Document:

THE
      SINGING MACHINE COMPANY, INC.

    

    SECURITIES
      PURCHASE AGREEMENT

    

    This
      Securities Purchase Agreement (this “Agreement”) is dated as of January 16,
      2007, among The Singing Machine Company, Inc., a Delaware corporation (the
      “Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”).

    

    RECITALS

    

    WHEREAS,
      the
      Company has authorized the sale and issuance to the Purchasers of an aggregate
      of up to 720,000 shares (the “Shares”) of the Company’s Common Stock, par value
      $0.01 (the “Common Stock”); and

    

    WHEREAS,
      Purchasers desire to purchase and the Company desires to sell the Shares on
      the
      terms and conditions set forth herein.

    

    NOW,
      THEREFORE,
      in
      consideration of the foregoing recitals and the mutual promises,
      representations, warranties and covenants hereinafter set forth and for other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

    

    AGREEMENT

    

    1.  
      Purchase
      and Sale.
      Pursuant
      to the terms and conditions set forth in this Agreement, the Company agrees
      to
      sell to the Purchasers, and the Purchasers hereby agree to purchase the Shares
      at a purchase price of $0.833 per share, for a total purchase price equal to
      $600,000 US Dollars (the “Purchase Price”).

     

    2.  
      Closing,
      Delivery and Payment. 

     

    2.1.  
      Closing.
      Subject
      to the terms and conditions herein, the closing of the transactions contemplated
      hereby (“Closing”) shall take place on the first business day following such
      date as the Company and each Purchaser has satisfied all of the closing
      conditions set forth herein (the “Closing Date”) at the offices of Sichenzia
      Ross Friedman Ference LLP, located at 1065 Avenue of the Americas, New York,
      New
      York. The Shares sold and issued on the Closing Date will be, and will be
      distributed among the Purchasers, as set forth on Exhibit A.

     

    2.2.  
      Closing
      Deliverables. 

     

    (a)
         At the Closing, and as a condition to the Purchaser’s obligations
      hereunder, the Company will deliver the following to the
      Purchasers:

     

    (i)
         an executed copy of this Agreement;

    
      
        
        

      

      
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    (ii)
         an executed copy of corporate resolutions and Board authorizations
      which pursuant to Delaware law authorize the issuance of the Shares to
      Purchasers as set forth herein;

     

    (iii)
         Such documents from the American Stock Exchange, and any other
      applicable regulatory bodies (collectively “AMEX”) which set forth that
      Purchasers’ purchase of the Shares on the terms set forth in this Agreement and
      the Related Agreements (as hereinafter defined) has been approved by the AMEX
      such that Purchasers’ purchase of the Shares is completely free and clear of any
      voting restrictions which may be imposed by the AMEX pursuant to Section 713,
      and any other applicable sections, of the American Stock Exchange Company Guide,
      and any additional applicable and related regulations (collectively “Regulatory
      Approval”);

     

    (iv)
         an opinion of Company counsel that the Shares have been properly
      authorized, conform with all laws relating to their issuance, and are free
      and
      clear of all liens, charges, or assessments of any form and character as of
      the
      Closing Date;

     

    (v)
         stock certificates representing the Shares purchased at the
      Closing; and

     

    This
      Agreement are referred to herein as the “Related Agreements.”

     

    (b)
         At the Closing, each Purchaser will deliver the following to the
      Company:

     

    (i)
         an executed copy of this Agreement; and

     

    (ii)
         the purchase consideration for the Shares to be purchased by such
      Purchaser at the Closing, via wire transfer to an account designated by the
      Company.

     

    3.  
      Representations
      and Warranties of the Company.
      Except
      as set forth in the Company’s filings under the Securities Exchange Act of 1934
      (collectively, the “Exchange Act Filings”), copies of which have been made
      available to the Purchasers, the Company hereby represents and warrants to
      the
      Purchaser as follows:

     

    3.1.  
      Organization,
      Good, Standing and Qualification.
      Each of
      the Company and its active Subsidiaries (as defined below) is an entity duly
      incorporated or otherwise organized, validly existing and in good standing
      under
      the laws of the jurisdiction of its incorporation or organization (as
      applicable), with the requisite power and authority to own and use its
      properties and assets and to carry on its business as currently conducted.
      Set
      forth on the attached Schedule 3.1 is a list identifying the name of the Company
      and each Subsidiary, its jurisdiction of incorporation and foreign status
      registration(s) as well as its directors and officers. Neither the Company
      nor
      any active Subsidiary is in violation of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the active Subsidiaries is duly
      qualified to do business and is in good standing as a foreign corporation or
      other entity in each jurisdiction in which the nature of the business conducted
      or property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not,
      individually or in the aggregate: (i) adversely affect the legality, validity
      or
      enforceability of this Agreement or the Related Agreements, (ii) have or result
      in or be reasonably likely to have or result in a material adverse effect on
      the
      results of operations, assets, business or condition (financial or otherwise)
      of
      the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
      the Company's ability to perform fully on a timely basis its obligations under
      this Agreement or the Related Agreements (any of (i), (ii) or (iii), a “Material
      Adverse Effect”).

     

    
      
        
        

      

      
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    3.2.  
      Subsidiaries.
      Each
      direct and indirect Subsidiary of the Company, the direct owner of such
      Subsidiary and its percentage ownership thereof, is set forth on the attached
      Schedule 3.2. For the purpose of this Agreement, a “Subsidiary” of any person or
      entity means (i) a corporation or other entity whose shares of stock or other
      ownership interests having ordinary voting power (other than stock or other
      ownership interests having such power only by reason of the happening of a
      contingency) to elect a majority of the directors of such corporation, or other
      persons or entities performing similar functions for such person or entity,
      are
      owned, directly or indirectly, by such person or entity or (ii) a corporation
      or
      other entity in which such person or entity owns, directly or indirectly, more
      than 50% of the voting interests at such time.

