Document:

COLLATERAL SECURITY AGREEMENT

      THIS COLLATERAL SECURITY AGREEMENT,  dated as of March 8, 2006, is entered
into by and between THE SINGING MACHINE  COMPANY,  INC., a Delaware  corporation
located at 6601 Lyons Road,  Building  A-7  Coconut  Creek,  FL 33073,  USA (the
"Borrower"),  and EVER SOLID LIMITED, a Hong Kong registered company, located at
Shing Dao  Industrial  Bldg.,  F/5,  232  Aberdeen  Main Road,  Hong Kong or its
successors or assigns (as used herein,  each such signatory or their  successors
or assigns is referred to as the "Lender" or a "Lender").

                              W I T N E S S E T H:

      WHEREAS,  the Borrower and the Lender are  executing and  delivering  this
Agreement in accordance  with and in reliance upon the exemption from securities
registration for offers and sales to accredited investors afforded,  inter alia,
by Rule 506 under  Regulation D  ("Regulation  D") as  promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act; and

      WHEREAS,   In  connection  with  the  Lender's  intent  to  help  Borrower
facilitate its faithful  performance under that certain Stock Purchase Agreement
dated February 21, 2006 (hereafter "SPA") by and between Company on the one hand
and koncepts International, Limited ("koncepts") on the other, Lender has agreed
to lend funds to the Borrower,  subject to and upon the terms and  conditions of
this Agreement the repayment of which will be represented by a Senior Promissory
Note of the Borrower  ("Senior Note"),  on the terms and conditions  referred to
herein; and

      NOW THEREFORE,  in  consideration of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby  acknowledged,  the parties agree as follows:

1. AGREEMENT TO LEND:

      Subject to the terms and  conditions of this  Agreement,  the Senior Note,
and the Bridge Loan  Agreement of even date  herewith,  Lender  hereby agrees to
loan to the Borrower the principal amount of $2,000,000.00 US Dollars (the "Loan
Amount or Aggregate  Loan  Amount") to be used  exclusively  to redeem  existing
outstanding Debentures held by Omicron Master Trust, SF Capital Partners,  Ltd.,
Bristol  Investment Fund, Ltd.,  Ascend Offshore Fund, Ltd., Ascend Partners LP,
and Ascend  Partners  Sapient LP  (collectively  the "Sub-Debt  Holders") in the
original aggregate  principal amount of $4,000,000.  The obligation to repay the
loan shall be evidenced by the Borrower's execution of the Senior Note.

2. TERMS OF REPAYMENT:

      The Senior Note shall bear interest absent an event of default at the rate
of eight  percent  (8%) per  annum,  commencing  as of the date on which  Lender
advances funds to Company pursuant to the Senior Note, which interest, absent an
event of default,  shall all be due upon maturity of the Senior Note as provided
for  therein.  If  shareholder  approval for  completion  of the SPA is granted,
koncepts shall be entitled to deliver the original Senior Note marked "Paid" and
written satisfaction of this Bridge Loan Agreement to Company as payment for Two
Million  ($2,000,000  USD) dollars of koncepts' total Three Million  ($3,000,000
USD)  dollars  purchase  consideration  under the SPA thereby  reducing the cash
required  at  closing  under  the  terms  of  the  SPA to  One  Million  dollars
($1,000,000 USD). Notwithstanding the foregoing, at such time Company will still
owe Lender all amounts of accrued but unpaid  interest  and other fees,  if any,
owing under the terms of the Senior Note, and will concurrently pay such accrued
but  unpaid  interest  and  fees,  if any,  to  Lender  in  cash.  If,  however,
shareholder  approval is not  granted,  the Senior Note shall  mature as per its
terms on or before September 8, 2006.

3. SECURITY:

      The Bridge Loan and Senior Note  described  above is secured as more fully
set forth herein.

4. SECURITY INTEREST:

      4.1 GRANT OF SECURITY  INTEREST:  Borrower  grants to Lender a  continuing
consensual  and  perfected  security  interest in, and lien on, all of Borrowers
assets both foreign and domestic of whatever form or character (collectively the
"Collateral")  to secure the payment of the  indebtedness and the performance of
all of Borrower's obligations under this Agreement and the Collateral Documents.

      Borrower  acknowledges  that nothing  contained  in this  Agreement or any
other  agreement will be (i) construed as an agreement by Lender to resort to or
look to a particular type of the Collateral as security for the repayment of the
indebtedness or (ii) deemed to limit or reduce any security  interest in or lien
upon any portion of the Collateral for the indebtedness.

      4.2 PERFECTION OF SECURITY INTEREST:

      (a) FILING OF FINANCING  STATEMENT:  The Borrower  irrevocably  authorizes
Lender  at any  time  and  from  time  to time to  file  any  initial  financing
statements  and  amendments  thereto  describing  the  Collateral and perfecting
Lender's  security  interest  therein,  and agrees to execute  upon  demand such
documents as are required by Lender to perfect Lender's security interest in the
Collateral.  The  Borrower  will pay all taxes and other costs of the filing and
any other costs associated  therewith.  The Borrower also ratifies the filing of
any financing statement already filed by Lender prior to the date hereof.

