo's karaoke inventory for approximately $
685,000
.
During the three and nine months ended December 31, 2021, there was a gain of approximately $
11,000
from Cosmo related to payments received
in Fiscal 2022 on prior year sales and the related receivable previously reversed and written off as initially deemed uncollectible.
The
Company incurred service expenses from SLE. The services from SLE were approximately $
91,000
for the three months ended December 31,
2021 and 2020. The services from SLE for the nine months ended December 31, 2021 and 2020 were approximately $
272,000
. These amounts
were included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.
NOTE
13 –
RESERVE FOR SALES RETURNS
A
return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are allowed
to return defective goods within a specified period of time after shipment (between 6 and 9 months). The Company does make occasional
exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions
as identified and management estimates.
The
Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability
for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets.
F-
17
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2021 and 2020
(Unaudited)
Changes
in the Company's reserve for sales returns are presented in the following table:
Nine
    Months Ended
December 31,
December 31,
2021
2020
Reserve for sales returns at beginning
    of the year
$
960,000
$
1,224,000
Provision for estimated sales returns
4,020,000
4,187,000
Sales returns received
(
2,058,000
)
(
2,445,000
)
Reserve for sales returns
    at end of the period
$
2,922,000
$
2,966,000
NOTE
14 –
REFUNDS DUE TO CUSTOMERS
As
of December 31, 2021 and March 31, 2021 the amount of refunds due to customers was approximately $
90,000
and $
145,000
, respectively,
primarily due to one customer for overstock returns.
NOTE
15 -
EMPLOYEE BENEFIT PLANS
The
Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee's
contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged
to operations for contributions to this plan and administrative costs during the three months ended both December 31, 2021 and 2020 totaled
approximately $
20,000
. The amounts charged to operations for contributions to this plan and administrative costs during the nine months
ended December 31, 2021 and 2020 totaled approximately $
55,000
and $
54,000
, respectively. The amounts are included as a component of
general and administrative expense in the accompanying condensed consolidated statements of income. The Company does not provide any
post-employment benefits to retirees.
NOTE
16 -
CONCENTRATIONS OF CREDIT AND SALES RISK
The
Company derives a majority of its revenues from retailers of products in the United States. The Company's allowance for doubtful
accounts is based upon management's estimates and historical experience and reflects the fact that accounts receivable are concentrated
with several large
customers.
At December 31, 2021, approximately
75
% of accounts receivable were due from four customers in North America that individually owed over
10% of total accounts receivable. At March 31, 2021,
70
% of accounts receivable were due from three customers in North America that individually
owed over 10% of total accounts receivable.
The
Company generates most of its revenue from retailers of products in the United States with a significant amount of sales concentrated
with several large customers the loss of which could have an adverse impact on the financial position of the Company. For the three months
ended December 31, 2021, there were five customers who individually accounted for 10% or more of the Company's net sales. Revenue
derived from these customers as a percentage of net sales were
25
%,
24
%,
17
%,
17
% and
10
% respectively. For the three months ended December
31, 2020, there were five customers who individually accounted for 10% or more of the Company's net sales. Revenue derived from
these customers as a percentage of net sales were
22
%,
22
%,
19
%,
12
% and
12
%, respectively.
For
the nine months ended December 31, 2021, there were four customers who individually accounted for 10% or more of the Company's
net sales. Revenue derived from these customers as a percentage of net sales were
37
%,
19
%,
16
% and
11
%, respectively. For the nine months
ended December 31, 2020, there were four customers who individually accounted for 10% or more of the Company's net sales. Revenue
derived from these customers as a percentage of net sales were
34
%,
19
%,
13
% and
13
%, respectively.
In
August 2021, the Company secured vendor invoice credits of approximately $
236,000
from a factory involved with a damaged goods incident
during fiscal 2020 which is reflected as gain from extinguishment of accounts payable in the condensed consolidated statement of income
for the nine months ended December 31, 2021.
F-
18
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of
The
Singing Machine Company, Inc.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of The Singing Machine Company, Inc. and Subsidiaries (the "Company")
as of March 31, 2021 and 2020, and the related consolidated statements of operations, cash flows, and shareholders' equity for
each of the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of March 31,
2021 and 2020, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical
Audit Matters
The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Variable
Consideration
As
described in Note 1 to the consolidated financial statements, the Company provides for variable consideration estimated at the expected
value or at the most likely amount depending on the type of consideration. Estimated amounts are included in the transaction price to
the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is resolved. Variable consideration primarily includes reserves for sales returns and accruals for promotional
incentives. The Company estimates variable consideration under its return programs for goods returned from the customer for various reasons,
whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.
The Company selectively participates in retailer's promotional incentives to maximize sales of the Company's products on
the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing allowances to their customers.
The Company's reserve for sales returns were approximately $1.0 million as of March 31, 2021. The Company's accrual for promotional
incentives was approximately $0.5 million as of March 31, 2021.
We
identified management's estimates for variable consideration as a critical audit matter due to the fact that there was significant
judgment required by management with respect to measurement uncertainty, as the calculation of these reserves and allowances includes
assumptions such as product sell through at retailers, as well historical product sales used to predict future sales in evaluating the
net realizable value of inventory returns. This in turn led to a high degree of auditor judgment, subjectivity and effort in applying
the procedures related to those assumptions.
F-
19
Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial
statements. We obtained an understanding and evaluated the design of controls over the Company's estimates for variable consideration.
Our procedures also included, among others,(1) recalculating the sales return reserve based on our review of returns received subsequent
to year end and the net realizable value of the returned goods based on historical margins and product sales projections; (2) recalculating
the Company's promotional incentive accrual based on specific customer arrangements and programs along with supporting documentation
from those customers; (3) performing a sensitivity analysis of the Company's variable consideration by recalculating using our
independent assumptions; (4)evaluating the Company's ability to accurately estimate the sales return reserve by comparing historically
recorded reserves to the actual amount that was ultimately claimed by the retailers; and (5) analyzing year over year trends in the reserve
and allowance in comparison with revenue trends to further evaluate reasonableness of the estimate and consistency with expectations.
Inventory
Valuation
As
described in Note 1 to the consolidated financial statements, the Company's inventories are stated at the lower of cost or net
realizable value. The Company maintains its inventory at the lower of cost or net realizable value based primarily on the age of the
inventory, estimated required sell-through time and whether items are selling below cost. In determining appropriate inventory reserve
percentages, the Company evaluates a number of factors including its historical write off experience, the specific products affected,
its historic recovery percentages on various methods of liquidations, as well as forecasts of future sales. Inventories, net, and the
inventory reserve at March 31, 2021, totaled $5.5 million and $0.6 million, respectively.
We
identified the valuation of inventory as a critical audit matter due to the significant judgments necessary to identify and record the
inventory at the lower of cost or net realizable value timely. This in turn led to a high degree of auditor judgement, subjectivity and
effort in, performing audit procedures to evaluate management's estimates of the net realizable value for the inventory on-hand
as of the reporting date.
Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. We obtained an understanding and evaluated the design of controls over the Company's inventory valuation.
Our procedures related to management's estimates of the net realizable value of the inventory on-hand as of the reporting date
included the following, among others, (1) evaluating of the appropriateness and consistency of management's methodology and assumptions
used in determining the inventory reserve; (2) obtaining the Company's inventory at the lower of cost or net realizable value calculation
and testing the mathematical accuracy; (3) testing the accuracy and completeness of the underlying data used in the calculation of the
Company's net realizable value; and (4) selecting a sample of inventory items, evaluating historical sales performance relative
to management's conclusions on the ability to sell through the inventory on-hand at the forecasted levels as well as testing sales
subsequent to year-end to evaluate the Company's ability to accurately estimate the inventory reserve relative to the net realizable
value.
We
have served as the Company's auditor since 2016.
/s/
    EisnerAmper LLP
EISNERAMPER
    LLP
Iselin,
    New Jersey
July
    14, 2021
F-
20
The
Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED
BALANCE SHEETS
March 31, 2021
March 31, 2020
Assets
Current Assets
Cash
$
396,579
$
345,200
Accounts receivable, net of allowances of $
138,580
and $
337,461
, respectively
2,298,922
1,860,500
Due from banks
4,557,120
2,388,438
Accounts receivable related party - Winglight Pacific, Ltd
-
100,000
Insurance claim receivable
-
1,268,463
Inventories, net
5,490,255
7,601,277
Prepaid expenses and other current assets
221,071
252,473
Deferred financing costs
15,359
3,333
Total Current Assets
12,979,306
13,819,684
Property and equipment, net
674,153
771,349
Deferred tax assets
887,164
1,285,721
Operating Leases - right of use assets
2,074,115
573,874
Other non-current assets
147,173
150,509
Total Assets
$
16,761,911
$
16,601,137
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable
$
2,461,103
$
5,041,610
Accrued expenses
1,659,499
1,529,168
Due to related party - Starlight Consumer Electronics Co., Ltd.