     

    3.3.  
      Capitalization;
      Voting Rights. 

     

    (a)
         The authorized capital stock of the Company, as of the date hereof
      consists of 100,000,000 shares of common stock par value $0.01 of which
      25,274,883 are issued and outstanding and 1,000,000 shares of preferred stock
      $0.10 par value, of which none are issued and outstanding. All issued and
      outstanding shares of the Company’s Common Stock: (a) have been duly authorized
      and validly issued and are fully paid and nonassessable; and (b) were issued
      by
      the Company in full compliance with all applicable state and federal laws
      concerning the issuance of securities.

     

    (b)
         The rights, preferences, privileges and restrictions of the shares
      of the Common Stock are as stated in the Company’s Certificate of Incorporation,
      as amended (the “Charter”) and pursuant to applicable law.

     

    3.4.  
      Authorization
      and Binding Obligations.
      All
      corporate, partnership or limited liability company, as the case may be, action
      on the part of the Company (including the respective officers and directors)
      necessary for the authorization of this Agreement and the Related Agreements,
      the performance of all obligations of the Company hereunder and under the other
      Related Agreements at the Closing and, the authorization, sale, issuance and
      delivery of the Shares has been taken or will be taken prior to the Closing.
      This Agreement and the Related Agreements, when executed and delivered will
      be
      valid and binding obligations of each of the Company enforceable against the
      Company in accordance with their terms, except as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or other laws of general
      application affecting enforcement of creditors’ rights and general principles of
      equity that restrict the availability of equitable or legal
      remedies.

     

    3.5.  
      Liabilities.
      Neither
      the Company nor any of its Subsidiaries has any material contingent liabilities,
      except current liabilities incurred in the ordinary course of business and
      liabilities disclosed in the Company’s Exchange Act Filings .

     

    3.6.  
      Agreements;
      Action. 

     

    (a)
         there are no agreements, understandings, instruments, contracts,
      proposed transactions, judgments, orders, writs or decrees to which the Company
      or any of its Subsidiaries is a party or by which it is bound which may involve:
      (A) obligations (contingent or otherwise) of, or payments to, the Company in
      excess of $100,000; or (B) provisions restricting the development, manufacture
      or distribution of the Company’s products or services.

     

    
      
        
        

      

      
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    (b)
         For the purposes of this Section 3.6, all indebtedness,
      liabilities, agreements, understandings, instruments, contracts and proposed
      transactions involving the same person or entity (including persons or entities
      the Company has reason to believe are affiliated therewith) shall be aggregated
      for the purpose of meeting the individual minimum dollar amounts of such
      subsections.

     

    3.7.  
      Obligations
      to Related Parties.
      There
      are no obligations of the Company or any of its Subsidiaries to officers,
      directors, stockholders or employees of the Company or any of its Subsidiaries
      other than:

     

    (a)
         for payment of salary for services rendered and for bonus
      payments;

     

    (b)
         reimbursement for reasonable expenses incurred on behalf of the
      Company and its Subsidiaries; and

     

    (c)
         for other standard employee benefits made generally available to
      all employees (including stock option agreements outstanding under any stock
      option plan approved by the Board of Directors of the Company).

     

    Further,
      except as described above, none of the officers, directors or, to the best
      of
      the Company’s knowledge, key employees or stockholders of the Company or any
      members of their immediate families, are indebted to the Company, individually
      or in the aggregate, in excess of $5,000 or have any direct or indirect
      ownership interest in any firm or corporation with which the Company is
      affiliated or with which the Company has a business relationship, or any firm
      or
      corporation which competes with the Company, other than passive investments
      in
      publicly traded companies (representing less than one percent (1%) of such
      company) which may compete with the Company. Except as described above, no
      officer, director or stockholder, or any member of their immediate families,
      is,
      directly or indirectly, interested in any material contract with the Company
      and
      no agreements, understandings or proposed transactions are contemplated between
      the Company and any such person. Except as set forth on Schedule 3.7, the
      Company is not a guarantor or indemnitor of any indebtedness of any other
      person, firm or corporation.

    

    3.8.  
      Changes.
      Since
      September 30, 2006, except as disclosed or any other Schedule to this Agreement
      or to any of the Related Agreements, there has not been:

     

    (a)
         any change in the business, assets, liabilities, condition
      (financial or otherwise), properties or operations of the Company or any of
      its
      Subsidiaries, which individually or in the aggregate has had, or could
      reasonably be expected to have, individually or in the aggregate, a Material
      Adverse Effect;

     

    (b)
         any resignation or termination of any officer, key employee or
      group of employees of the Company or any of its Subsidiaries;

    
      
        
        

      

      
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    (c)
         any material change, except in the ordinary course of business, in
      the contingent obligations of the Company or any of its Subsidiaries by way
      of
      guaranty, endorsement, indemnity, warranty or otherwise;

     

    (d)
         any damage, destruction or loss, whether or not covered by
      insurance, has had, or could reasonably be expected to have, individually or
      in
      the aggregate, a Material Adverse Effect;

     

    (e)
         any waiver by the Company or any of its Subsidiaries of a valuable
      right or of a material debt owed to it;

     