      (b)  POSSESSION:  The Borrower  will have  possession  of the  Collateral,
except where Lender  chooses to perfect its security  interest by  possession in
addition to the filing of a financing  statement.  If the  Collateral  is in the
possession of a third party, the Borrower will join with Lender in notifying the
third party of Lender's security interest and obtaining an acknowledgement  from
the third party that it is holding the Collateral for the benefit of Lender.

      (c) CONTROL:  The Borrower will cooperate with Lender in obtaining control
with respect to the Collateral consisting of, but not limited to all foreign and
domestic: (i) Deposit Accounts; (ii) Investment Property; (iii) Letter-of-Credit
rights;  and (iv) Electronic  chattel paper;  (d) Marking of Chattel Paper:  The
Borrower  will not  create any  Chattel  Paper  without  placing a legend on the
Chattel  paper  acceptable  to Lender  indicating  that  Lender  has a  security
interest in the Chattel Paper.

<PAGE>

      4.3 NO DISPOSITION OF COLLATERAL:  Lender does not authorize, and Borrower
agrees not to (a) sell or lease any of the  Collateral,  except for Inventory in
the ordinary course of business; (b) license any of the Collateral; or (c) grant
any other security interest in any of the Collateral.

      4.4 PURCHASE  MONEY  SECURITY  INTERESTS:  To the extent that the Borrower
uses the Loan to purchase the Collateral,  Borrower's repayment of the Loan will
apply on a  "first-in-first  out" basis so that the  portion of the Loan used to
purchase a particular item of the Collateral  will be paid in the  chronological
order the Borrower purchased the Collateral.

      4.5 BORROWER REMAINS LIABLE:  Notwithstanding anything contained herein to
the contrary, (a) Borrower will remain liable for all damages,  obligations, and
liabilities  under the contracts and  agreements  included in the  Collateral to
perform  all of its  duties  and  obligations  to the  same  extent  as if  this
Agreement had not been executed, (b) the exercise by Lender of any of its rights
under this Agreement or the  Collateral  Documents will not release the Borrower
from any of its  duties  or  obligations  under  the  contracts  and  agreements
included in the  Collateral  and (c) Lender will have no obligation or liability
under the contracts and agreements  included in the Collateral,  nor will Lender
be obligated to perform any of the obligations or duties of Borrower  thereunder
or to take any action to collect or enforce any claim for payment. Borrower will
pay all taxes,  levies,  assessments  and charges of any kind upon or related to
the Collateral, Borrower's business, income, revenues and assets.

      5. REPRESENTATIONS AND WARRANTIES:

      The Borrower represents and warrants to Lender that:

      5.1  ORGANIZATION AND AUTHORITY:  The Borrower is a Delaware  corporation,
duly  organized and in good standing under the laws of the State of Delaware and
has the power and  authority to own its assets and transact  its  business.  The
precise  legal  name of the  Borrower  is set  forth on the  first  page of this
Agreement.  The Person  executing  this  Agreement  has full power and  complete
authority to execute this  Agreement and all  Collateral  Documents on behalf of
Borrower.

      5.2  TRANSACTIONS  LEGAL  AND  AUTHORIZED:  The  execution,  delivery  and
performance  of this  Agreement  and the  Collateral  Documents  have  been duly
authorized by all necessary action of Borrower, and the execution,  delivery and
performance  of this  Agreement and the  Collateral  Documents  does not violate
Borrower's  formation  documents,  or  the  terms  of any  contract,  indenture,
agreement or undertaking to which Borrower is a party or by which it is bound.

      5.3  ENFORCEABILITY OF OBLIGATIONS:  This Agreement,  the Senior Note, and
the Collateral  Documents are valid,  binding upon, in full force and effect and
fully  enforceable  against  Borrower,  Validity  Guarantor  or any other  party
thereto in accordance with their respective terms.

<PAGE>

      5.4  LITIGATION:  No  litigation or other  proceeding  before any court or
administrative agency is pending or threatened.  Furthermore, Borrower is not in
default with respect to any order, writ,  injunction,  or demand of any court or
governmental department or agency.

      5.5 FINANCIAL STATEMENTS/REPORTS/CERTIFICATES:

      (a) EXISTING  FINANCIAL  INFORMATION/NO  ADVERSE  CHANGES:  The  financial
statements  furnished  to Lender are true and correct and have been  prepared in
accordance  with GAAP  applied on a  consistent  basis  throughout  the  periods
involved.  The balance sheet fairly presents the condition of Borrower as of the
date thereof,  and the profit and loss statement  fairly presents the results of
operations.  There have been no material  adverse  changes in the  condition  of
Borrower,  financial  or  otherwise  subsequent  to the date of the most  recent
financial statement furnished to Lender.

      (b) FUTURE FINANCIAL INFORMATION:  All financial information,  statements,
reports and  certificates  required  by this  Agreement  are true and  accurate.
Lender are based upon  reasonable  assumptions  or facts then known to Borrower,
and fairly present,  to the best knowledge of Borrower,  the projected condition
of Borrower as therein set forth, and fairly presents,  to the best knowledge of
Borrower, the projected results of operations.