14,400
14,400
Due to related party - Starlight Electronics Co., Ltd
-
372,300
Due to related party - Starlight R&D, Ltd.
48,650
115,016
Revolving line of credit - Iron Horse Credit
64,915
-
Customer deposits
139,064
-
Refunds due to customers
145,408
806,475
Reserve for sales returns
960,000
1,224,000
Current portion of finance leases
2,546
14,953
Current portion of installment notes
68,332
63,098
Current portion of note payable - Paycheck Protection Program
172,685
-
Current portion of operating lease liabilities
794,938
321,389
Current portion of related party subordinated note payable - Starlight Marketing Development, Ltd.
502,659
-
Total Current Liabilities
7,034,199
9,502,409
Finance leases, net of current portion
-
2,550
Installment notes, net of current portion
212,949
283,193
Note payable - Payroll Protection Program, net of current portion
271,215
-
Operating lease liabilities, net of current portion
1,334,010
322,263
Subordinated related party debt - Starlight Marketing Development, Ltd., net of current portion
-
802,659
Total Liabilities
8,852,373
10,913,074
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $
1.00
par value;
1,000,000
shares authorized;
no
shares issued
    and outstanding
-
-
Common stock, Class A, $
0.01
par value;
100,000
shares authorized;
no
shares
    issued and outstanding
-
-
Common stock, Class B, $
0.01
par value;
100,000,000
shares authorized;
39,040,748
and
38,557,643
shares issued and outstanding, respectively
390,407
385,576
Additional paid-in capital
19,773,322
19,729,043
Accumulated deficit
(
12,254,191
)
(
14,426,556
)
Total Shareholders' Equity
7,909,538
5,688,063
Total Liabilities and Shareholders' Equity
$
16,761,911
$
16,601,137
See
notes to the consolidated financial statements
F-
21
The
Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Twelve Months Ended
March 31, 2021
March 31, 2020
Net Sales
$
45,802,574
$
38,500,570
Cost of Goods Sold
33,505,356
30,323,223
Gross Profit
12,297,218
8,177,347
Operating Expenses
Selling expenses
3,976,523
4,286,257
General and administrative expenses
6,531,932
6,564,422
Bad debt expense
65,055
302,333
Depreciation
298,357
269,107
Total Operating Expenses
10,871,867
11,422,119
Income (Loss) from Operations
1,425,351
(
3,244,772
)
Other Income (Expenses)
Gain from damaged goods insurance claim
1,067,829
-
Gain from settlement of accounts payable
390,000
-
Gain - related party
220,023
-
Interest expense
(
412,270
)
(
240,709
)
Finance costs
(
61,699
)
(
13,333
)
Total Other Income (Expenses), net
1,203,883
(
254,042
)
Income (Loss) Before Income Tax (Provision) Benefit
2,629,234
(
3,498,814
)
Income Tax (Provision) Benefit
(
456,869
)
641,814
Net Income (Loss)
$
2,172,365
$
(
2,857,000
)
Net Income (Loss) per Common Share
Basic
$
0.06
$
(
0.07
)
Diluted
$
0.06
$
(
0.07
)
Weighted Average Common and Common Equivalent Shares:
Basic
38,760,092
38,532,889
Diluted
39,128,650
38,532,889
See
notes to the consolidated financial statements
F-
22
The Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended
March 31, 2021
March 31, 2020
Cash flows from operating activities
Net Income (Loss)
$
2,172,365
$
(
2,857,000
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation
298,357
269,107
Amortization of deferred financing costs
61,699
13,333
Change in inventory reserve
202,339
180,000
Change in allowance for bad debts
(
198,881
)
286,365
Stock based compensation
22,710
32,508
Change in net deferred tax assets
398,557
(
527,355
)
Gain - related party
220,023
-
Gain from settlement of accounts payable
390,000
-
Changes in operating assets and liabilities:
Accounts receivable
(
239,541
)
(
377,461
)
Due from banks
(
2,168,682
)
(
151,659
)
Accounts receivable - related parties
100,000
188,941
Insurance receivable
1,268,463
(
1,268,463
)
Inventories
1,908,683
(
1,756,966
)
Prepaid expenses and other current assets
31,402
21,805
Other non-current assets
3,336
(
60,427
)
Accounts payable
(
3,190,530
)
4,198,902
Income Taxes Payable
Accrued expenses
130,331
704,433
Due to related parties
(
438,666
)
501,716
Customer deposits
139,064
-
Refunds due to customers
(
661,067
)
775,400
Reserve for sales returns
(
264,000
)
327,846
Operating lease liabilities, net of operating leases - right of use assets
(
14,945
)
(
56,260
)
Net cash provided by operating activities
171,017
444,765
Cash flows from investing activities
Purchase of property and equipment
(
201,161
)
(
517,546
)
Net cash used in investing activities
(
201,161
)
(
517,546
)
Cash flows from financing activities
Net Proceeds from revolving lines of credit
64,915
-
Proceeds from note payable - Payroll Protection Program
443,900
-
Payment of bank term note
-
(
125,000
)
Payment of deferred financing charges
(
73,725
)
-
Proceeds from installment notes
-
365,340
Payments on installment notes
(
65,010
)
(
19,049
)
Proceeds from subscription receivable
-
2,200
Proceeds from exercise of stock options
26,400
10,200
Payment on subordinated note payable - related party
(
300,000
)
(
12,708
)
Payments on finance leases
(
14,957
)
(
14,410
)
Net cash provided by financing activities
81,523
206,573
Net change in cash
51,379
133,792
Cash at beginning of year
345,200
211,408
Cash at end of year
$
396,579
$
345,200
Supplemental disclosures of cash flow information:
Cash paid for interest
$
461,080
$
179,811
Operating leases - right of use assets initial adoption
$
-
$
1,108,330
Operating lease liabilities - initial adoption
$
-
$
1,234,368
Operating leases - right of use assets and lease liabilities at inception of lease
$
2,184,105
$
-
See
notes to the consolidated financial statements
F-
23
The
Singing Machine Company, Inc. and Subsidiaries
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY
For
the twelve months ended March 31, 2021 and 2020
Preferred
    Stock
Common
    Stock
Additional
    Paid in
Subscriptions
Accumulated
Shares
Amount
Shares
Amount
Capital
Receivable
Deficit
Total
Balance
    at March 31, 2019
-
$
-
38,464,753
$
384,648
$
19,687,263
$
(
2,200
)
$
(
11,569,556
)
$
8,500,155
Net
    loss
(
2,857,000
)
(
2,857,000
)
Employee
    compensation-stock option
20,008
20,008
Collection
    of subscription receivable
2,200
2,200
Exercise
    of stock options
60,000
600
9,600
-
10,200
Issuance
    of common stock - directors
32,890
328
12,172
12,500
Balance
    at March 31, 2020
-
-
38,557,643
385,576
19,729,043
$
-
(
14,426,556
)
5,688,063
Net
    income
2,172,365
2,172,365
Employee
    compensation-stock option
10,210
10,210
Exercise
    of stock options
440,000
4,400
22,000
26,400
Issuance
    of common stock - directors
43,105
431
12,069
12,500
Balance
    at March 31, 2021
-
$
-
39,040,748
$
390,407
$
19,773,322
$
-
$
(
12,254,191
)
$
7,909,538
See
notes to the consolidated financial statements.
F-
24
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
NOTE
1 -
BASIS OF PRESENTATION
OVERVIEW
The
Singing Machine Company, Inc., a Delaware corporation (the "Company," "SMC", "The Singing Machine"),
and wholly-owned subsidiaries SMC (Comercial Offshore De Macau) Limitada ("Macau Subsidiary"), SMC Logistics, Inc. ("SMCL")
and SMC-Music, Inc. ("SMCM"), are primarily engaged in the development, marketing, and sale of consumer karaoke audio equipment,
accessories and musical recordings. The products are sold directly to distributors and retail customers.
The
Company is partially held by koncepts International Limited ("koncepts") who is major shareholder of the Company, owning
approximately
49
%
of our shares of common stock outstanding on a fully diluted basis as of March 31, 2021. The Company is also partly
held by Treasure Green Holdings Ltd. ("Treasure Green) who owns approximately
2
%
of our common stock. In total approximately
51
%
of the Company's shares of common stock on a fully diluted basis as of March 31, 2021 are owned by koncepts and Treasure Green.
koncepts and Treasure Green are owned by Fairy King Prawn Holdings Limited ("Fairy King"), an investment holding company
incorporated in the British Virgin Islands, principally owned by the Company's Chairman, Philip Lau.