    (f)
         any direct or indirect loans made by the Company or any of its
      Subsidiaries to any stockholder, employee, officer or director of the Company
      or
      any of its Subsidiaries, other than advances made in the ordinary course of
      business;

     

    (g)
         any material change in any compensation arrangement or agreement
      with any employee, officer, director or stockholder of the Company or any of
      its
      Subsidiaries;

     

    (h)
         any declaration or payment of any dividend or other distribution of
      the assets of the Company or any of its Subsidiaries;

     

    (i)
         any labor organization activity related to the Company or any of
      its Subsidiaries;

     

    (j)
         any debt, obligation or liability incurred, assumed or guaranteed
      by the Company or any of its Subsidiaries, except those for immaterial amounts
      and for current liabilities incurred in the ordinary course of
      business;

     

    (k)
         any sale, assignment, hypothecation or transfer of any patents,
      trademarks, copyrights, trade secrets or other intangible assets owned by the
      Company or any of its Subsidiaries;

     

    (l)
         any change in any material agreement to which the Company or any of
      its Subsidiaries is a party or by which either the Company or any of its
      Subsidiaries is bound which either individually or in the aggregate has had,
      or
      could reasonably be expected to have, individually or in the aggregate, a
      Material Adverse Effect;

     

    (m)
         any other event or condition of any character that, either
      individually or in the aggregate, has had, or could reasonably be expected
      to
      have, individually or in the aggregate, a Material Adverse Effect;
      or

     

    (n)
         any arrangement or commitment by the Company or any of its
      Subsidiaries to do any of the acts described in subsection (a) through (m)
      above.

     

    3.9.  
      Title
      to Properties and Assets; Liens, Etc.
      Except
      as set forth on Schedule 3.9, the Company and each of its Subsidiaries has
      good
      and marketable title to its properties and assets, and good title to its
      leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
      encumbrance or charge, other than:

     

    
      
        
        

      

      
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    (a)
         those resulting from taxes which have not yet become
      delinquent;

     

    (b)
         minor liens and encumbrances which do not materially detract from
      the value of the property subject thereto or materially impair the operations
      of
      the Company or any of its Subsidiaries; and

     

    (c)
         those that have otherwise arisen in the ordinary course of
      business.

     

    All
      facilities, machinery, equipment, fixtures, vehicles and other properties owned,
      leased or used by the Company and its Subsidiaries are in good operating
      condition and repair and are reasonably fit and usable for the purposes for
      which they are being used. Except as set forth on Schedule 3.9, the Company
      and
      its Subsidiaries are in compliance with all material terms of each lease to
      which it is a party or is otherwise bound except where such failure to be in
      compliance, either individually or in the aggregate has had, or could reasonably
      be expected to have, individually or in the aggregate, a Material Adverse
      Effect.

    

    3.10.  
      Intellectual
      Property. 

     

    (a)
         Each of the Company and each of its Subsidiaries owns or possesses
      sufficient legal rights to all patents, trademarks, service marks, trade names,
      copyrights, trade secrets, licenses, information and other proprietary rights
      and processes necessary for its business as now conducted, as presently proposed
      to be conducted (the “Intellectual Property”), without any infringement of the
      rights of others. There are no outstanding options, licenses or agreements
      of
      any kind relating to the foregoing proprietary rights, nor is the Company or
      any
      of its Subsidiaries bound by or a party to any options, licenses or agreements
      of any kind with respect to the patents, trademarks, service marks, trade names,
      copyrights, trade secrets, licenses, information and other proprietary rights
      and processes of any other person or entity other than such licenses or
      agreements arising from the purchase of “off the shelf” or standard
      products.

     

    (b)
         Neither the Company nor any of its Subsidiaries are in breach of
      any intellectual property right of any third party nor have they received any
      communications alleging that the Company or any of its Subsidiaries has violated
      any of the patents, trademarks, service marks, trade names, copyrights or trade
      secrets or other proprietary rights of any other person or entity, nor is the
      Company or any of its Subsidiaries aware of any basis therefor.

     

    (c)
         The Company does not and will not utilize any inventions, trade
      secrets or proprietary information of any of its employees made prior to their
      employment by the Company or any of its Subsidiaries, except for inventions,
      trade secrets or proprietary information that have been rightfully assigned
      to
      the Company or any of its Subsidiaries.

     

    3.11.  
      Compliance
      with other Instruments.
      Neither
      the Company nor any of its Subsidiaries is in violation or default of (i) any
      material term of its Charter or Bylaws, or (ii) of any provision of any
      indebtedness, mortgage, indenture, contract, agreement or instrument to which
      it
      is party or by which it is bound or of any judgment, decree, order or writ,
      which violation or default, in the case of this clause (ii), has had, or could
      reasonably be expected to have, either individually or in the aggregate, a
      Material Adverse Effect. The execution, delivery and performance of and
      compliance with this Agreement and the Related Agreements to which it is a
      party, and the issuance and sale of the Shares by the Company pursuant hereto,
      will not, with or without the passage of time or giving of notice, result in
      any
      such material violation, or be in conflict with or constitute a default under
      any such term or provision, or result in the creation of any mortgage, pledge,
      lien, encumbrance or charge upon any of the properties or assets of the Company
      or any of its Subsidiaries or the suspension, revocation, impairment, forfeiture
      or nonrenewal of any permit, license, authorization or approval applicable
      to
      the Company, its business or operations or any of its assets or
      properties.