      5.6  OWNERSHIP  OF  COLLATERAL;  NO LIENS:  Except  as set forth  below in
Exhibit "A" and any collateral  security agreement executed by Borrower in favor
of Crestmark Bank,  Borrower is the owner of and has good and indefeasible title
to all of the Collateral.  The Collateral is not subject to any liens,  purchase
options,  mortgages,  pledges,  encumbrances,  claims (legal or  equitable),  or
charges  of any kind  except  Permitted  Encumbrances.  As of the  date  hereof,
Borrower has not sold any Collateral  except in the ordinary course of business.
Lender's  security  interest  in the  Collateral  is a first  priority  security
interest,  and Borrower will defend and indemnify  Lender against the claims and
demands of all other persons claiming an interest in the Collateral.

      5.7 PERSONAL PROPERTY: The Collateral will remain personal property at all
times. The Borrower will not affix any of the Collateral to any real property in
any manner which would change its nature from that of personal  property to real
property or a fixture.

      5.8 TAX RETURNS AND TAXES:  Borrower has filed all federal,  state,  local
and foreign tax returns  which are  required to be filed and has paid all taxes,
withholdings,  assessments and other  government  charges which have become due.
Borrower  does not  know of any  proposed  material  additional  tax  assessment
against it, or any of its properties, or any basis therefore.

      5.9 FULL  DISCLOSURE:  Neither this  Agreement  nor any written  statement
furnished  by or on behalf of  Borrower to Lender in  connection  with the Loan,
taken as a whole,  contains any untrue  statement of a material fact or omits to
state a material  fact  necessary to make the  statements  contained  therein or
herein not  misleading.  There is no fact  relating to Borrower or its  business
which  Borrower has not  disclosed to Lender in writing,  which  materially  and
adversely  affects,  or as far as Borrower can now foresee,  will materially and
adversely affect Borrower's business (financial or otherwise).

<PAGE>

      5.10 CASUALTY LOSS OR JUDGMENT:  The Collateral has not suffered any loss,
substantial damage, or destruction and no attachment, lien, levy, garnishment or
commencement of any related proceeding has occurred against the Collateral.

      5.11 NO MATERIAL  ADVERSE CHANGE:  No material adverse change has occurred
in  the  existing  or  prospective  financial  condition,  business,  assets  or
liabilities of the Borrower.

      6. AFFIRMATIVE COVENANTS:

      Borrower  covenants and agrees that until all  indebtedness  due Lender is
paid in full, Borrower will:

      6.1 PAYMENTS ON INDEBTEDNESS:  Pay all  indebtedness  when due, whether by
acceleration  or  otherwise.  Furthermore,  Borrower  will not have any Advances
outstanding  under the Loan contrary to any  provisions of the Loan Agreement or
the  Collateral  Documents,  including  any  Advances  in excess of the  Advance
Formula which are not immediately repaid to Lender.

      6.2 PERFORMANCE OF OBLIGATIONS:  Perform or cause to be performed,  all of
the terms, conditions, obligations and covenants of Borrower or any other Person
as required by this Agreement,  the Collateral Documents or any other agreement,
executed between Lender and Borrower and/or another Person, whether now existing
or hereafter created.

      Borrower  will also take all action (or not take any action)  necessary to
keep the representations and warranties true and accurate.

      6.3 INFORMATION:  Furnish  promptly and in a form  satisfactory to Lender,
such  information  as  Lender  may  request,  from  to  time,  and to  permit  a
representative  of Lender  access to any of its premises,  computer  systems and
financial records to inspect and examine Borrower's books and records.

      6.4 NOTIFICATION OF DISPUTES: Notify Lender promptly of any litigation, or
administrative  or tax  proceeding,  or other action  threatened  or  instituted
against  Borrower or any property of Borrower or any other material matter which
could adversely impair Borrower's  financial condition or its ability to conduct
its business. For the purposes of this Agreement, any single such claim in which
the sum in dispute is in excess of Twenty Thousand  ($20.000.00) Dollars, or all
such  claims  in  which  the  aggregate  sums in  dispute  are  Twenty  Thousand
($20,000.00) Dollars or more, will be deemed to be material and adverse.

      6.5  PAYMENT  OF TAXES:  Pay when due all  taxes,  assessments,  and other
governmental  charges to which  Borrower or it's  property is or will be subject
before such charges become  delinquent,  except that no such charge need be paid
so long  as its  validity  or  amount  is  being  contested  in  good  faith  by
appropriate proceedings and Borrower has established a cash reserve with respect
thereto;  provided,  however, that any such tax, assessment,  or charge shall be
paid  forthwith  (under  protest) upon the filing of any lien securing the same,
commencement of levy, other form of execution, or any other collection action.