We
do business with a number of entities that are principally owned by the Company's Chairman, Philip Lau, including Starlight R&D
Ltd ("SLRD"), Starlight Consumer Electronics USA, Inc., ("SCE"), Cosmo Communications Corporation of Canada,
Inc. ("Cosmo"), Winglight Pacific, Ltd ("Winglight") and Starlight Electronics Company Ltd ("SLE"),
among others.
NOTE
2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES
OF CONSOLIDATION
The
accompanying consolidated financial statements include the accounts of the Company, its Macau Subsidiary, SMCL, and SMCM. All inter-company
accounts and transactions have been eliminated in consolidation for all periods presented.
USE
OF ESTIMATES
The
Singing Machine makes estimates and assumptions in the ordinary course of business relating to sales returns and allowances, warranty
reserves, inventory reserves and reserves for promotional incentives that affect the reported amounts of assets and liabilities and of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. Future events and their effects cannot be determined with absolute certainty; therefore, the determination
of estimates requires the exercise of judgment. Historically, past changes to these estimates have not had a material impact on the Company's
financial statements. However, circumstances could change which may alter future expectations.
COLLECTIBILITY
OF ACCOUNTS RECEIVABLE
The
Singing Machine's allowance for doubtful accounts is based on management's estimates of the creditworthiness of its customers,
current economic conditions and historical information, and, in the opinion of management, is believed to be in an amount sufficient
to respond to normal business conditions. Management sets
100
%
reserves for customers in bankruptcy and other allowances based upon historical
collection experience. The Company is subject to chargebacks from customers for co-op program incentives, defective returns, return freight
and handling charges that are deducted from open invoices and reduce collectability of open invoices. Should business conditions deteriorate
or any major customer default on its obligations to the Company, this allowance may need to be significantly increased, which would have
a negative impact on operations.
FOREIGN
CURRENCY TRANSLATION
The
functional currency of the Macau Subsidiary is the Hong Kong dollar. The financial statements of the subsidiary are translated to U.S.
dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs,
and expenses. Net gains and losses resulting from foreign exchange transactions are recorded in the statement of operations and translations
would be recorded in a separate component of shareholders' equity. Any such amounts were not material during the periods presented.
Concentration
of Credit Risk
At
times, the Company maintains cash in United States bank accounts that are in excess of the Federal Deposit Insurance Corporation insured
amounts. The Company maintains cash balances in foreign financial institutions. The amounts at foreign financial institutions at March
31, 2021 and 2020 were approximately $
0.2
million.
F-
25
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist of accounts receivable.
INVENTORY
Inventories
are comprised primarily of electronic karaoke equipment, microphones and accessories, and are stated at the lower of cost or net realizable
value, as determined using the first in, first out method. Inventories also include an estimate for the net realizable value of expected
future inventory returns due to warranty and allowance programs. As of March 31, 2021 and March 31, 2020 the estimated amounts for these
future inventory returns were approximately $
1.0
million and $
1.4
million, respectively. The Company reduces inventory on hand to its
net realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below
its original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below
cost. Management regularly reviews the Company's investment in inventories for such declines in value. As of March 31, 2021 and
2020 the Company had inventory reserves of approximately and $
0.6
million and $
0.4
million, respectively for estimated excess and obsolete
inventory.
LONG-LIVED
ASSETS
The
Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the
carrying amounts may not be recoverable. If the undiscounted future cash flows attributable to the related assets are less than the carrying
amount, the carrying amounts are reduced to fair value and an impairment loss is recognized in accordance with Financial Accounting Standards
Board ("FASB") Accounting Standards Codification ("ASC") 360-10-05, "Accounting for the Impairment or Disposal
of Long-Lived Assets."
PROPERTY
AND EQUIPMENT
Property
and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred.
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using accelerated
and straight-line methods.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
We
follow FASB ASC 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments
for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the
amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.
The
carrying amounts of the Company's short-term financial instruments, including accounts receivable, accounts payable, accrued expenses,
customer deposits, refunds due to customers, and due to related parties approximates fair value due to the relatively short period to
maturity for these instruments. The carrying amounts on the notes payable, finance leases and installment notes approximate fair value
either due to the relatively short period to maturity or the related interest is accrued at a rate similar to market rates. The carrying
amounts on the revolving line of credit approximates fair value due the relatively short period to maturity and related interest accrued
at market rates.
REVENUE
RECOGNITION AND RESERVE FOR SALES RETURNS
The
Company recognizes revenue in accordance with FASB ASC 606, "Revenue from Contracts with Customers". All revenue is generated
from contracts with customers. The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an
amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange
for those goods. The Company determines revenue recognition utilizing the following five steps: (1) identification of the contract with
a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination
of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when,
or as, the Company transfers control of the product or service for each performance obligation.
The
Company selectively participates in a retailer's co-op promotion incentives to maximize sales of the Company's products on
the retail floor or to assist in developing consumer awareness of new product launches, by providing marketing fund allowances to our
customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair
value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers
are recorded as a reduction to net sales. Co-op promotion incentives were approximately $
2.0
million during fiscal 2021 and $
2.9
million
during fiscal 2020.
The
Company's contracts with customers consist of one performance obligation (the sale of the Company's products). The Company's
contracts have no financing elements, payment terms are less than 120 days and have no further contract asset or liability obligations
once control of goods is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive
for the sale of these goods.
Costs
incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in
general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions
are included in selling expenses in the accompanying consolidated statements of operations as our underlying customer agreements are
less than one year.
F-
26
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
The
Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke
hardware and the Company has no other material business segments (See NOTE 10 – SEGMENT INFORMATION).
While
the Company generally does not allow products to be returned, the Company does provide for variable consideration contingent upon the
occurrence of uncertain future events. Variable consideration is estimated at the expected value or at the most likely amount depending
on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant
reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
The Company estimates variable consideration under our return allowance programs for goods returned from the customer for various reasons,
whereby a sales return reserve is recorded based on historic return amounts, specific events as identified and management estimates.
The
Company's reserve for sales returns were approximately $
1.0
million and $
1.2
million as of March 31, 2021 and 2020, respectively.
During
fiscal 2021 and 2020 revenue was derived from five different major product lines. Disaggregated approximate revenue from these product
lines consisted of the following:
Revenue by Product Line
Fiscal Years Ended
Product Line
March 31, 2021
March 31, 2020
Karaoke Machines
$
34,700,000
$
32,600,000
Licensed Products
4,700,000
2,000,000
Microphones and Accessories
4,700,000
2,600,000
SMC Kids Toys
1,300,000
900,000
Music Subscriptions
400,000
400,000
Total Net Sales
$
45,800,000
$
38,500,000
SHIPPING
AND HANDLING COSTS
Shipping
and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to
fulfill the Company's promise to transfer the goods. For both Fiscal 2021 and 2020 shipping and handling expenses were approximately
$
1.2
million. These expenses are classified as a component of selling expenses in the accompanying consolidated statements of operations.
STOCK-BASED
COMPENSATION
The
Company follows the provisions of the FASB ASC 718-20, "Compensation – Stock Compensation Awards Classified as Equity".
ASC 718-20 requires all share-based payments to employees including grants of employee stock options, be measured at fair value and expensed
in the consolidated statement of operations over the service period (generally the vesting period). The Company uses the Black-Scholes
option valuation model to value stock options. Employee stock option compensation expense in fiscal years 2021 and 2020 includes the
estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for the entire portion
of the award. For the years ended March 31, 2021 and 2020, the stock option expense was approximately $
10,000
and $
20,000
, respectively.
The
fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the assumptions
outlined below. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected
term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees.
●
For
    the year ended March 31, 2021: expected dividend yield of
0
%
, risk-free interest rate of
.18%
, volatility of
146.7
%
and expected
    term of
three years
.
●
For
    the year ended March 31, 2020: expected dividend yield of
0
%
, risk-free interest rate of
2.08
%, volatility of
194.5
%
and expected
    term of
three years
.
The
Company's directors were issued shares of stock as compensation for their service. For the years ended March 31, 2021and 2020,
the stock compensation expense to directors was $
12,500
.
RESEARCH
AND DEVELOPMENT COSTS
All
research and development costs are charged to results of operations as incurred. These expenses are shown as a component of general and
administrative expenses in the consolidated statements of operations. For both years ended March 31, 2021 and 2020, these amounts totaled
approximately $
0.1
million.
F-
27
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
INCOME
TAXES
The
Company follows the provisions of FASB ASC 740 "Accounting for Income Taxes." Under the asset and liability method of ASC
740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized,
a valuation allowance is recognized.
The
Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed
tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and which is
reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the
largest benefit that has a
greater than 50%
likelihood of being realized upon ultimate resolution. As of March 31, 2021 and 2020 there
were no uncertain tax positions that resulted in any adjustment to the Company's provision for income taxes. The Company recognizes
interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities
recorded for accrued interest or penalties related to uncertain tax provisions.