    
      
        
        

      

      
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    3.12.  
      Filings,
      Consents and Approvals.
      Neither
      the Company nor any Subsidiary is required to obtain any consent, waiver,
      authorization or order of, give any notice to, or make any filing or
      registration with, any court or other federal, state, local or other
      governmental authority or other person in connection with the execution,
      delivery and performance by the Company of this Agreement or the Related
      Agreements, other than (i) a current report on Form 8-K announcing the
      transactions contemplated under this Agreement, (ii) the filing of a
      registration statement with the SEC as required under the Registration Rights
      Agreement, (iii) the notice and/or application(s) to the American Stock Exchange
      (“AMEX”) for the issuance and sale of the Shares for trading thereon in the time
      and manner required thereby, and (iv) the filing of Form D with the SEC and
      applicable Blue Sky filings (collectively, the “Required
      Approvals”).

     

    3.13.  
      Litigation.
      There is
      no action, suit, proceeding or investigation pending or, to the Company’s
      knowledge, currently threatened against the Company or any of its Subsidiaries
      that prevents the Company or any of its Subsidiaries from entering into this
      Agreement or the other Related Agreements, or from consummating the transactions
      contemplated hereby or thereby, or which has had, or could reasonably be
      expected to have, either individually or in the aggregate, a Material Adverse
      Effect or any change in the current equity ownership of the Company or any
      of
      its Subsidiaries, nor is the Company aware that there is any basis to assert
      any
      of the foregoing. Neither the Company nor any of its Subsidiaries is a party
      or
      subject to the provisions of any order, writ, injunction, judgment or decree
      of
      any court or government agency or instrumentality. There is no action, suit,
      proceeding or investigation by the Company or any of its Subsidiaries currently
      pending or which the Company or any of its Subsidiaries intends to
      initiate.

     

    3.14.  
      Tax
      Returns and Payments.
      Except
      as set forth on Schedule 3.14, the Company and each of its Subsidiaries have
      timely filed all tax returns (federal, state, local, and foreign) required
      to be
      filed by it. All taxes shown to be due and payable on such returns, any
      assessments imposed, and all other taxes due and payable by the Company or
      any
      of its Subsidiaries on or before the Closing, have been paid or will be paid
      prior to the time they become delinquent. Except as set forth on Schedule 3.14,
      neither the Company nor any of its Subsidiaries has been advised:

     

    (a)
         that any of its returns, federal, state, local, foreign, or other,
      have been or are being audited as of the date hereof; or

     

    (b)
         of any deficiency in assessment or proposed judgment to its
      federal, state, local, foreign, or other taxes.

     

    The
      Company has no knowledge of any liability for any tax to be imposed upon its
      properties or assets as of the date of this Agreement that is not adequately
      provided for.

     

    
      
        
        

      

      
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    3.15.  
      Employees.
      Neither
      the Company nor any of its Subsidiaries has any collective bargaining agreements
      with any of its employees. There is no labor union organizing activity pending
      or, to the Company’s knowledge, threatened with respect to the Company or any of
      its Subsidiaries. Neither the Company nor any of its Subsidiaries is a party
      to
      or bound by any currently effective employment contract with its corporate
      officers, deferred compensation arrangement, bonus plan, incentive plan, profit
      sharing plan, retirement agreement or other employee compensation plan or
      agreement. To the Company’s knowledge, no employee of the Company or any of its
      Subsidiaries, nor any consultant with whom the Company or any of its
      Subsidiaries has contracted, is in violation of any term of any employment
      contract, proprietary information agreement or any other agreement relating
      to
      the right of any such individual to be employed by, or to contract with, the
      Company or any of its Subsidiaries because of the nature of the business to
      be
      conducted by the Company or any of its Subsidiaries; and to the Company’s
      knowledge the continued employment by the Company or any of its Subsidiaries
      of
      its present employees, and the performance of the Company’s and its
      Subsidiaries’ contracts with its independent contractors, will not result in any
      such violation. Neither the Company nor any of its Subsidiaries is aware that
      any of its employees is obligated under any contract (including licenses,
      covenants or commitments of any nature) or other agreement, or subject to any
      judgment, decree or order of any court or administrative agency, that would
      interfere with their duties to the Company or any of its Subsidiaries. Neither
      the Company nor any of its Subsidiaries has received any notice alleging that
      any such violation has occurred. Except for employees who have a current
      effective employment agreement with the Company or any of its Subsidiaries,
      no
      employee of the Company or any of its Subsidiaries has been granted the right
      to
      continued employment by the Company or any of its Subsidiaries or to any
      material compensation following termination of employment with the Company
      or
      any of its Subsidiaries. The Company is not aware that any officer, key employee
      or group of employees intends to terminate his, her or their employment with
      the
      Company or any of its Subsidiaries, nor does the Company or any of its
      Subsidiaries have a present intention to terminate the employment of any
      officer, key employee or group of employees.

     

    3.16.  
      Compliance
      with Laws; Permits.
      Neither
      the Company nor any of its Subsidiaries is in violation of any applicable
      statute, rule, regulation, order or restriction of any domestic or foreign
      government or any instrumentality or agency thereof in respect of the conduct
      of
      its business or the ownership of its properties which has had, or could
      reasonably be expected to have, either individually or in the aggregate, a
      Material Adverse Effect. No governmental orders, permissions, consents,
      approvals or authorizations are required to be obtained and no registrations
      or
      declarations are required to be filed in connection with the execution and
      delivery of this Agreement or any other Related Agreement and the issuance
      of
      any of the Shares, except such as has been duly and validly obtained or filed,
      or with respect to any filings that must be made after the Closing, as will
      be
      filed in a timely manner. Each of the Company and its Subsidiaries has all
      material franchises, permits, licenses and any similar authority necessary
      for
      the conduct of its business as now being conducted by it, the lack of which
      could, either individually or in the aggregate, reasonably be expected to have
      a
      Material Adverse Effect.