<PAGE>

      6.6  INSURANCE:   Maintain  insurance  in  such  form  and  amount  as  is
satisfactory  to  Lender,  with loss  payable  clauses  in favor of  Lender  and
providing that any losses under the policies are payable to Lender.  If Borrower
fails to obtain or maintain any required policies,  then Lender, without waiving
any Default by Borrower  relating  thereto,  may (but without any obligation) at
any time  thereafter  make such  payment or obtain such  coverage  and take such
other  actions as Lender deems  advisable.  Borrower  will not take out separate
insurance  concurrent in form or contributing  in the event of a loss.  Borrower
will also maintain  insurance pursuant to all applicable  Worker's  Compensation
laws, and liability insurance for damage to persons. All such insurance shall be
in such form,  with such companies and in such amounts as shall be acceptable to
Lender and each policy shall provide that the insurance  company will provide at
least  thirty (30) days notice to Lender prior to any  cancellation  or material
alteration or amendment of any policy.  In the event any proceeds are payable to
Borrower,  or  otherwise  become  available,  as a result of a  casualty  to any
Collateral,  all such proceeds are be the property of Lender, immediately turned
over to Lender and applied to the Indebtedness due Lender.

      6.7 COMPLIANCE  WITH LAWS:  Continue at all times to comply with all laws,
ordinances,  regulations or requirements of any governmental  authority relating
to Borrower's business, property or affairs, including,  without limitation, all
environmental  laws and the Fair Labor Standards Act of 1938, 29 U.S.C.  200, et
seq., as amended from time to time.

      6.8  PRESERVATION  OF COLLATERAL:  Maintain the Collateral in good repair,
working  order and  condition.  With respect to Accounts,  Borrower  will pursue
collections  diligently and present  evidence  thereof to Lender,  if requested.
Borrower will, upon request, immediately deliver to Lender evidence of ownership
and/or certificates of title relative to the Collateral.

      7. NEGATIVE COVENANTS:

      Borrower  covenants and agrees that until all  indebtedness  due Lender is
paid in full, it will not:

      7.1 NO CHANGES: The Borrower will not change its state of incorporation or
organization. The Borrower will also not change its name, adopt an assumed name,
or move its chief  executive  office  without  giving Lender at least sixty (60)
days prior written notice.

      7.2 DIVIDENDS: Declare or pay any dividend, or make any other distribution
of, or with regard to, its capital stock or other equity  security,  or purchase
or retire any of its capital stock or other equity security.  Provided, however,
with  respect to any year in which  Borrower  is taxed by the  Internal  Revenue
Service as an " S corporation,  Borrower may make a  distribution  of profits to
its  shareholders  in an amount  not to exceed the sum  necessary  to enable its
shareholders to pay their personal state and federal taxes directly attributable
to the profits earned by Borrower for the year.

      7.3 LOANS LIABILITIES:  Make a loan, or incur or assume any obligations or
liabilities  as guarantor,  surety,  indemnitor or otherwise with respect to any
indebtedness or other obligation of any Person, except in the ordinary course of
business.

      7.4  TRANSACTIONS  WITH   AFFILIATES/NO   SUBSIDIARIES:   Enter  into  any
transaction with any stockholders of Borrower or such stockholders'  affiliates,
except on terms not less  favorable than would be usual and customary in similar
transactions between persons or entities dealing at arm's length.  Borrower does
not have and will not organize or acquire any subsidiaries.

<PAGE>

      7.5  REDEMPTION/ISSUANCE:  Release,  redeem, retire, purchase or otherwise
acquire,  directly  or  indirectly,  any of its  capital  stock or other  equity
security without the prior written consent of Lender.

      7.6  DEFAULT  IN  PAYMENT OF OTHER  DEBT:  Default  in the  payment of any
indebtedness owed to any Person for borrowed money.

      7.7  JUDGMENT:  Suffer or permit any  judgment,  decree or order not fully
covered by insurance to be entered by a court of competent  jurisdiction against
Borrower  or  Validity  Guarantor  or permit or suffer  any writ or  warrant  of
attachment  or any  similar  process to be filed  against  Borrower  or Validity
Guarantor or against any property or asset of Borrower or Validity Guarantor.

      Borrower  covenants and agrees that until all  indebtedness  due Lender is
paid in full, it will keep proper books of accounts in a manner  satisfactory to
Lender.  Lender  will  have  the  right,  at  any  time,  to  verify  any of the
Collateral,  documentation  or books,  whether such  documentation  is furnished
weekly,  monthly or annually in whatever manner and in whatever frequency Lender
deems necessary.

      8.1 QUARTERLY FINANCIAL  STATEMENTS AND REPORTS:  Borrower will deliver to
Lender quarterly management prepared financial  statements,  balance sheets, and
profit and loss  statements  for the  quarter  then ended,  certified  to by the
president or chief  financial  officer of Borrower.  Such reports will set forth
the financial  affairs and true condition of Borrower for (each quarter and will
be  delivered  to Lender no later  than  thirty  (45) days after the end of each
quarter. In addition, Borrower will furnish to Lender the following certified to
by the president or chief financial  officer of Borrower within the time periods
set forth:

      (a) ACCOUNTS  RECEIVABLE  REPORTS:  Monthly detailed  Accounts  Receivable
Aging Reports no later than fifteen (15) days after the end of each month;

      (b) Accounts  Payable  Reports:  Monthly  detailed  Accounts Payable Aging
Reports no later than fifteen (15) days after the end of each month;

      All  financial  and  operating  statements  are and  will be  prepared  in
accordance with GAAP applied on a consistent basis.

