EMPLOYMENT AGREEMENT

EMPLOYMENT  AGREEMENT  ("Agreement") made as of the 20th day of July 2006 by and
between  THE  SINGING  MACHINE  COMPANY  INC.  a Delaware  corporation  with its
principal  offices at 6601 Lyons Road,  Coconut Creek,  FL 33073 (the "Company")
and Mr.  Danny Zheng whose  residence  address is 17721 SW 7th Street,  Pembroke
Pines, FL 33029 (the "Employee").

The  Company  and the  Employee  hereby  agree as  follows  with  respect to the
Employee's relationship with the Company.

1.    Relationship Term:
The Company shall retain the Employee and the Employee  shall be retained by the
Company, on the terms and conditions hereinafter set forth, as an Employee for a
period (the "Employment  Period")  commencing on July 18, 2006 (the Commencement
Date), and ending on July 17, 2008 (the "Termination  Date"),  unless terminated
sooner  pursuant  to the  provisions  hereof.  During  the  entire  term of this
Agreement, the Employee shall be the Company's Chief Financial Officer

2.    Efforts on Company's Behalf:
The  Employee  shall  devote  all of his time and his best  efforts,  skills and
attention to the  business  and affairs of the Company,  shall serve the Company
faithfully  and  competently  and shall at all times act in the  Company's  best
interest.  The services to be rendered by Employee  during the term hereof shall
be as Chief Financial Officer, subject at all times to the direction and control
of the Chief  Executive  Officer.  Nothing  herein shall be construed to prevent
Employee from  investing in or  participating  in the management of companies or
other  entities,  which do not compete  with the Company or from  serving on the
board of directors of any other company.

3.    Compensation Package:
(a)   The Company shall pay to the Employee,  and the Employee agrees to accept,
      base salary of one hundred and sixty thousand dollars ($160,000) per year,
      payable in  accordance  with  normal  payroll  policies of the Company and
      shall be subject to all usual and customary payroll  deductions  including
      all applicable withholding taxes.

(b)   Any base  salary  increase  during  the  term  hereof  should  be the sole
      discretion  of the Company's  Board of Directors  based on Company and the
      Employee's performance.

4.    Bonus/Benefits Compensation:
(a)   At the sole discretion of the Company's  board of Directors,  the Employee
      may  receive a bonus (the  "profit  Bonus")  for each  fiscal  year of the
      Company ("Fiscal year") during the employment  period based on Company and
      the Employee's performance.

(b)   The Company shall pay to the employee a car allowance of $ 500 per month.

<PAGE>

5.    Benefit Plans:
(a)   The Employee shall be entitled to participation  in all  Company-sponsored
      benefit plans in accordance with terms, conditions and costs with usual or
      customary Company policy.

(b)   In the event that the Company purchases insurance on the life of Employee,
      Employee shall be entitled to purchase said policy from the Company in the
      event of his  termination,  pursuant  to the terms  hereof,  for an amount
      equal to the cash surrender value thereof.

6.    Business Expenses:
The Employee shall be reimbursed for all usual and customary  expenses  incurred
on behalf of the Company,  in accordance with Company  practices and procedures;
provided  that  each  such  expense  is of a  nature  qualifying  it as a proper
deduction  on the Federal  income tax returns of the  Company,  exclusive of any
limitation rules as a business expense of the Company and not as compensation to
Employee,  and Employee furnishes the Company with adequate documentary evidence
to substantiate such expenses.

7.    Vacation:
Employee  shall be entitled  to a paid  vacation of three weeks per each year of
this Agreement.  Such vacation time allowance shall cumulatively accrue, and any
unused  vacation  time for  each  year can be used in the  following  year.  The
Company shall make all reasonable efforts to enable Employee to use his vacation
leave each year.  Employee  shall also be  entitled  to all paid  holidays  made
generally available by the Company to its employees.