     

    3.17.  
      Environmental
      and Safety Laws.
      Neither
      the Company nor any of its Subsidiaries is in violation of any applicable
      statute, law or regulation relating to the environment or occupational health
      and safety and no material expenditures are or will be required in order to
      comply with any such existing statute, law or regulation except for such
      violations that individually, or in the aggregate, have had, or could reasonably
      be expected to have, individually or in the aggregate, a Material Adverse
      Effect. No Hazardous Materials (as defined below) are used or have been used,
      stored, or disposed of by the Company or any of its Subsidiaries or, to the
      Company’s knowledge, by any other person or entity on any property owned, leased
      or used by the Company or any of its Subsidiaries. For the purposes of the
      preceding sentence, “Hazardous Materials” shall mean:

     

    (a)
         materials which are listed or otherwise defined as “hazardous” or
“toxic” under any applicable local, state, federal and/or foreign laws and
      regulations that govern the existence and/or remedy of contamination on
      property, the protection of the environment from contamination, the control
      of
      hazardous wastes, or other activities involving hazardous substances, including
      building materials; or

    
      
        
        

      

      
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    (b)
         any petroleum products or nuclear materials.

     

    3.18.  
      Insurance.
      Each of
      the Company and each of its Subsidiaries have general commercial, fire and
      casualty insurance policies with coverages which the Company believes are
      customary for companies similarly situated to the Company and its Subsidiaries
      in the same or similar business.

     

    3.19.  
      SEC
      Reports.
      The
      Company has timely filed all proxy statements, reports and other documents
      required to be filed by it under the Securities Exchange Act 1934, as amended
      (the “Exchange Act”). The Company has made available to the Purchaser copies of:
      (i) its Annual Reports on Form 10-K for its fiscal year ended March 31, 2006;
      (ii) its quarterly reports on Form 10-Q for the fiscal quarters ended June
      30,
      2004, September 30, 2004, December 31, 2004, June 30, 2005, September 30, 2005,
      December 31, 2005, June 30, 2006 and September 30, 2006 and (iii) its reports
      on
      Form 8-K which have been filed from July 31, 2006 to date (collectively, the
      “SEC Reports”). Each SEC Report was, at the time of its filing, in substantial
      compliance with the requirements of its respective form and none of the SEC
      Reports, nor the financial statements (and the notes thereto) included in the
      SEC Reports, as of their respective filing dates, contained any untrue statement
      of a material fact or omitted to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading.

     

    4.  
      Representations,
      Warranties and Covenants of the Purchaser.
      Each
      Purchaser hereby represents, warrants and covenants to the Company as
      follows:

     

    4.1.  
      Authorization;
      Enforceability.
      Each
      Purchaser has the power and authority to purchase the Shares and to execute
      and
      deliver this Agreement and the Related Agreements to which such Purchaser is
      a
      party and to perform the provisions hereof and thereof. This Agreement
      constitutes, and upon execution and delivery thereof, each other Related
      Agreement to which such Purchaser is a party will constitute, such Purchaser’s
      valid and legally binding obligation, enforceable in accordance with its terms,
      subject to (i) applicable bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium or other similar laws of general application relating
      to or affecting the enforcement of creditors’ rights generally and (ii) general
      principles of equity.

     

    4.2.  
      No
      Conflict with Other Instruments.
      The (i)
      execution, delivery and performance of this Agreement by each Purchaser and
      the
      other Related Agreements to which such Purchaser is a party, and (ii)
      consummation of the transactions contemplated hereby and thereby by such
      Purchaser has not and will not result in default (and to the knowledge of such
      Purchaser, no event has occurred which, with notice or lapse of time or both,
      would constitute a default) under any provision of any instrument or contract
      to
      which such Purchaser is a party or by which such Purchaser or any of its
      property is bound, or in violation of any provision of any governmental
      requirement applicable to such Purchaser.

     

    
      
        
        

      

      
        9

        
          

        

      

       

    

     

    4.3.  
      Consent. 
      Filings,
      Consents and Approvals.
      No
      Purchaser is required to obtain any consent, waiver, authorization or order
      of,
      give any notice to, or make any filing or registration with, any court or other
      federal, state, local or other governmental authority or other person in
      connection with the execution, delivery and performance by the Purchaser of
      this
      Agreement or the Related Agreements, other than the Required Approvals or any
      other filing or notice required under federal or state securities laws to report
      the transactions contemplated in this Agreement and the Related
      Agreements.

     

    4.4.  
      Investment
      for Own Account.
      Such
      Purchaser will hold the Shares for their own account for investment purposes
      only, and not with a view to, or for resale in connection with, any distribution
      that would require registration under the Securities Act or the securities
      laws
      of any state. Such Purchaser does not presently have any reason to anticipate
      any change in circumstances or other particular occasion or event which would
      require selling the Shares or any part thereof or interest therein. Such
      Purchaser understands that there will be no established market for the Shares
      and that such Purchaser may be restricted from selling the Shares except in
      a
      sale exempt under federal and state securities laws.