      8.2 FIELD  EXAMINATIONS:  Borrower  will permit  Lender to perform  annual
field  examinations  of Borrower's  assets and  liabilities,  to be performed by
Lender's inspector,  whether a Lender officer or an independent party, with fees
and expenses  thereof to be paid by Borrower.  The  information  compiled by the
field  examination is for Lender's internal use, and Lender has no obligation to
share the field examination, in whole or in part, with Borrower.

      8.3  ANNUAL  FINANCIAL  STATEMENTS/PROJECTIONS:  Each year  Borrower  will
deliver to Lender annual reviewed  financial  statements,  balance  sheets,  and
profits and loss statements prepared by a certified public accountant acceptable
to Lender. Such reports will set forth in detail Borrower's true condition as of
the end of  Borrower's  fiscal year no later than ninety (90) days after the end
of Borrower's fiscal years.  Borrower will also deliver to Lender  semi-annually
management prepared financial projections  forecasting on a month by month basis
that month's  balance sheet,  income  statement and a detailed  schedule of cash
disbursements  and borrowing  availability.  Said projections shall be submitted
within thirty (30) days after the Company's fiscal year end for each year and at
each six month point after year end that the Loan is outstanding.

<PAGE>

      9. REMEDIES UPON DEFAULT:

      Upon the occurrence of any Default, Lender can charge the default interest
rate on the Senior Note, and Lender has the following rights and remedies. These
rights and remedies are cumulative and not exclusive.

      9.1 GENERAL:  Upon any Default,  Lender may pursue any remedy available at
law (including  those available under the UCC), in equity or by agreement of the
parties.

      9.2 ACCELERATION:  Upon any Default,  Lender can accelerate all or part of
the  Indebtedness  without  notice or  demand,  and  declare  such  amount to be
immediately   due  and  payable,   without   presentation,   notice  or  demand,
notwithstanding  the maturity or due date, if any, therein to the contrary,  all
of which are expressly waived by Borrower and Validity Guarantor.

      9.3 CONFORMER REMEDIES:  Upon any Default,  Lender has the right to pursue
any of the following remedies  separately,  successively or simultaneously:  (i)
file suit and obtain  judgment and, in conjunction  with any action,  Lender may
seek any ancillary  remedies  provided by law,  including levy of attachment and
garnishment; (ii) take possession of any Collateral and any books and records of
the Borrower  without  demand and without legal process.  Upon Lender's  demand,
Borrower will assemble and make the Collateral  and books and records  available
to Lender as it directs.  Borrower grants to Lender the right, for this purpose,
to enter into or on any premises where the Collateral may be located;  and (iii)
without taking possession, sell, lease or otherwise dispose of the Collateral at
public or private sale in accordance with the UCC.

      9.4 RIGHT OF OFFSET:  Lender may offset  against any funds (i) of Borrower
or Validity  Guarantor on deposit with or in the possession of Lender,  and (ii)
of Borrower or Validity Guarantor on deposit in any deposit account.

      9.5 ACCOUNTS AND/OR ACCOUNTS RECEIVABLE:

      (a) Lender may notify any and all Account  Debtors to make  payment on any
Account directly to Lender.

      (b) Lender may in its own name or in the name of Borrower:

      (i) demand,  collect,  receive payment of, receipt for and give discharges
and  releases,  upon payment of all or any of the Accounts and any monies due or
to become  due in  respect  thereof  and to notify  all  Account  Debtors of the
Default and to direct all Account Debtors to pay Lender directly;

      (ii) settle,  compromise,  compound,  or adjust all or any of the Accounts
which are in dispute;

      (iii)  commence,  prosecute,  settle  and  compromise  any and all  suits,
actions,  or  proceedings  in  law  or in  equity  in  any  court  of  competent
jurisdiction to collect or otherwise realize on all or any of the Accounts or to
enforce any rights in respect thereof; and

<PAGE>

      (iv) file any claim or take any other  action or  proceeding  which Lender
may deem  necessary or  appropriate to protect and preserve and realize upon the
security interest of Lender in the Accounts and the proceeds thereof; and

      (v) generally to sell, assign,  transfer,  pledge, make any agreement with
respect to or otherwise reasonably deal with all or any of the Accounts as fully
and  completely  as  though  Lender  were the  absolute  owner  thereof  for all
purposes.   Borrower   hereby  waives  any  statutory  rule  or   constitutional
restriction,  prohibition,  or procedure in connection  with the rights  granted
Lender in this subsection and gives Lender the right to peaceful repossession of
the Collateral without hearing or court order.

      9.6 SALES AS CREDIT:  If after a Default,  Lender sells any  Collateral on
credit,  the Borrower will be credited  only with payments  actually made by the
purchaser,  received by Lender and applied to the Indebtedness. If the purchaser
fails to pay for the  Collateral,  Lender  may  resell  the  Collateral  and the
Borrower will be credited with the proceeds of the sale.

      9.7 WAIVERS:  To the extent  permitted by applicable law,  Borrower hereby
absolutely and irrevocably  waives and  relinquishes the benefits and advantages
of any  valuation,  stay,  appraisement,  extension  or  redemption  laws now or
hereafter  existing which,  but for this  provision,  might be applicable to any
sale made under the judgment,  order or decree of any court,  or otherwise.  The
Borrower  also waives any rights to compel  Lender to pursue  collection  of any
Collateral or to collect any income on the Collateral.