8.    Death or Disability:
(a)   Notwithstanding  anything to the  contrary  contained in Paragraph 1 above
      if, during the term hereof,  the Employee suffers a disability (as defined
      below) the Company  shall,  subject to the  provisions  of Paragraph 8 (c)
      hereof,  continue to pay Employee the compensation provided in Paragraph 3
      hereof during the period of his disability;  provided,  however,  that, in
      the event  Employee is  disabled  for a  continuous  period of ninety (90)
      consecutive  days or for shorter periods  aggregating  ninety (90) days in
      any  twelve-month  period that the Employee is incapable of  substantially
      fulfilling the duties set forth in Section 2 or hereafter  assigned to him
      by the Chief Executive  Officer or Board of Directors because of physical,
      mental or emotional incapacity resulting from injury,  sickness or disease
      as determined by an independent  physician agreed upon by both the Company
      and the  Employee,  the  Company  may,  at its  election,  terminate  this
      Agreement.  In the event of such termination,  the Company, shall continue
      to be obligated to pay Employee his compensation  earned up to the date of
      termination.

(b)   As  used  in  this  Agreement,   the  term  "disability"  shall  mean  the
      substantial  inability  of  Employee  to  perform  his  duties  under this
      Agreement as determined by an  independent  physician  agreed upon by both
      the Company and the Employee.

(c)   In the event that  employment  ceases prior to the end of a calendar month
      as a result of his death or  disability  or in the event of a  termination
      described  in Paragraph  10 below,  the Company  shall pay Employee or his
      legal  representatives,  as the  case may be,  in  addition  to any  other
      amounts payable by the Company  hereunder,  a lump cash sum which shall in
      no event be less than the salary  plus any bonus to which  Employee  would
      have been  entitled,  had he continued to be  affiliated  with the Company
      until  the  end  of  the  calendar  month  during  which  his  affiliation
      terminates.


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<PAGE>

9.    Termination:
(a)   Termination  Without Cause by the Company:  The Company may terminate this
      Agreement  without  cause at anytime upon written  notice to the Employee,
      whereupon this Agreement  shall  terminate on the date specified  therein.
      The  Company  shall  pay the  Employee  a  severance  amount  equal to the
      remaining  amount of Employee's  Base Salary left on this  agreement  (the
      "Severance Amount"), payable in full within thirty (30) days from the date
      specified therein  (hereinafter,  the "Severance Payout Period") and shall
      be  subject  to all  usual and  customary  payroll  deductions,  including
      applicable withholding taxes. At the same time, all the options granted to
      Employee shall be vested immediately upon termination without causes.

(b)   Termination  Without  Cause by the Employee:  Employee may terminate  this
      agreement for any reason upon the giving of 60 days advance  notice.  Upon
      termination  by Employee,  the Company shall be obligated only to continue
      to pay to Employee  his Base  Salary  earned up to the  effective  date of
      termination.  All of Employees  unvested  options  shall be forfeited  and
      Employee  shall abide by the  termination  Without  Cause  non-competition
      agreements set forth herein.

(c)   Termination  for  Cause:  The  Company  may  immediately   terminate  this
      Agreement at any time during the Employment Period for "cause". In such an
      event of  termination,  the Company shall be obligated only to continue to
      pay to  Employee  his  Base  Salary  earned  up to the  effective  date of
      termination. "Cause" for purposes hereof shall mean a breach of any of the
      provisions of this Agreement by Employee,  wilful misconduct or neglect of
      duties,  conviction  of any  criminal  offence  involving a felony,  gross
      negligence,  refusal  or  failure  to  follow  the  legal  and  legitimate
      directives  of the  Board of  Directors,  malfeasance  or a crime of moral
      turpitude.

(d)   Continuing  Effect:  Notwithstanding  any  termination  of the Employee as
      provided in this Section 9 or otherwise,  the provisions of Section 11 and
      12 shall  remain in full  force and  effect  and shall be  binding  on the
      Employee and his legal representatives, successors and assigns.

10.   Consolidation, Merger or Sale of Assets:
Nothing in this  Agreement  shall  preclude  the Company from  consolidating  or
merging into or with, or transferring all or substantially all of its assets to,
another  corporation,  which assumes this Agreement,  and all obligations of the
Company hereunder,  in writing. Upon such consolidation,  merger, or transfer of
assets and  assumption,  the term "the Company" as used herein,  shall mean such
other corporation and this Agreement shall continue in full force and effect.