COMPUTATION
OF EARNINGS (LOSS) PER SHARE
Computation
of dilutive shares for fiscal years ended March 31, 2021 and 2020 are as follows:
Fiscal year ended March 31, 2021
Fiscal year ended March 31, 2020
Basic weighted average common shares outstanding
38,760,092
38,532,889
Effect of dilutive stock options
368,558
-
Diluted weighted average of common shares outstanding
39,128,650
38,532,889
Basic
net income per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income
per share reflects the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options
and the proceeds thereof were used to purchase shares of Company common stock at the average market price during the period using the
treasury stock method.
For fiscal years ended March 31, 2021 and 2020, options to purchase approximately
750,000
shares and
approximately
2,230,000
shares of common stock have been excluded from diluted earnings per share as the result would have been anti-dilutive.
ADOPTION
OF NEW ACCOUNTING STANDARDS
In
December 2019, the FASB issued ASU 2019-12, "Income Taxes
(Topic 740).
Among several issues addressed in this ASU, there
was one area that may potentially affect the Company's calculations of interim income tax provision or benefit. The guidance specifies
that an entity should apply the annual effective tax rate to the year-to date income or loss as long as the tax benefits for any losses
are expected to be realized during the year or would be recognizable as a deferred tax asset at the end of the year eliminating the requirement
of a valuation allowance for that interim period. There is specific guidance for circumstances in which an entity incurs a loss on a
year-to-date basis that exceeds the anticipated ordinary loss for the year, which is an exception to the general guidance in Subtopic
740-270. The Company adopted the standard for the fiscal year ended March 31, 2021. The adoption of this standard did not have a material
effect on our consolidated financial statements.
RECENT
ACCOUNTING PRONOUNCEMENTS:
In
June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses"
(Topic 326)
. This ASU represents
a significant change in the current accounting model by requiring immediate recognition of management's estimates of current expected
credit losses. Under the prior model, losses were recognized only as they were incurred, which delayed recognition of expected losses
that might not yet have met the threshold of being probable. The amendments in ASU 2016-03 are effective for our fiscal year beginning
April 1, 2023 including interim periods within that fiscal year. Early adoption is permitted. We are currently evaluating the potential
effects of this updated guidance on our consolidated financial statements and related disclosures.
F-
28
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
NOTE
3 –
INVENTORIES, NET
Inventories
are comprised of the following components:
March 31,
March 31,
2021
2020
Finished Goods
$
5,400,000
$
6,600,000
Inventory in Transit
200,000
100,000
Estimated Amount of Future Returns
500,000
1,300,000
Subtotal
6,100,000
8,000,000
Less: Inventory Reserve
600,000
400,000
Total Inventories
$
5,500,000
$
7,600,000
NOTE
4 -
PROPERTY AND EQUIPMENT
A
summary of property and equipment is as follows:
USEFUL
MARCH 31,
MARCH 31,
LIFE
2021
2020
Computer and office equipment
5
-
7 years
$
400,000
$
400,000
Furniture and fixtures
7 years
100,000
100,000
Warehouse equipment
7 years
200,000
200,000
Molds and tooling
3
-
5 years
1,900,000
1,700,000
2,600,000
2,400,000
Less: Accumulated depreciation
1,900,000
1,600,000
$
700,000
$
800,000
Depreciation
expense for fiscal years ended 2021 and 2020 was approximately $
0.3
million.
NOTE
5 –
FINANCING
Intercreditor
Revolving Credit Facility Crestmark Bank and Iron Horse Credit
On
June 16, 2020, the Company executed an Intercreditor Revolving Credit Facility on eligible accounts receivable and inventory which replaced
the Company's previous revolving credit facility with PNC Bank which was terminated on June 16, 2020. The Company signed a two-year
Loan and Security Agreement for a $
10.0
million financing facility (decreasing to $
5.0
million in off-peak season) with Crestmark Bank
("Crestmark Facility") on eligible accounts receivable. The outstanding loan balance cannot exceed $
10.0
million during peak
selling season between July 1 and December 31and is reduced to a maximum of $
5.0
million between January 1 and July 31. Costs associated
with closing of the Intercreditor Revolving Credit Facility of approximately $
74,000
were deferred and are being amortized over one year.
During fiscal years ended March 31, 2021 and 2020 the Company incurred amortization expense of approximately $
62,000
and $
0
, respectively
associated with the amortization of deferred financing costs from the Intercreditor Revolving Credit Facility.
Under
the Crestmark Facility:
●
Advance
    rate shall not exceed 70% of Eligible Accounts Receivable aged less than 90 days from invoice date.
●
Crestmark
    shall maintain a base dilution reserve of 1% for each 1% of dilution over 15%.
●
Crestmark
    will implement an availability block of 20% of amounts due on Iron Horse Credit ("IHC") Intercreditor Revolving Credit
    Facility. See below
●
Mandatory
    pay-down of the loan to zero in January and February each year.
The
Crestmark Facility is secured by a perfected security interest in all assets including a first security interest in Accounts Receivable
and Inventory. Notwithstanding the foregoing, Crestmark shall subordinate its first security interest in inventory to IHC as agreed between
all parties. The Crestmark Facility bears interest at the Wall Street Journal Prime Rate plus
5.50
% with a floor of
8.75
%. Interest and
Maintenance Fees shall be calculated on the higher of the actual average monthly loan balance from the prior month or a minimum average
loan balance of $
2.0
million. For the fiscal years ended March 31, 2021 and 2020 the Company recorded interest expense under the Crestmark
Facility of approximately $
0.2
million and $
0.0
million, respectively. The Crestmark Facility expires on
June 15, 2022
. As of
March 31, 2021 and 2020 the Company had no outstanding balance on the Crestmark Facility. In addition, the Company executed a two-year
Loan and Security Agreement with Iron Horse Credit ("IHC Facility") for up to $
2.5
million in inventory financing.
F-
29
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
Under
the IHC Facility:
●
Advance
    rate shall not exceed the lower of (a) 70% of the inventory cost or (b) 85% of Net Orderly Liquidation Value (NOLV) as determined
    by an independent third-party appraiser engaged by IHC.
●
The
    Company must maintain a fixed charge coverage ratio test of 1:1 times measured on a rolling 12-month basis, defined as earnings before
    interest, taxes, depreciation and amortization ("EBITDA") less non-financed capital expenditures, cash dividends and
    distributions paid and cash taxes paid divided by the sum of interest and principal on all indebtedness. This financial covenant
    was waived for the first six months of the IHC Facility. As of March 31, 2021, the Company was in compliance with this covenant.
The
IHC Facility is secured by a perfected security interest in the Company's inventory. The IHC Facility bears interest at
1.292
%
per month or
15.51
% annually. Interest shall be calculated on the higher of the actual average monthly loan balance from the prior
month or a minimum average loan balance of $
1,000,000
. Interest expense under the IHC Facility for the fiscal years ended March 31,
2021 and 2020 was approximately $
0.1
million and $
0.0
million, respectively. The IHC Facility expires on
June 15, 2022
. As of March
31, 2021 and 2020, there was an outstanding balance of approximately $
65,000
and $
0
, respectively.
As
both the Crestmark Facility and the IHC Facility are set to expire on June 15, 2022, the Company expects to negotiate a
revision or extension of these debt facilities upon their maturity however, there can be no assurance that such revision or extension
will occur or at what terms.
Revolving
Credit Facility PNC Bank
On
June 22, 2017, the Company renewed the existing revolving credit facility (the "PNC Revolving Credit Facility") with PNC
Bank, National Association ("PNC") for an additional three years which was terminated on June 16, 2020 and replaced by the
Intercreditor Revolving Credit Facility with Crestmark and IHC. In September 2019, the Company defaulted on the PNC Revolving Credit
Facility due to non-compliance with the fixed charge coverage ratio requirement. In November 2019, the Company entered into a Forbearance
Agreement with PNC whereby PNC delayed taking action they would have been entitled to under a default through March 31, 2020. The Company
remained in default of the Forbearance Agreement up until termination of the Revolving Credit Facility on June 16, 2020 at which time
the Company executed the Intercreditor Revolving Credit Facility with Crestmark and IHC. As of March 31, 2021, and 2020 there were no
amounts due on the PNC Revolving Credit Facility. During the fiscal years ended March 31, 2021 and 2020 the Company incurred interest
expense of approximately $
0.0
million and $
0.1
million, respectively on amounts borrowed against the PNC Revolving Credit Facility.