      10. STANDARDS FOR EXERCISING REMEDIES:

      To the extent that  applicable  law  imposes  duties on Lender to exercise
remedies in a commercially  reasonable  manner,  the Borrower  acknowledges  and
agrees that it is not commercially unreasonable for Lender:

      (a) EXPENSES:  To fail to incur expenses  deemed  significant by Lender to
prepare,  clean up or repair the  Collateral or complete raw material or work in
process into finished goods or other finished products prior to disposition;

      (b)  CONSENTS:  To fail to obtain  third party  consents for access to the
Collateral  to be disposed of, or to obtain or, if not required by other law, to
fail to obtain  governmental  or third  party  consents  for the  collection  or
disposition of the Collateral;

      (c)  PURSUIT  OF THIRD  PARTIES;  LIENS:  To fail to  exercise  collection
remedies against account debtors or other persons obligated on the Collateral or
to remove liens or encumbrances  or adverse claims against the  Collateral,  and
Borrower  waives  any right it may have to  require  Lender to pursue  any third
parties;

      (d)  COLLECTION  SPECIALISTS:  To  exercise  collection  remedies  against
Account Debtors and other person obligated on the Collateral directly or through
the of collection agencies and other collection specialists;

      (e)  ADVERTISING:  To advertise  dispositions  of the  Collateral  through
publications or media of general circulations,  whether or not the Collateral is
of a specialized nature;

<PAGE>

      (f)  SOLICITING:  To  contact  other  persons,  whether or not in the same
business as the Borrower,  for  expressions  of interest in acquiring all or any
portion of the Collateral;

      (g) AUCTIONEERS: To hire one or more professional auctioneers to assist in
the  disposition  of the  Collateral,  whether  or not  the  Collateral  is of a
specialize nature;

      (h) WHOLESALE SALES  PERMITTED:  To dispose of assets in wholesale  rather
than retail markets;

      (i)  DISCLAIMER  OF  WARRANTIES:  To  disclaim  any  warranties  as to the
Collateral, including as to title;

      (j)  INSURANCE:  To purchase  insurance or credit  enhancements  to insure
Lender against risks of loss,  collection or disposition of the Collateral or to
provide to Lender a guaranteed  return from the collection or disposition of the
Collateral; or

      (k) OTHER  PROFESSIONALS:  To the extent deemed  appropriate by Lender, to
obtain the services of other brokers, investment bankers, consultants, attorneys
and other professionals to assist Lender in the collection or disposition of any
of the  Collateral,  the costs of which, if any, shall be added to the principal
amount of the Senior Note.

      The  Borrower  acknowledges  that the  purpose  of this  Section  10 is to
provide non-exhaustive  indications of what actions or omissions by Lender would
not be commercially  unreasonable in Lender's  exercise of remedies  against the
Collateral  and that other  actions or  omissions  by Lender  will not be deemed
commercially  unreasonable  solely on  account  of not being  indicated  in this
Section 10. Without  limitation  upon the foregoing,  nothing  contained in this
section  will be  construed to grant any rights to the Borrower or to impose any
duties on Lender that would not have been  granted or imposed by this  Agreement
or by applicable law in the absence of this section.

      Nothing  contained in this  Agreement  will be construed to make Lender an
agent or trustee of Borrower or Validity  Guarantor for any purpose  whatsoever.
Lender will not be responsible or liable for any shortage, discrepancy,  damage,
loss or  destruction  of any  part of the  Collateral  wherever  the same may be
located  and  regardless  of the  cause  thereof  (except  to the  extent  it is
determined by final judicial decision that Lender's act or omission  constituted
gross   negligence  or  willful   misconduct).   Lender  will  not,   under  any
circumstances  or in any event  whatsoever,  have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts, liquidation of the Collateral or any instrument received
in payment thereof or for any damage resulting  therefrom  (except to the extent
it is determined by a final judicial  decision that Lender's error,  omission or
delay constituted gross negligence or willful  misconduct).  Lender does not, by
anything herein or in any assignment or otherwise,  assume any of the Borrower's
or Validity Guarantor's  obligations under any contract or agreement assigned to
Lender,  and Lender shall not be responsible  in any way for the  performance by
the  Borrower  or  Validity  Guarantor  of any kind of the terms and  conditions
thereof.

<PAGE>

      11. APPLICATION OF PROCEEDS:

      After the occurrence of a Default and  acceleration of the indebtedness by
Lender, or after demand for repayment of all  indebtedness,  the proceeds of any
sale or other  disposition  of the Collateral  will be applied by Lender,  first
upon all expenses authorized by this Agreement,  the Collateral  Documents or by
law, including reasonable attorney's fees incurred by Lender; the balance of the
proceeds of such sale or other disposition will be applied to the payment of the
indebtedness,  first  to  interest,  then to  principal,  then to  other  unpaid
Indebtedness,  and the surplus, if any, shall be paid over to the Borrower or to
such other Person or Persons as may be entitled  thereto under  applicable  law.
The Borrower and Validity Guarantor will remain liable for any deficiency, which
the Borrower or Validity Guarantor will pay to Lender immediately upon demand.