     

    4.5.  
      No
      Registration.
      Such
      Purchaser understands that: (a) the Shares (i) have not been registered under
      the Securities Act or any state securities laws, (ii) will be issued in reliance
      upon an exemption from the registration and prospectus delivery requirements
      of
      the Securities Act which relate to private offerings, (iii) may be required
      to
      be held by such Purchaser indefinitely, and (b) such Purchaser must therefore
      bear the economic risk of such investment indefinitely unless a subsequent
      disposition thereof is registered under the Securities Act and applicable state
      securities laws or is exempt therefrom. Such Purchaser further understands
      that
      such exemptions depend upon, among other things, the accuracy of such
      Purchaser’s representations set forth in this Section 4.

     

    4.6.  
      Access
      to Information.
      Such
      Purchaser has had an opportunity to ask questions of, and receive satisfactory
      answers from, the Company and its representatives or agents concerning the
      terms
      of this investment and the undersigned’s potential acquisition of the Shares,
      and all such questions have been answered to such Purchaser’s full satisfaction.
      Such Purchaser has been furnished by the Company all information (or provided
      access to all information) regarding the business and financial condition of
      the
      Company, the attributes of the Shares and the merits and risks of an investment
      in the Shares which such Purchaser has requested or otherwise needs to evaluate
      the investment in the Shares, and such Purchaser does not desire any further
      information or data concerning the Company. Specifically, such Purchaser
      acknowledges receipt from the Company of, without limitation, the following
      information (collectively, the “Investment Information”):

     

    (a)
         the Company’s Exchange Act Filings; and

     

    (b)
         the Company’s Charter and Bylaws.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Such
      Purchaser has received, read and understands the Investment Information. Such
      Purchaser has examined all written materials furnished by the Company, or caused
      the same to be examined by such Purchaser’s representatives, to the extent such
      Purchaser deemed necessary or appropriate. The undersigned acknowledges that
      the
      Company has made available to the undersigned the opportunity to obtain
      additional information to verify the accuracy of any material shown to the
      undersigned by the Company and to evaluate the merits and risks of this
      investment.

    

    4.7.  
      Accredited
      Investor.
      Such
      Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D
      promulgated under the Securities Act, and such Purchaser, or those persons
      retained by such Purchaser, have knowledge, skill and experience in financial,
      business and investment matters relating to an investment of this type and
      are
      capable of evaluating the merits and risks of such investment and protecting
      such Purchaser in connection with an investment in the Shares. At such
      Purchaser’s own expense, the undersigned has, to the extent deemed necessary by
      such Purchaser, retained and relied upon appropriate professional advice
      regarding the investment, tax and legal merits and consequences of an investment
      in the Shares. Such Purchaser has not received any legal, business, tax or
      other
      advice from the Company, its counsel or other representatives.

     

    4.8.  
      Risk
      of Investment.
      Such
      Purchaser acknowledges that (i) it has been called to such Purchaser’s attention
      that such Purchaser’s investment in the Shares involves a high degree of risk,
      (ii) any investment in the Company is not insured by any governmental or other
      entity, and (iii) such Purchaser understands that the Shares will be an illiquid
      investment. Further, such Purchaser acknowledges that there are certain tax
      risks associated with the proposed investment and no assurances are being made
      that existing tax laws and regulations will not be modified in the future,
      thus
      altering tax consequences associated with this potential investment. The Company
      has never made any representation, guarantee or warranty (a) as to the
      approximate or exact length of time that such Purchaser will be required to
      remain an owner of the Shares (or any other securities of the Company); (b)
      the
      percentage of profit, amount of or type of consideration and/or profit or loss,
      if any, that will result from an investment in the Shares; or (c) that any
      future expectations relating to the Company’s performance indicate in any way
      what the Company’s financial condition or results of operations will be in the
      future. Such Purchaser understands the speculative nature of an investment
      in
      the Shares and the financial risks associated with the Shares.

     

    4.9.  
      Restrictions
      on Transfer.
      The
      Offering is being made in reliance upon exemptions from registration under
      the
      Securities Act and applicable state securities laws for an offer and sale of
      securities not involving a public offering. The Shares may not be sold,
      transferred or otherwise disposed of without satisfaction of certain conditions,
      including registration under, or the availability of an exemption from
      registration under, the Securities Act and applicable state securities laws.
      Such Purchaser agrees that the Company may permit the transfer of the Shares
      out
      of such Purchaser’s name only when any request for transfer is accompanied by an
      opinion of counsel acceptable in form and substance to Company counsel to the
      effect that the proposed transfer results in no violation of the Securities
      Act
      or any applicable state securities laws. A legend to this effect will be placed
      upon each certificate representing the Shares.

     

    4.10.  
      Representations
      and Warranties.
      No
      person or entity, other than the Company, has been authorized to give any
      information or to make any representations on behalf of the Company in
      connection with the offering of the Shares and, if given or made, such
      information or representations have not been relied upon by the undersigned
      as
      having been made or authorized by the Company. The only representations,
      warranties and information made by the Company in connection with the Offering
      are those contained in this Agreement and the Investment
      Information.

     

    
      
        
        

      

      
        11

        
          

        

      

       

    

     

    4.11.  
      General
      Solicitation.
      The
      solicitation of an offer to buy the Shares was communicated to such Purchaser
      in
      such a manner that at no time was such Purchaser presented with or solicited
      by
      or through any leaflet, public promotional meeting, television, radio, internet
      or other published advertisement or any other form of general or public
      advertising or solicitation.

     

    4.12.  
      Purchaser’s
      Experience.
      By
      reason of such Purchaser’s business and financial experience, such Purchaser has
      the capacity to protect such Purchaser’s own interests in investments of this
      nature. Such Purchaser has evaluated such Purchaser’s financial resources and
      investment position, and the risks associated with the proposed investment
      and
      concluded that such Purchaser has the ability to bear the economic risks
      associated with this proposed investment.