11.   Restrictive Covenants:
(a)   The  Employee  acknowledges  that his services  and  responsibilities  are
      unique in character  and are of  particular  significance  to the Company,
      that the  Company  is a  competitive  business  and  that  the  Employee's
      continued and exclusive  service to the Company under this Agreement is of
      a  high  degree  of  importance  to the  Company.  Therefore,  during  the
      Employment  Period and for the applicable  periods  specified below (each,
      the "Noncompete Period"),  the Employee shall not, directly or indirectly,
      as owner, partner,  joint venture,  Employee,  Broker,  Corporate Officer,
      Agent,  Principal,  Licensor,  Shareholder unless as owner of no more than
      five  percent  (5%) of the issued and  outstanding  capital  stock of such
      entity if such stock is traded on a major securities  exchange,  or in any
      other his capacity  whatsoever,  engage in or have any connection with any
      business  which  is  competitive  with the  Company,  and  which  operates
      anywhere  in the  world  on the  effective  date  of  termination  of this
      Agreement.


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<PAGE>

         Reason for Termination             Non-compete Period
         ----------------------             ------------------

         Termination without cause          for balance of contract term
         Termination for cause              2 years

(b)   For the  purposes  of this  Agreement,  a  business  will be  deemed to be
      competitive  with the Company if it is an  importer/re-seller  of consumer
      products including hardware and/or software,  which is in the same product
      categories as those sold by the Company in the United States mass merchant
      marketplace.

(c)   In addition to the  restrictions  set forth in Section  11(a),  during the
      Noncompete period, the Employee shall not:

i.    directly  or  indirectly,  by  initiating  contact  or  otherwise,  induce
      influence,  combine or  conspire  with,  or attempt to induce,  influence,
      combine or conspire with, any of the officers,  employees or agents of the
      Company to terminate his, her or its employment or relationship with or to
      compete against the company; or
ii.   directly or  indirectly,  by initiating  contact or  otherwise,  divert or
      attempt to divert any or all of any customers' or suppliers' business with
      the Company.

(d)   If, in any  judicial  proceedings,  a court shall refuse to enforce any of
      the covenants included in this Section 11 due to extent,  geographic scope
      or duration thereof, or otherwise,  then such unenforceable covenant shall
      be amended to relate to such lesser extent,  geographic  scope or duration
      and this  Section 11 shall be  enforceable,  as amended.  In the event the
      Company should bring any legal action or other proceeding against Employee
      for  enforcement  of this  Agreement,  the  calculation  of the Noncompete
      Period shall not include the period of time  commencing with the filing of
      legal action or other  proceeding  to enforce this  Agreement  through the
      date of final judgement or final resolution, including all appeals, if any
      of such legal action or other  proceeding  unless the Company is receiving
      the practical  benefits of this Section 11 during such time. The existence
      of any  claim or cause of  action  by the  Employee  against  the  Company
      predicated on this  Agreement or otherwise  shall not constitute a defence
      to the enforcement by the Company of these covenants.

(e)   The  Employee  has  carefully  considered  the  nature  and  extent of the
      restrictions upon the Employee and the rights and remedies  conferred upon
      the Company  under this Section 11, and the Employee  hereby  acknowledges
      that the  restrictions on his activity as contained  herein are reasonably
      required for the Company's  protection,  would not operate as a bar to the
      Employee's  sole means of  support,  are fully  required  to  protect  the
      legitimate  interests  of the  Company,  do not  confer a  benefit  on the
      Company disproportionate to the detriment to the Employee and are material
      inducements  to the  Company to enter into this  Agreement.  The  Employee
      hereby  agrees  that  in the  event  of a  violation  by his of any of the
      provisions  of this  Agreement,  the Company will be entitled to institute
      and  prosecute  proceedings  at law or in equity to  obtain  damages  with
      respect to such  violation or to enforce the specific  performance of this
      Agreement by the Employee or to enjoin the Employee  from  engaging in any
      activity in violation hereof.