      12. EXPENSES:

      Borrower will pay to Lender,  on demand,  any and all expenses,  including
reasonable  attorneys' fees and collection expenses,  incurred or paid by Lender
in  protecting  or enforcing  its rights under this  Agreement,  the  Collateral
Documents or pursuant to any other document or agreement relating to the Loan.

      13. NOTICE:

      Any notice to Borrower or Lender will be deemed effective if it is written
and sent by facsimile with  confirmation of receipt,  by certified mail,  return
receipt requested, postage prepaid, or other expedited mail service, or by other
personal  delivery  service  addressed  to Borrower or Lender at the address set
forth in this  Agreement or at such other address as is designated by one to the
other in writing.

      14. TERMINATION/RENEWAL:

      All   of   Borrower's   obligations,    duties,    promises,    covenants,
representations  and warranties  under this  Agreement and Collateral  Documents
will  continue  and remain in full force and effect  until the  indebtedness  is
irrevocably  paid in full in cash or in kind,  including all exit fees under the
Senior Note.

      15. MISCELLANEOUS:

      15.1  BINDING  EFFECT:  This  Agreement  is binding upon and inures to the
benefit  of  Borrower,  Validity  Guarantor  and  Lender,  and their  respective
successors and assigns and will bind all persons who become bound as a debtor to
this Agreement.  The foregoing,  will not, however,  authorize any assignment by
Borrower of its rights or duties  hereunder,  which  assignment,  in whole or in
part, by Borrower is not permissible. Lender may assign its rights and interests
under this Agreement and the Collateral Documents. If an assignment by Lender is
made,  Borrower  and  Validity  Guarantor  will make all  payments to and render
performance  under this  Agreement  and the  Collateral  Documents  to  Lender's
assignee.

      Borrower  and  Validity  Guarantor  waive and will not assert  against any
assignee any claims, defenses or set-offs,  which Borrower or Validity Guarantor
could assert against Lender except defenses which cannot be waived.

      15.2 DELAY/WAIVER:  No delay or failure of Lender in exercising any right,
remedy,  power or privilege hereunder will affect such right,  remedy,  power or
privilege, nor will any single or partial exercise thereof preclude the exercise
of any other right, remedy, power or privilege. No delay or failure of Lender at
any time to  demand  strict  adherence  to the terms of this  Agreement  will be
deemed to constitute a course of conduct inconsistent with Lender's right at any
time to demand strict adherence to the terms of this Agreement or the Collateral
Documents.

<PAGE>

      15.3 INCORPORATION BY REFERENCE: The Collateral Documents are incorporated
herein by reference.  In the event any provision of the Collateral  Documents is
inconsistent with the provisions of this Agreement,  then this Agreement will be
deemed  paramount  unless the rights and  remedies of Lender  would be adversely
affected or diminished thereby.

      15.4 APPLICABLE  LAW: This Agreement and the Collateral  Documents will be
interpreted,  and the rights of the parties hereunder will be determined,  under
the laws of the State of California (without regard to conflict of laws).

      15.5 FURTHER  ASSURANCES:  Borrower and Validity  Guarantor,  from time to
time, upon Lender's request,  will each make,  execute,  acknowledge and deliver
all such further and  additional  instruments  and  agreements and take all such
further  action as may be required,  to carry out the intent and purpose of this
Agreement or any part thereof.

      15.6  HOLD   HARMLESS/INDEMNITY:   Borrower  assumes   responsibility  and
liability for, and holds harmless and indemnifies  Lender from and against,  any
and all liabilities,  demands,  obligations,  injuries,  costs, damages (direct,
indirect or consequential),  awards, loss of interest, principal, or any portion
of the  Indebtedness,  charges,  expenses,  payments  of monies  and  reasonable
attorney fees,  incurred or suffered,  directly or indirectly,  by Lender and/or
asserted against Lender by any Person whatsoever, including Borrower or Validity
Guarantor,  which  arise  in  whole  or in part  out of this  Agreement,  or the
Collateral  Documents,  or the relationship  herein set forth or the exercise of
any  right or  remedy  including  the  realization,  disposition  or sale of the
Collateral,  or any portion thereof,  or the exercise of any right in connection
therewith even if the above are caused by the sole action, inaction, omission or
negligence of Lender,  but Borrower or Validity  Guarantor will not be liable if
the damages result solely from the fraud or gross negligence of Lender.

      15.7  LIMITATION OF LIABILITY:  Neither Lender nor any of its  affiliates,
directors, officers, agents, attorneys or employees shall be liable to Borrower,
Validity  Guarantor or any of Borrower's  affiliates  for any action  taken,  or
omitted to be taken, by it or them or any of them under this Agreement or any of
the Collateral Documents or in connection herewith or therewith,  except that no
person shall be relieved of any liability  imposed by law for gross  negligence,
recklessness or fraud.  Except for claims of gross  negligence,  recklessness or
fraud,  no  claim  may be  made by  Borrower,  Validity  Guarantor  or by any of
Borrower's affiliates,  directors, officers, agents, attorneys or employees, for
any  special,  consequential,  indirect  or  punitive  damages in respect of any
breach or wrongful  conduct  (whether  the claim is based on contract or tort or
duty  imposed by law)  arising out of or related to this  Agreement or any other
Collateral Documents, or the transactions contemplated hereby or thereby, or any
act, omission or event occurring in connection herewith or therewith.