Note
Payable Payroll Protection Plan
On
May 5, 2020, the Company received loan proceeds from Crestmark in the amount of approximately $
0.4
million under the Paycheck Protection
Program ("PPP"). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"),
which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying
business. The loans and accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including
payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced if the borrower
terminates employees or reduces salaries during the eligible period. The unforgiven portion of the PPP loan is payable over two years
at an interest rate of 1%, with a deferral of payments until a forgiveness application has been accepted and reviewed by the Small Business
Administration ("SBA"), and the SBA has provided Crestmark with the loan forgiveness amount. For the fiscal years ended March
31, 2021 and 2020 the Company incurred interest expense of approximately $
4,000
and $
0
, respectively. As of March 31, 2021 and 2020 there
was an outstanding balance on the PPP note payable of approximately $
0.4
million and $
0.0
million, respectively. In June 2021 the Company
received notification from the SBA that the loan had been forgiven in its entirety.
Installment
Notes Payable
On
June 18, 2019, the Company entered into a financing arrangement with Dimension Funding, LLC ("Dimension") to finance an entire
ERP System project over a term of
60
months at a cost of approximately $
365,000
. As of March 31, 2021, the Company executed three installment
notes totaling approximately $
0.4
million for payments issued to the project vendor. The installment notes have 60-month terms with interest
rates of
7.58
%,
8.55
% and
9.25
%, respectively. The installment notes are payable in monthly installments of $
7,459
which include principal
and interest. For both fiscal years ended March 31, 2021 and 2020 there was an outstanding balance on the installment notes of approximately
$
0.3
million. For the fiscal years ended March 31 2021 and 2020 the Company incurred interest expense of approximately $
26,000
and $
23,000
,
respectively.
Subordinated
Debt/Note Payable to Related Party
In
conjunction with the Crestmark Facility and IHC Facility there is a subordination agreement on related party debt due to Starlight
Marketing Development, Ltd. of approximately $
803,000
. On June 1, 2020 the remaining amount due on the subordinated debt of
approximately $
803,000
was converted to a note payable ("subordinated note payable") which bears interest at
6
%. As part
of the agreement to convert the subordinated debt to a note payable it was agreed that interest expense would be accrued at the same
6% interest rate on the unpaid principal retroactively from the date that previously scheduled payments had been missed. During the
fiscal years ended March 31, 2021 and 2020 interest expense was approximately $
47,000
and $
74,000
, respectively on the subordinated
note payable and the related party subordinated debt.
F-
30
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
In
connection with the Intercreditor Revolving Credit Facility the Company was required to subordinate the subordinated note payable.
Both the Crestmark Facility and IHC Facility agreements allow for the repayment of the subordinated note payable provided any
amounts borrowed against these credit facilities are paid in full, the Company maintains a 1 : 1 debt coverage ratio and exhibits
sufficient cash liquidity to support on-going operations. As of March 31, 2021 the Company met repayment requirements of the
Intercreditor Revolving Credit Facility to make principal payments totaling $
0.3
million. During the next twelve months the Company
intends on making additional payments and pay off the remaining balance outstanding provided the Company meets all repayment
requirements of the Crestmark Facility and IHC Facility agreements.
As
of March 31, 2021 and 2020 the remaining amount due on the note payable was approximately $
0.5
million and $
0.8
million, respectively.
The remaining amount due on the subordinated note payable was classified as a current liability as of March 31, 2021 on the consolidated
balance sheets.
NOTE
6 -
COMMITMENTS AND CONTINGENCIES
LEGAL
MATTERS
On
September 11, 2020 a Complaint was filed against the Company's SMCL subsidiary and various staffing agencies used by SMCL in a
Superior Court of San Bernadino County. The complaint alleges an employee of SMCL committed employment practice violations against a
former temporary employee not employed by SMC Logistics. Management has investigated the allegation and has engaged with an employment
attorney to defend the lawsuit. Management does not believe the claims have merit and does not believe the lawsuit will have a material
adverse effect on our financial results.
As
of this filing management is not aware of any other legal proceedings other than matters that arise in the ordinary course of business.
LEASES
The
Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the
Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation
to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date.
The liability is equal to the present value of the remaining minimum lease payments. The asset is based on the liability, subject to
certain adjustments. Operating leases result in straight-line expense (similar to operating leases under the prior accounting
standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting
standard). As the interest rate implicit in the Company's operating leases is not readily determinable, the Company utilizes
its incremental borrowing rate to discount the lease payments. The Company utilizes the implicit rate for its finance
leases.
Operating
Leases
We
have operating lease agreements for offices and a warehouse facility in Florida, California and Macau expiring in various years through
2024.
We
entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida
where we lease approximately
6,500
square feet of office space. The lease expires on
March 31, 2024
. The base rent payment is approximately
$
9,400
per month, subject to annual adjustments.
We
entered into an operating lease agreement, effective June 1, 2013, for
86,000
square feet of warehouse space in Ontario, California for
our logistics operations. On June 15, 2020 we executed a three-year lease extension which will expire on
August 31, 2023
. The renewal
base rent payment is $
65,300
per month with a 3% increase every 12 months for the remaining term of the extension.
We
entered into an operating lease agreement, effective May 1, 2018, for
424
square feet of office space in Macau. The rent is fixed at
approximately $
1,600
per month for the duration of the lease which expired on
April 30, 2021
. In May 2021
we executed a one-year lease
extension which will expire on April 30, 2022.
The lease provides for a renewal option to extend the lease. Rent expense on the new lease
is fixed at approximately $
1,700
per month for the duration of the lease term.
Lease
expense for our operating leases is recognized on a straight-line basis over the lease terms.
Finance
Leases
On
May 25, 2018 and June 4, 2018, we entered into two long-term capital leasing arrangements with Wells Fargo Equipment Finance ("Wells
Fargo") to finance the leasing of two used forklift vehicles in the amount of approximately $
44,000
. The leases require monthly
payments in the amount of $
1,279
per month over a total lease term of
36
months which commenced on June 1, 2018. The agreement has an
effective interest rate of
4.5
% and the Company has the option to purchase the equipment at the end of the lease term for one dollar.
As of March 31, 2021 and March 31, 2020, the remaining amounts due on these capital leasing arrangements was approximately $
3,000
and
$
18,000
, respectively.
F-
31
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
Supplemental
balance sheet information related to leases as of March 31, 2021 is as follows:
Assets:
Operating lease - right-of-use assets
$
2,074,115
Finance leases as a component of property and equipment, net of accumulated depreciation of $
18,136
25,390
Liabilities
Current
Current portion of operating leases
$
794,938
Current portion of finance leases
2,546
Noncurrent
Operating lease liabilities, net of current portion
$
1,334,010
Finance leases, net of current portion
-
Supplemental
    statement of operations information related to leases for the fiscal year ended March 31, 2021 is as follows:
Fiscal Year Ended
March 31, 2021
Operating lease expense as a component of general and administrative expenses
$
790,715
Finance lease cost
Depreciation of leased assets as a component of depreciation
$
6,218
Interest on lease liabilities as a component of interest expense
$
370
Supplemental cash flow information related to leases for the nine months ended March 31, 2021 is as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow paid for operating leases
$
805,662
Financing cash flow paid for finance leases
$
14,957
Lease term and Discount Rate
Weighted average remaining lease term (months)
30.0
Operating leases
2.0
Finance leases
Weighted average discount rate
Operating leases
6.25
%
Finance leases
3.68
%
Scheduled
maturities of operating and finance lease liabilities outstanding as of March 31, 2021 are as follows:
Fiscal Year
Operating Leases
Finance Leases
2022
$
682,373
$
2,558
2023
931,948
-
2024
674,488
-
2025
30,739
-
Total Minimum Future Payments
2,319,548
2,558
Less: Imputed Interest
190,600
12
Present Value of Lease Liabilities
$
2,128,948
$
2,546
NOTE
7 –
SHAREHOLDERS' EQUITY
COMMON
STOCK ISSUANCES
During
the years ended March 31, 2021 and 2020 the Company issued the following common stock shares:
Fiscal
2021:
On
October 30, 2020 the Company issued
440,000
shares of its common stock to three executive officers who exercised stock options at an
average exercise price of $
.06
per share.
On
November 6, 2020, the Company issued
43,105
shares of its common stock to our Board of Directors at $
0.29
per share, pursuant to our
annual director compensation plan for the fiscal year ending March 31, 2021.
Fiscal
2020:
On
August 30, 2019 the Company issued
60,000
shares of its common stock to a former director who exercised stock options at an average exercise
price of $
0.17
per share.
On
June 12, 2019, the Company issued
32,890
shares of its common stock to our Board of Directors at $
0.38
per share, pursuant to our annual
director compensation plan for the fiscal year ending March 31, 2020.
F-
32
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
STOCK
OPTIONS
On
June 1, 2001, the Board of Directors approved the 2001 Stock Option Plan ("Plan"), as amended. The Plan was developed to
provide a means whereby directors and selected employees, officers, consultants, and advisors of the Company may be granted incentive
or non-qualified stock options to purchase common stock of the Company. As of March 31, 2021, the Plan had expired and no shares were
available to be issued nor were any additional shares issued from the plan in Fiscal 2021 or 2020.