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<PAGE>

12.   Treatment and Ownership of Confidential Information:
The Employee acknowledges that during his employment he will learn and will have
access to Confidential  Information  regarding the Company. For purposes of this
Agreement,  the term  "Confidential"  acquires  or  develops or has made use of,
acquires or  develops  or has made use of,  acquires or develops or has made use
of,  acquired or developed  in whole or in part in  connection  with  Employee's
employment  with  the  Company  (whether  before  or  after  the  date  of  this
Agreement),  including any financial data, client names and addresses,  employee
data, discoveries, processes, formulas, inventions, know-how, techniques and any
other  materials or  information  related to the business or  activities  of the
Company which are not generally known to others engaged in similar businesses or
activities.  The Employee acknowledges that such Confidential  Information as is
acquired and used by the Company or its  affiliates  is a special,  valuable and
unique asset.  The Employee will not,  except in connection with and as required
by his  performance of his duties under this  Agreement,  for any reason use for
his own  benefit,  or the  benefit of any person or entity with which she may be
associated,  or disclose any such Confidential  Information to any person, firm,
corporation,  association  or other entity for any reason or purpose  whatsoever
without the prior written  consent of the Company's  Board of Directors,  unless
such Confidential Information previously shall be and shall remain the exclusive
property of the Company. The Employee agrees to promptly disclose to the Company
all  Confidential  Information  developed  in whole  or in part by the  Employee
within  the scope of this  Agreement  and to assign to the  Company  any  right,
title, or interest the Employee may have in such Confidential  Information.  The
Employee agrees to turn over to the Company all physical  manifestations  of the
Confidential  Information  in his possession or under his control at the request
of the Company.

13.   Employee Representations and Warranties:
The Employee represents and warrants that he is not a party to, or bound by, any
other his employment agreements. The Employee further represents and warrants to
the  Company  that he is free of known  physical  and mental  disabilities  that
would,  with or without  reasonable  accommodations  that would  create an undue
hardship  for the  Company,  impair his  performance  hereunder  and he is fully
empowered to enter and perform his  obligations  under this  Agreement.  Without
limiting the generality of the foregoing,  the Employee  represents and warrants
that he is under no  restrictive  covenants to any person or entity that will be
violated by his entering into and performing this Agreement.

14.   Arbitration:
Except as provided in sections 11 and 24 hereof,  any  dispute,  controversy  or
claim  arising  under,  out of,  in  connection  with,  or in  relation  to this
Agreement,  or  the  breach,  termination,  validity  or  enforceability  of any
provision  of this  Agreement,  will be settled  arbitrator  (the  "Arbitrator")
chosen according to the rules of the American Arbitration Association's National
Rules for Resolution of Employment  Disputes,  with the additional  proviso that
all steps necessary to insure the  confidentiality  of the  proceedings  will be
added to the basic rules.  Unless otherwise mutually agreed upon by the parties,
the  arbitration  hearings  shall be held in the Broward  County,  Florida.  The
parties  hereby agree that the  Arbitrator  has full power and authority to hear
and  determine  the  controversy  and make and award in writing in the form of a
reasoned  judicial  opinion.  The parties  hereby  stipulate in advance that the
award is binding and final.  The parties  hereto also agree that  judgement upon
the  arbitration  award may be entered  in any  federal  or state  court  having
jurisdiction  thereof.  Each party is  responsible  for their own legal fees and
out-of-pocket expenses.


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<PAGE>

15.   Severability:
Invalidity or  unenforceability  of any provisions hereof shall in no way affect
the validity or enforceability of any other provisions.

16.   Terminology:
All personal  pronouns used in this  Agreement,  whether used in the  masculine,
feminine or neuter gender,  shall include all other genders;  the singular shall
include  the plural and vice versa.  Titles of  Paragraphs  are for  convenience
only, and neither limit nor amplify the provisions of the Agreement itself.

17.   Governing Law:
This  Agreement  shall be governed and construed in accordance  with the laws of
the State of Florida.