      15.8  SURVIVAL  AND   CONTINUATION:   All   representations,   warranties,
covenants, indemnifications, consents and agreements contained in this Agreement
and/or any of the  Collateral  Documents  will  survive  the  execution  of this
Agreement,  the Collateral  Documents and any  investigations by Lender and will
be, and continue at all times while any Indebtedness is outstanding,  to be true
and accurate.

<PAGE>

      15.9  RULES  OF  CONSTRUCTION:  (a) No  reference  to  "proceeds"  in this
Agreement authorizes any sale, transfer,  or other disposition of the Collateral
by the Borrower;  (b)"includes and "including" are not limiting; (c) "Or" is not
exclusive; and (d) "all includes "any" and "any includes "all."

      15.10 COMPLETE AGREEMENT:  This Agreement incorporates and/or contains the
entire agreement of the parties hereto with respect to its subject matter.  None
of the parties to this  Agreement  will be bound by anything  not  expressed  in
writing.  This  Agreement  and the  Collateral  Documents may only be amended or
modified by a written agreement executed by Lender and Borrower.

      15.11 SEVERABILITY: If any provision of this Agreement is in conflict with
any statute or rule of law or is otherwise  unenforceable  for any reason,  then
that  provision  will be deemed  null and void to the extent of the  conflict or
unenforceability and will be deemed severable.  The offending provision will not
invalidate any other provision of this Agreement.

--------------------------------------------------------------------------------
LENDER:                                     COMPANY:
-------                                     --------
EVER SOLID, LTD.                            THE SINGING MACHINE COMPANY, INC.
(a Hong Kong registered company)

By: /s/ Sak Hong Lau                        By: /s/ Yi Ping Chan
    ----------------------------------          --------------------------------
   (Signature of Authorized Person)             (Signature of Authorized Person)

    Sak Hong Lau, Chairman                      Yi Ping Chan, Interim CEO
    ------------------------------------        --------------------------------
    Printed Name and Title                      Printed Name and Title
--------------------------------------------------------------------------------THE SINGING MACHINE COMPANY, INC.
                            -------------------------
                             SENIOR PROMISSORY NOTE

$2,000,000                                                         MARCH 8, 2006

      The Singing  Machine  Company,  Inc.,  a Delaware  corporation  ("Maker"),
hereby promises to pay to Ever Solid,  Limited.,  a Hong Kong registered company
("Holder"), at the Shing Dao Industrial Bldg., 5/F, 232 Aberdeen Main Road, Hong
Kong, or at such other address as may be specified by Holder,  the principal sum
of Two Million Dollars and no cents ($2,000,000 USD) if paid within  forty-eight
(48)  hours of the  closing  of that  certain  Stock  Purchase  Agreement  dated
February  21,  2006  by  and  between  Singing   Machine,   Inc.,  and  koncepts
International  Limited  a Hong  Kong  registered  company  ("koncepts")  ("Stock
Purchase  Agreement").  If, however, the Stock Purchase Agreement fails to close
for whatever  reason,  Maker shall make payment to Holder of all  principal  and
interest  then  owing on or before  September  8, 2006,  in lawful  money of the
United States of America.

      Absent an event of default, the principal  indebtedness  evidenced by this
Senior  Note shall earn  interest at the rate of eight  percent  (8%) per annum.
Principal and interest  shall be paid in one  installment on the earlier of: (a)
September 8, 2006,  or (b) within  forty-eight  (48) hours of the closing of the
Stock Purchase Agreement.  This Note may be prepaid in full, but not in part, at
any time without penalty.

      The  principal  amount of this  Senior  Note is "Senior  Indebtedness"  as
defined in the Bridge  Loan  Agreement  dated the date  hereof  among  Maker and
Holder.  This Senior Note is also secured by a consensual  and perfected  "broad
form"  UCC-1  filing  secured by all of the assets of Maker,  both  foreign  and
domestic,  such that Lender shall be deemed a consensual  secured  lender in the
event of either a voluntary or  non-voluntary  filing by or against  Maker under
United  States Code Title 11 or any similar  state or federal  statute.  In this
regard  Maker shall  promptly  execute such  documents as Lender may  reasonably
request from time to time so as to perfect its  position as a secured  lender to
Maker.

      Maker hereby waives presentment,  protest, demand or notice of any kind in
connection with any failure to pay when due the  indebtedness  evidenced by this
Note.  If Maker  fails to pay the  indebtedness  when due,  Maker  agrees to pay
Holder's  reasonable  legal fees and expenses  incurred in  connection  with the
enforcement of this Note.

      Regardless of the place of its execution,  this Note shall be construed in
accordance with the laws of the State of California.

                                        THE SINGING MACHINE COMPANY, INC.,
                                        A DELAWARE CORPORATION

                                        By: /s/ Yi Ping Chan
                                            ------------------------------------
                                            Yi Ping Chan, Interim - CEO

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