A
summary of stock option activity for each of the years presented is summarized below.
Fiscal 2021
Fiscal 2020
Number of Options
Weighted Average Exercise Price
Number of Options
Weighted Average Exercise Price
Stock Options:
Balance at beginning of year
2,230,000
$
0.26
2,210,000
$
0.25
Granted
100,000
$
0.29
100,000
$
0.38
Exercised
(
440,000
)
$
0.06
(
60,000
)
$
0.17
Forfeited
(
210,000
)
$
0.17
(
20,000
)
$
0.03
Balance at end of year *
1,680,000
$
0.32
2,230,000
$
0.26
Options exercisable at end of year
1,580,000
$
0.33
2,130,000
$
0.25
The
following table summarizes information about employee stock options outstanding at March 31, 2021:
Range of Exercise Price
Number
    Outstanding at March 31, 2021
Weighted
    Average Remaining Contractual Life
Weighted
    Average Exercise Price
Number
    Exercisable at March 31, 2021
Weighted
    Average Exercise Price
$
0.12
- $
0.38
1,130,000
4.0
$
0.24
1,030,000
$
0.23
$
0.47
- $
0.55
550,000
6.4
$
0.50
550,000
$
0.50
*
1,680,000
1,580,000
*
Total number of options outstanding as of March 31, 2021 includes
600,000
options issued to five current and two former directors as compensation and
1,040,000
options issued to key employees that were
not issued from the Plan.
NOTE
8 -
INCOME TAXES
The
Company files separate tax returns in the United States and in Macau. The Macau Subsidiary has received approval from the Macau government
to operate its business as a Macau Offshore Company (MOC), and is exempt from the Macau income tax. For the fiscal years ended March
31, 2021 and 2020, the Macau Subsidiary recorded no tax provision.
The
U.S. Federal net operating loss carryforward is subject to an IRS Section 382 limitation. As of March 31, 2021 and 2020, the Company
had net deferred tax assets of approximately $
0.9
million and $
1.3
million, respectively. For the fiscal year ended March 31, 2021
we determined our effective tax rate to be approximately
17.4
% and we recorded a tax provision of approximately $
0.5
million which
was net of a valuation reserve of approximately $
23,000
for deferred tax assets that will most likely expire prior to being
realized. For the fiscal year ended March 31, 2020 we determined our effective tax rate to be approximately
18.1
% and we recorded a
tax benefit of approximately $
0.6
million which was net of a valuation reserve of approximately $
88,000
for deferred tax assets that
will most likely expire prior to being realized. The Company also recorded an income tax receivable of approximately $
0.1
million
due to the availability of net operating loss carrybacks and alternative minimum tax credits that were realized for the year ended
March 31, 2021. The income tax receivable was included as a component of prepaid expenses and other current assets on the
accompanying consolidated balance sheet as of March 31, 2021.
F-
33
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
The
income tax provision (benefit) for federal, foreign, and state income taxes in the consolidated statements of operations consisted of
the following components for 2021 and 2020:
2021
2020
(Restated)
Income tax provision (benefit):
Current:
Federal
$
54,487
$
(
114,459
)
State
3,825
-
Total current Federal and State tax benefit
$
58,312
$
(
114,459
)
Deferred:
Federal
$
417,477
$
(
576,004
)
State
(
18,920
)
48,649
Total Deferred Federal and State
398,557
(
527,355
)
Total income tax (benefit) provision
$
456,869
$
(
641,814
)
The
United States and foreign components of income (loss) before income taxes are as follows:
2021
2020
United States
$
1,922,947
$
(
3,765,272
)
Foreign
706,287
266,458
$
2,629,234
$
(
3,498,814
)
The
actual tax provision differs from the "expected" tax for the years ended March 31, 2021 and 2020 (computed by applying the
U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows:
2021
2020
Expected tax provision (benefit)
$
551,982
$
(
734,751
)
State income taxes, net of Federal income tax provision (benefit)
128,699
(
175,245
)
Permanent differences
(
6,578
)
9,977
Tax rate differential on foreign earnings
(
108,690
)
-
Change in valuation allowance
(
65,193
)
87,842
Effect of IRC §382 on NOL
-
100,966
Tax rate differential on NOL carryback
-
16,263
Correction of state rate
-
83,803
Other
(
43,351
)
(
30,669
)
Actual tax provision (benefit)
$
456,869
$
(
641,814
)
F-
34
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONDENSED FINANCIAL STATEMENTS
March
31, 2021 and 2020
The
tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
2021
2020
NOL Federal Carryforward
$
246,769
$
312,430
State NOL Carryforward
194,388
157,967
General business credit
-
14,196
Inventory differences
348,921
303,529
Stock option compensation expense
115,730
128,220
Allowance for doubtful accounts
35,877
143,748
Insurance contingency
-
220,425
Reserve for estimated returns
111,887
112,537
Accrued vacation
13,186
42,928
Business interest deduction
-
55,978
1,066,758
1,491,958
Less: valuation allowance
22,649
87,842
1,044,109
1,404,116
Depreciable and amortizable assets
(
119,242
)
(
82,512
)
Prepaid expenses
(
37,703
)
(
35,883
)
Net deferred tax liabilities
(
156,945
)
(
118,395
)
Net deferred tax asset
$
887,164
$
1,285,721
The
Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative
evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess
the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences
and the length of carryback and carryforward periods available under the applicable federal and state laws; and the amount and timing
of future taxable income. At March 31, 2021, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP
and concluded that a $
22,649
valuation allowance against deferred tax assets was necessary. The recognition of the remaining net deferred
tax asset and corresponding tax benefit is based upon the Company's conclusions regarding, among other considerations, the Company's
history of earnings and projected earnings for fiscal year 2022 and in the future.
At
March 31, 2021, the Company has federal tax net operating loss carryforwards in the amount of approximately $
1.2
million that
begin to
expire in the year 2025.
The net operating loss carryforward is subject to an IRS Section 382 limitation that limited the amount available
to use beginning in Fiscal 2020 to approximately $
.15
million per year. In addition, the Company has state tax net operating loss carryforwards
of approximately $
3.6
million that will
begin to expire beginning in 2024.
NOTE
9 -
SEGMENT INFORMATION
The
Company operates in
one
segment. Sales by geographic region for the period presented are as follows:
FOR THE FISCAL YEARS ENDED
March 31,
March 31,
2021
2020
North America
$
44,200,000
$
36,000,000
Europe
1,200,000
1,700,000
Asia
-
300,000
Australia
400,000
500,000
$
45,800,000
$
38,500,000
The
geographic area of sales is based primarily on where the product was delivered.
NOTE
10 -
EMPLOYEE BENEFIT PLANS
The
Company has a 401(k) plan for its employees to which the Company makes contributions at rates dependent on the level of each employee's
contributions. Contributions made by the Company are limited to the maximum allowable for federal income tax purposes. The amounts charged
to operations for contributions to this plan and administrative costs during the fiscal years ended March 31, 2021 and 2020 totaled approximately
$
74,000
and $
63,000
, respectively. The amounts are included as a component of general and administrative expense in the accompanying
Consolidated Statements of Operations. The Company does not provide any post-employment benefits to retirees.
F-
35
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
NOTE
11 -
CONCENTRATIONS OF CREDIT RISK, CUSTOMERS, AND SUPPLIERS
The
Company derives a majority of its revenues from retailers in the United States. The Company's allowance for doubtful accounts is
based upon management's estimates and historical experience and reflects the fact that accounts receivable are concentrated with
several large customers. At March 31, 2021,
70
% of accounts receivable were due from four customers in North America that individually
owed over 10% of total accounts receivable. At March 31, 2020,
82
% of accounts receivable were due from four customers in North America
that individually owed over 10% of total accounts receivable.
Revenues
derived from three customers in 2021 and 2020 were
69
% and
64
% of total revenue, respectively. Revenues from customers representing greater
than 10% of total net sales were derived from top four customers in Fiscal 2021 and top three customers in Fiscal 2020 as percentage
of the net sales were
36
%,
20
%,
13
% and
12
%, and
41
%,
13
% and
10
%, respectively. The loss of any of these customers could have an adverse
impact on the Company.
The
Macau Subsidiary recorded net sales of approximately $
4.1
million and $
5.1
million in fiscal 2021 and 2020, respectively.
The
Company is dependent upon foreign companies for the manufacture of all its electronic products. The Company's arrangements with
manufacturers are subject to the risk of doing business abroad, such as import duties, trade restrictions, work stoppages, foreign currency
fluctuations, political instability, and other factors, which could have an adverse impact on its business. The Company believes that
the loss of any one or more of their suppliers would not have a long-term material adverse effect because other manufacturers with whom
the Company does business would be able to increase production to fulfill their requirements. However, the loss of certain suppliers
in the short-term could adversely affect business until alternative supply arrangements are secured.