     

    4.13.  
      Non-public
      Information.
      After
      the date hereof, such Purchaser agrees to hold in strict confidence any
      non-public information of the Company (the “Information”) acquired by such
      Purchaser, and not to use such Information for any competitive purpose. Such
      Purchaser may transmit Information to its partners, directors, officers,
      employees, agents or representatives, including attorneys, accountants and
      consultants (collectively, “Representatives”), but only to such Representatives
      who are informed of the confidential nature of the Information and are directed
      to treat such Information as confidential. Notwithstanding anything to the
      contrary herein, such Purchaser may disclose any Information to the extent
      such
      Information or portion thereof (i) is or becomes generally available to the
      public other than as a result of a disclosure by the undersigned or its
      Representatives in breach of the terms hereof, (ii) is or becomes available
      to
      such Purchaser on a non-confidential basis from a source, other than the Company
      or its representatives, without violation of a duty of confidentiality to the
      Company, or (iii) was known to such Purchaser on a non-confidential basis prior
      to the disclosure to such Purchaser by the Company or any of its
      representatives.

     

    5.  
      Covenants
      of the Company and Purchaser. 

     

    5.1    Registration
      Rights.
      If at
      any time after the date hereof, the Company shall determine to prepare and
      file
      with the Commission a registration statement relating to an offering for its
      own
      account or the account of others under the Securities Act of any of its equity
      securities, other than on Form S-4 or Form S-8 (each as promulgated under the
      Securities Act) or their then equivalents relating to equity securities to
      be
      issued solely in connection with any acquisition of any entity or business
      or
      equity securities issuable in connection with stock option or other employee
      benefit plans, then the Company shall use its best efforts to include in such
      registration statement all of such Shares to the extent the Company may do
      so
      without violating registration rights of others which exist as of the date
      of
      this Agreement, subject to customary underwriter cutbacks applicable to all
      holders of registration rights and subject to obtaining any required the consent
      of any selling stockholder(s) to such inclusion under such registration
      statement. The Company shall have a right to postpone, delay or withdraw any
      registration pursuant to this Section 5.1 without obligation to the
      Holder.

     

    5.2.  
      Listing.
      The
      Company shall as promptly as practicable after Closing secure the listing of
      the
      Shares on the AMEX (subject to official notice of issuance) and shall maintain
      such listing so long as any other shares of Common Stock shall be so listed.
      The
      Company will use commercially reasonable best efforts to maintain the listing
      of
      its Common Stock on AMEX, and will comply with the Company’s reporting, filing
      and other obligations under the bylaws or rules of the National Association
      of
      Securities Dealers (“NASD”) and such exchanges, as applicable.

     

    
      
        
        

      

      
        12

        
          

        

      

       

    

     

    5.3.  
      Market
      Regulations.
      The
      Company shall notify the SEC, NASD and applicable state authorities, in
      accordance with their requirements, of the transactions contemplated by this
      Agreement, and shall take all other necessary action and proceedings as may
      be
      required and permitted by applicable law, rule and regulation, for the legal
      and
      valid issuance of the Shares to the Purchasers and promptly provide copies
      thereof to the Purchasers.

     

    5.4.  
      Reporting
      Requirements;
      Reports for Purchasers .
      The
      Company will timely file with the SEC all reports required to be filed pursuant
      to the Exchange Act and refrain from terminating its status as an issuer
      required by the Exchange Act to file reports thereunder even if the Exchange
      Act
      or the rules or regulations thereunder would permit such termination. The
      Company will prepare and timely file with the Commission, at the Company’s
      expense, any filings pursuant to Section 13 or 16 of the Exchange Act that
      are
  required for Purchasers in connection with this transaction in the
      future; provided,
      however
      , that
      Purchasers agree to deliver any necessary information required to complete
      such
      filings   to the Company no later than the next business day after the
      transaction requiring such filing occurs.      

     

    5.5.  
      Restrictions.
      If
      required by law, until this Agreement and the Related Agreements are approved
      by
      the holders a majority of the outstanding shares of capital stock of the Company
      entitled to vote (“Shareholder Approval”), no holder of Shares shall be entitled
      to vote such holder’s Shares, if such holder will hold more than 9.99% of the
      outstanding Common Stock or voting power of the Company on the date of such
      vote
      or exercise.

     

    6.  
      Indemnification.

     

    6.1.  
      Company
      Indemnification.
      The
      Company agrees to indemnify, hold harmless, reimburse and defend the Purchasers,
      each Purchaser’s officers, directors, agents, affiliates, control persons, and
      principal shareholders, against any claim, cost, expense, liability, obligation,
      loss or damage (including reasonable legal fees) of any nature, incurred by
      or
      imposed upon the Purchasers which results, arises out of or is based upon:
      (i)
      any misrepresentation by the Company or any of its Subsidiaries or breach of
      any
      warranty by the Company or any of its Subsidiaries in this Agreement, any other
      Related Agreement or in any exhibits or schedules attached hereto or thereto;
      or
      (ii) any breach or default in performance by Company or any of its Subsidiaries
      of any covenant or undertaking to be performed by Company or any of its
      Subsidiaries hereunder, under any other Related Agreement or any other agreement
      entered into by the Company and/or any of its Subsidiaries and Purchasers
      relating hereto or thereto.