18.   Entire Agreement:
This Agreement contains the entire understanding between the parties and may not
be changed  or  modified  except by an  Agreement  in writing  signed by all the
parties.

19.   Notice:
Any notice required or permitted to be delivered hereunder shall be deemed to be
delivered when deposited in the United States mail, postage prepaid,  registered
or certified  mail,  return receipt  requested,  addressed to the parties at the
addresses  first stated herein,  or to such other address as either party hereto
shall  from time to time  designate  to the other  party by notice in writing as
provided herein.

20.   No Publicity:
The Employee agrees that she will not engage in any conduct that is injurious to
the Company's reputation and interests,  including, but not limited to, publicly
disparaging  (or  inducing  or  encouraging  others to publicly  disparage)  the
Company or any of the Company's directors, officers, employees or agent.

21.   Co-operation:
Employee agrees to co-operate fully with the Company by providing information to
the Company and its  representatives,  agents or advisors regarding any business
matters  with which the Employee  may become  involved  with during the terms of
this Agreement and to co-operate  fully in the event of any litigation or legal,
administrative or regulatory proceeding by providing information,  including but
not limited to, providing  truthful  testimony at any legal,  administrative  or
regulatory proceeding,  regarding any facts or information of which Employee has
knowledge and/or any business matters of which Employee has or had knowledge.


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<PAGE>

22.   Assign ability:
The rights and  obligations of the Company under this Agreement shall insure the
benefit of and be  binding  upon the  successors  and  assigns  of the  Company,
provided that such successor or assign shall acquire all or substantially all of
the assets and  business  of the Company  and,  further  provided  that any such
assignment  shall not release the Company from its  obligations  to the Employee
hereunder.  The employee's rights and obligations  hereunder may not be assigned
or alienated without the prior written consent of the Company and any attempt to
do so by the Employee will be void.

23.   Injunctive Relief:
The Employee  acknowledges  and agrees that in the event  Employee  violates any
term,  covenant or provision of Section 11 of this  Agreement,  the Company will
suffer  irreparable  harm for which the Company will have no adequate  remedy at
law. The Employee agrees that the Company shall be entitled to injunctive relief
for any breach or violation of Section 11 of this  Agreement,  including but not
limited to the issuance of an ex-parte  preliminary  injunction,  in addition to
and not in limitation of any and all other remedies  available to the Company at
law or in equity.

24.   Indemnification/Offsets:
The Company agrees that the Employee shall be covered under applicable Directors
and Officers  insurance  policies as may be purchased from time to time. As such
the Company  agrees to indemnify  and hold  Employee  harmless  from any and all
claims  that arise as a result of the  dutiful  performance  by  Employee of his
obligations hereunder. Further, the Employee agrees to hold the Company harmless
and  indemnify  the Company from and against any claims that may be made against
Company as a result of the Employee's negligent or wilful conduct. The existence
of any claim or cause of action of the  Employee  against the  Company,  whether
predicated on this Agreement or otherwise, shall not constitute a defence to the
enforcement by the Company of this Agreement.

25.   Employee Acknowledgement:
The Employee  acknowledges and agrees that Employee has read and understands the
terms set forth in this Agreement and has been given a reasonable opportunity to
consult with an attorney prior to execution of this Agreement.

26.   Other Instruments:
The parties  hereby  covenant  and agree that they will  execute  such other and
further  instruments and documents as are or may become  necessary or convenient
to effectuate and carry out the terms of this Agreement.

27.   Counterparts:
This  Agreement  may be  executed  in any number of  counterparts  and each such
counterpart shall for all purposes be deemed an original.


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<PAGE>

IN WITNESS  WHEREOF,  this Agreement has been duly signed by the Employee and on
behalf of the Company on the day and year first above written.


THE SINGING MACHINE COMPANY INC


/s/ Yi Ping Chan
--------------------------------
By: Yi Ping Chan
    Interim Chief Executive Officer


EMPLOYEE


/s/ Danny Zheng
--------------------------------
Danny Zheng


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