During
fiscal years 2021 and 2020, manufacturers in the People's Republic of China accounted for
100
% of the Company's total product
purchases, including all of the Company's hardware purchases. In 2018
the U.S. government-imposed tariffs of up to 25% on certain
goods imported from China. All of our products are manufactured and imported from China however, only our microphones are currently subject
to a 7.5% tariff currently in place.
Should the government decide to expand its list of products to include our karaoke products that
would subject our products to tariffs in the future, there could be a significant increase in the landed cost of our products. If we
are unable to mitigate these increased costs through price increases, we could experience reductions in revenues, gross profit margin
and results from operations.
NOTE
12 –
RELATED PARTY TRANSACTIONS
DUE
TO/FROM RELATED PARTIES
On
March 31, 2021 the Company had approximately $
0.1
million due to related parties SLRD, SCE and SLE for services provided by these companies
and licensing fees for use of pedestal model molds and tools owned by them. On March 31, 2020, the Company had approximately $
0.5
million
due from related parties SLRD, SCE and SLE for goods and services sold to these companies.
TRADE
During
both Fiscal 2021 and 2020 the Company paid approximately $
0.4
million to SLE as reimbursement for engineering, quality control and other
administrative services performed on our behalf in China. These expense reimbursements were included in general and administrative expenses
on our consolidated statements of operations.
During
Fiscal 2021 and 2020 the Company sold approximately $
0.0
million and $
0.9
million, respectively of product to Winglight for direct shipment
to Cosmo at discounted pricing granted to major direct import customers shipped internationally with freight prepaid. These amounts were
included as a component of net sales in the accompanying consolidated statements of operations.
On
July 30, 2020, the Company and Cosmo reached agreement that Cosmo would no longer be the Company's Canadian distributor and the
Company became the sole and exclusive distributor of the Company's products in Canada. As part of the agreement, the companies
executed a Purchase and Sales agreement whereby the Company acquired all of Cosmo's karaoke inventory for approximately $
0.7
million.
During Fiscal 2021 there was a gain of approximately $
0.2
million from Cosmo related to payments received in Fiscal 2021 on prior year
sales and the related receivable previously reversed and written off as initially deemed uncollectible.
NOTE
13 –
RESERVE FOR SALES RETURNS
A
return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are either allowed
to return defective goods within a specified period of time after shipment (between 6 and 9 months) or granted a "defective allowance"
consisting of a fixed percentage (between 1% and 5%) off of invoice price in lieu of returning defective products. The Company does make
occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific
exceptions as identified and management estimates.
F-
36
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
The
Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability
for defective goods is included in the reserve for sales returns on the consolidated balance sheets.
Changes
in the Company's reserve for sales returns are presented in the following table:
Fiscal Year Ended
March 31,
March 31,
2021
2020
Reserve for sales returns at beginning of the fiscal year
$
1,224,000
$
896,000
Provision for estimated sales returns
3,881,000
5,771,000
Sales returns received
(
4,145,000
)
(
5,443,000
)
Reserve for sales returns at end of the year
$
960,000
$
1,224,000
NOTE
14 –
DAMAGED GOODS INCIDENT
In
August 2019, we received notification from a major customer that several containers of goods from multiple vessels purchased direct import
by the customer had arrived severely water damaged. Upon inspection of the damaged goods by insurance surveyors it was their opinion
that the source of the damage was due to moisture in the pallets provided by the factory which caused significant condensation and consequently
water damage to the merchandise. Actual damage to the goods occurred while the goods were in transit. We filed insurance claims on our
cargo insurance policy which provided for recovery of the sales value plus additional expenses associated with the damaged goods. For
the fiscal year ended March 31, 2020, the customer charged us back a total of approximately $
1.7
million for damaged goods consisting
of sales value of approximately $
1.6
million which was recorded as a reduction in net sales and approximately $
0.1
million in freight
charges which were expensed as a component of sales and marketing expense on the accompanying consolidated statements of operations.
For the fiscal year ended March 31, 2020, we incurred additional related expenses of approximately $
0.3
million that were included as
a component of general and administrative expenses on the accompanying consolidated statements of operations. We recorded a refund due
to the customer of approximately $
0.5
million which reflected approximately $
1.7
million of chargebacks by the customer less approximately
$
1.2
million the customer had deducted on payment remittances to the Company as of March 31, 2020. We recognized an insurance claim receivable
of approximately $
1.3
million (the approximate cost of the damaged goods destroyed) on the accompanying consolidated balance sheets for
March 31, 2020.
During
Fiscal 2021, we recovered approximately $
2.3
million in proceeds from the damaged goods insurance claim which consisted of $
1.6
million
of lost sales, approximately $
0.1
million in freight costs and approximately $
0.6
million in out-of-pocket expenses associated with the
incident. We recognized a one-time gain from the damaged goods claim settlement of approximately $
1.1
million (net of the insurance claim
receivable) as other income for the fiscal year ended March 31, 2021 on the accompanying statements of operations. In addition, we recognized
an additional one-time gain of approximately $
0.4
million as other income for the fiscal year ended March 31, 2021 on the accompanying
consolidated statements of operations due settlement of accounts payable by the factory that caused the damage.
NOTE
15 –
REFUNDS DUE TO CUSTOMERS
As
of March 31, 2021 and 2020 the amount of refunds due to customers was approximately $
0.1
million and $
0.8
million, respectively. All
refunds related to the damaged goods incident were settled with the customer from proceeds from the damaged goods insurance
settlement claim.
Refunds due to customers at March 31, 2021 were primarily due to amounts due to two major customers for
seasonal returns. Refunds due to customers at March 31, 2020 were primarily due to one major customer which reflects approximately
$
1.7
million of chargebacks primarily due to damaged goods received less approximately $
1.2
million that the customer had deducted
on payment remittances to the Company as of March 31, 2020. The remaining $
0.3
million was primarily due to amounts due to two major
customers for overstock returns.
F-
37
THE
SINGING MACHINE COMPANY, INC AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2021 and 2020
NOTE
16 –
RESERVES
Asset
reserves and allowances for years ended March 31, 2021 and 2020 are presented in the following table:
Balance at
Charged to
Reduction to
Credited to
Balance at
Beginning of
Costs and
Allowance for
Costs and
End of
Description
Year
Expenses
Write off
Expenses
Year
Year ended March 31, 2021
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts
$
337,461
$
16,086
$
(
227,184
)
$
12,217
$
138,580
Inventory reserve
$
434,000
$
688,200
$
(
485,861
)
$
-
$
636,339
Year ended March 31, 2020
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts
$
51,096
$
303,843
$
(
15,303
)
$
(
2,175
)
$
337,461
Inventory reserve
$
254,000
$
398,730
$
(
218,730
)
$
-
$
434,000
F-
38
Common
Stock
PROSPECTUS
AEGIS
CAPITAL CORP.
, 2022
F-
39
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth all costs and expenses paid or payable by us in connection with the sale of the securities being registered,
other than underwriting discounts and commissions. All amounts shown are estimates except for the Securities and Exchange Commission,
or SEC, registration fee, the Nasdaq listing fee, and the FINRA filing fee.
Expense
Amount
Paid or
to be Paid
SEC registration fee
$
472.77
FINRA filing fee
*
Nasdaq Listing Fee
*
Legal fees and expenses
*
Accounting fees and expenses
*
Miscellaneous expenses
*
Expense reimbursement to underwriters
*
Total
$
*
*
To be filed by amendment.
Item
14. Indemnification of Directors and Officers.
Our
certificate of incorporation, as amended, and bylaws empower us to indemnify our directors and officers, and our employees and other
agents, to the fullest extent permitted by DGCL. DGCL prohibits our amended and restated certificate of incorporation from limiting the
liability of our directors for the following:
●
any
    breach of the director's duty of loyalty to us or to our stockholders;
●
acts
    or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
●
liability
    for actions taken under Section 174 of DGCL; and
●
any
    transaction from which the director derived an improper personal benefit.
If
DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability
of our directors will be eliminated or limited to the fullest extent permitted by DGCL, as so amended. Our certificate of incorporation,
as amended, does not eliminate a director's duty of care and, in appropriate circumstances, equitable remedies, such as injunctive
or other forms of non-monetary relief, remain available under DGCL. This provision also does not affect a director's responsibilities
under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we are also empowered to
purchase insurance on behalf of any person whom we are required or permitted to indemnify.
The
limitation of liability and indemnification provisions provided in our certificate of incorporation and amended and bylaws, each as amended,
may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the
likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders.
Moreover, a stockholder's investment may be harmed to the extent we pay the costs of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming
any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation
that may result in claims for indemnification by any director or officer.
Item
15. Recent Sales of Unregistered Securities.
On
August 20, 2021, we issued 17,242 shares of common stock pursuant to section 4(a)(2) of the Securities Act, as compensation to two of
our directors Harvey Judkowitz and Joseph Kling.
II-
1
On
August 20, 2021, we issued 50,000 shares of our common stock pursuant to section 4(a)(2) of the Securities Act, as compensation to a
third party investment relations firm Three Rivers Business Consulting, LLC.
On
April 1, 2019 and 2020, we issued 6,578 and 8,621 shares of restricted stock, respectively, to Messiers. Judkowitz, Kling, Lau, Tung
Lau, and Hon as compensation pursuant to section 4(a)(2) of the Securities Act.
None
of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe that
the offers, sales, and issuances of the above securities were exempt from registration under the Securities Act by virtue of Section
4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering,
or in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act because the transactions were pursuant to compensatory
benefit plans or contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions
represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were placed upon the share certificates issued in these transactions. We believe that all
recipients had adequate information about us or had adequate access, through their relationships with us, to information about us.
Item
16. Exhibits and Financial Statement Schedules.
Exhibit
    No.
Description
1.1*
Form
    of Underwriting Agreement
3.1
Certificate of Incorporation of the Singing Machine filed with the Delaware Secretary of State on February 15, 1994 and amendments through April 15, 1999 (incorporated by reference to Exhibit 3.1 in the Singing Machine's registration statement on Form SB-2 filed with the SEC on March 7, 2000).
3.2
Certificate of Amendment of the Singing Machine filed with the Delaware Secretary of State on September 29, 2000 (incorporated by reference to Exhibit 3.1 in the Singing Machine's Quarterly Report on Form 10-QSB for the period ended September 30, 1999 filed with the SEC on November 14, 2000).
3.3
Certificates of Correction filed with the Delaware Secretary of State on March 29 and 30, 2001 correcting the Amendment to our Certificate of Incorporation dated April 20, 1998 (incorporated by reference to Exhibit 3.11 in the Singing Machine's registration statement on Form SB-2 filed with the SEC on April 11, 2000).
3.4
Amended By-Laws of the Singing Machine Singing Machine (incorporated by reference to Exhibit 3.14 in the Singing Machine's Annual Report on Form 10-KSB for the year ended March 31, 2001 filed with the SEC on June 29, 2001).
4.1
Form of Certificate Evidencing Shares of Common Stock (incorporated by reference to Exhibit 3.3. of the Singing Machine's registration statement on Form SB-2 filed with the SEC on March 7, 2000). File No. 333-57722).
5.1*
Opinion
    of Sichenzia Ross Ference LLP
10.1
Amended and Restated 1994 Management Stock Option Plan (incorporated by reference to Exhibit 10.6 to the Singing Machine's registration statement on Form SB-2 filed with the SEC on March 28, 2001, File No. 333-59684).
10.2
Year 2001 Stock Option Plan (incorporated by reference to Exhibit 10.1 of the Singing Machine's registration statement on Form S-8 filed with the SEC on September 13, 2002, File No. 333-99543).
10.5
Lease for Lakeside Plaza executive offices dated July 31, 2011 by and between The Singing Machine Company, Inc. and Lakeside IV, LLC (incorporated by reference to the Singing Machine's Current Report on Form 10-K filed with the SEC on June 29, 2011).
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10.6
Lease for Ontario, CA warehouse dated January 31, 2013 by and between The Singing Machine Company, Inc. and Majestic-CCCIV Partners (incorporated by reference to the Singing Machine's Current Report on Form 10-K filed with the SEC on June 28, 2013).
10.7
Executive Change of Control Agreement dated January 3, 2014 by and between The Singing Machine Company, Inc. and Gary Atkinson, Bernardo Melo, and Lionel Marquis ((incorporated by reference to the Singing Machine's Current Report on Form 10-K filed with the SEC on June 30, 2014).
10.8
First Amendment to Standard Industrial Lease dated June 15, 2020 (incorporated by reference to the Singing Machine's Annual Report on Form 10-K filed with the SEC on August 13, 2020).
10.9
Intercreditor Agreement with Crestmark and Iron Horse, dated June 11, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.10
Loan and Security Agreement with Crestmark, dated June 11, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.11
Schedule to Loan and Security Agreement with Crestmark, dated June 11, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.12
Promissory Note with Crestmark, dated June 11, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.13
Loan and Security Agreement with Iron Horse, dated June 11, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.14
Subordination Agreement with Starlight Marketing, dated June 11, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.15
Promissory Note with Starlight Marketing, dated June 1, 2020 (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on June 16, 2020).
10.16
Stock Redemption Agreement, dated as of August 5, 2021, by and among The Singing Machine Company, Inc., Koncepts International, Ltd. and Treasure Green Holdings, Ltd. (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.17
Form of Securities Purchase Agreement (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.18
Form of Common Stock Purchase Warrant (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.19
Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to the Singing Machine's Current Report on Form 8-K filed with the SEC on August 12, 2021).
21**
List of subsidiaries of The Singing Machine Company Inc.
23.1
Consent of EisnerAmper, LLP Independent Registered Public Accounting Firm
23.2
Consent
    of Sichenzia Ross Ference LLP (included in Exhibit 5.1)
24.1
Power of Attorney (included on signature page)
101
The
    following materials from the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021 formatted in XBRL:
    (i) Consolidated Balance Sheets as of March 31 2021 and 2020; (ii) Consolidated Statements of Operations for the two years ended
    March 31, 2021 and 2020; (iii) Consolidated Statements of Cash Flows for the two years ended March 31, 2021 and 2020; (iv) Consolidated
    Statements of Shareholders' Equity for the two years ended March 31, 2021 and 2020 and (v) Notes to the Consolidated Financial
    Statements.
107
Calculation of Registration Fee
*       To
be filed by amendment
**
    Filed herewith
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(b)
Financial statement schedule.
Schedules
not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
Item
17. Undertakings.
(a)
The
    undersigned registrant hereby undertakes:
(1)
To
    file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i)
To
    include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
To
    reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
    post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
    forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
    the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
    of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b)
    if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price
    set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii)
To
    include any material information with respect to the plan of distribution not previously disclosed in the registration statement
    or any material change to such information in the registration statement.
(2)
That,
    for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
    to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.
(3)
To
    remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
    termination of the offering.
(4)
That,
    for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i)
If
    the registrant is relying on Rule 430B (§230.430B of this chapter):
(A)
Each
    prospectus filed by the registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this chapter) shall be deemed to be part of
    the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B)
Each
    prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§230.424(b)(2), (b)(5), or (b)(7) of this chapter)
    as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
    (x) (§230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a)
    of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date
    such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering
    described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an
    underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the
    registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the
    initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part
    of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
    or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective
    date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
    statement or made in any such document immediately prior to such effective date; or
(ii)
If
    the registrant is subject to Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of
    a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
    filed in reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement
    as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
    that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration
    statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior
    to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the
    registration statement or made in any such document immediately prior to such date of first use.
(5)
That,
    for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
    of the securities:
The
    undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
    statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold
    to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and
    will be considered to offer or sell such securities to such purchaser:
(i)
Any
    preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
    424 (§230.424 of this chapter);
(ii)
Any
    free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
    the undersigned registrant;
(iii)
The
    portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
    or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any
    other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
Insofar
    as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
    persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
    of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that
    a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
    director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted
    by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in
    the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
    question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication
    of such issue
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SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of Florida, on the 13
th
day of
April, 2022.
THE
    SINGING MACHINE, INC.
By:
/s/
    Gary Atkinson
Gary
    Atkinson
Chief
    Executive Officer and Director (Principal Executive Officer)
By:
/s/
    Lionel Marquis
Lionel
    Marquis
Chief
    Financial Officer (Principal Financial Officer)
POWER
OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gary Atkinson and Lionel Marquis
and each of them, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his
or her name, place and stead, in any and all capacities, to sign any and all amendments (including post- effective amendments) to this
registration statement, and to sign any registration statement for the same offering covered by the registration statement that is to
be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post- effective amendments thereto, and
to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of them, his, hers or their substitute or substitutes, may
lawfully do or cause to be done or by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities
and on the dates indicated.
SIGNATURE
TITLE
DATE
/s/
    Gary Atkinson
Chief
Executive Officer and Director
April
                                            13, 2022
Gary Atkinson
/s/
    Lionel Marquis
Chief
    Financial Officer
April
                                            13, 2022
Lionel
    Marquis
/s/
    Harvey Judkowitz
Director
April
                                            13, 2022
Harvey
    Judkowitz
/s/
    Joseph Kling
Director
April
                                            13, 2022
Joseph
    Kling
/s/
Mathieu Peloquin
Director
April
                                            13, 2022
Mathieu Peloquin
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