     

    6.2.  
      Purchasers’
      Indemnification.
      Each
      Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company
      and each of the Company’s officers, directors, agents, affiliates, control
      persons and principal shareholders, at all times against any claim, cost,
      expense, liability, obligation, loss or damage (including reasonable legal
      fees)
      of any nature, incurred by or imposed upon the Company which results, arises
      out
      of or is based upon: (i) any misrepresentation by the Purchasers or breach
      of
      any warranty by the Purchasers in this Agreement, any other Related Agreement
      or
      in any exhibits or schedules attached hereto or thereto; or (ii) any breach
      or
      default in performance by the Purchasers of any covenant or undertaking to
      be
      performed by the Purchasers hereunder, under any other Related Agreement or
      any
      other agreement entered into by the Company and/or any of its Subsidiaries
      and
      Purchasers relating hereto or thereto.

     

    
      
        
        

      

      
        13

        
          

        

      

       

    

     

    7.
         
      Miscellaneous.

     

    7.1.   Entire
      Agreement.
      This
      Agreement, the Related Agreements, the exhibits and schedules hereto and thereto
      and the other documents delivered pursuant hereto constitute the full and entire
      understanding and agreement between the parties with regard to the subjects
      hereof and no party shall be liable or bound to any other in any manner by
      any
      representations, warranties, covenants and agreements except as specifically
      set
      forth herein and therein.

     

    7.2    Choice
      of Law.
      This
      Agreement shall be governed under the laws of the State of New York, without
      regard to conflicts of law. The parties agree that the venue for the resolution
      of any conflicts arising under this Agreement or for the interpretation of
      this
      Agreement shall be in New York, New York and that the Courts of the State of
      New
      York shall have jurisdiction over any such disputes and over the parties
      hereto.

     

    7.3   Attorney’s
      Fees.
      In the
      event any litigation, arbitration, mediation, or other proceeding (“Proceeding”)
      is initiated by any party(ies) against any other party(ies) to enforce,
      interpret or otherwise obtain judicial or quasi-judicial relief in connection
      with this Agreement, the prevailing party(ies) in such Proceeding shall be
      entitled to recover from the unsuccessful party(ies) all costs, expenses, actual
      attorney’s and expert witness fees, relating to or arising out of: (i) such
      Proceeding (whether or not such Proceeding proceeds to judgment), and (ii)
      any
      post-judgment or post-award proceeding including, without limitation, one to
      enforce any judgment or award resulting from any such Proceeding. Any such
      judgment or award shall contain a specific provision for the recovery of all
      such subsequently incurred costs, expenses, actual attorney and expert witness
      fees.

     

    7.4    Counterparts.
      This
      Agreement may be signed in one (1) or more counterparts, each of which shall
      constitute an original but all of which together shall be one (1) and the same
      document. Signatures received by facsimile shall be deemed to be original
      signatures.

     

    7.5    Partial
      Invalidity.
      Each
      provision of this Agreement will be valid and enforceable to the fullest extent
      permitted by law. If any provision of this Agreement or the application of
      the
      provision to any person or circumstance will, to any extent, be invalid or
      unenforceable, the remainder of this Agreement, or the application of the
      provision to persons or circumstances other than those as to which it is held
      invalid or unenforceable, will not be affected by such invalidity or
      unenforceability, unless the provision or its application is essential to this
      Agreement.

     

    7.6   Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    7.7   Drafting
      Ambiguities.
      Each
      party to this Agreement and their legal counsel have reviewed and revised this
      Agreement. The rule of construction that any ambiguities are to be resolved
      against the drafting party shall not be employed in the interpretation of this
      Agreement or any amendments or exhibits to this Agreement.

     

    
      
        
        

      

      
        14

        
          

        

      

       

    

     

    7.8   Notices.
      Any
      notice from one party to another shall be delivered either personally, via
      facsimile or by United States mail, postage fully prepaid, addressed as
      follows:

     

    
      	
              Purchasers:

            	
               

            	
              To
                the respective addresses set forth below the   Purchaser’s signature
                at the foot of this Agreement

            
	
               

            	
               

            	
               

            
	
              With
                a copy (not constituting notice):  

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              Company:

            	
               

            	
              The
                Singing Machine Company, Inc.

            
	
               

            	
               

            	
              Attention:
                Danny Zheng

            
	
               

            	
               

            	
              6601
                Lyons Road, Building A-7

            
	
               

            	
               

            	
              Coconut
                Creek, FL 33073

            
	
               

            	
               

            	
               

            
	
              With
                a copy to (not constituting notice):

            	
               

            	
              Sichenzia
                Ross Friedman Ference LLP

            
	
               

            	
               

            	
              Attention:
                Darrin M. Ocasio, Esq.

            
	
               

            	
               

            	
              1065
                Avenue of the Americas

            
	
               

            	
               

            	
              New
                York, NY 10018

            

    

     

    Any
      notice being delivered within the continental United States shall be deemed
      delivered upon (a) personal service, or (b) transmission via facsimile (with
      the
      original thereof to be immediately sent via mail, postage prepaid), or (c)
      forty
      eight (48) hours after the time of deposit in the mail, as the case may be.
      In
      the event any Party changes its address, such change of address shall be
      communicated to the other Party in the manner set forth in this
      Section.

     

    7.8a   Definition
      of Knowledge.
      For the
      purposes of this Agreement, the Company shall only be deemed to have “knowledge”
of a particular fact or other matter, if an executive officer of the Company
      is
      actually aware of such fact or matter, or a reasonably prudent individual
      operating in the capacity of an executive officer of the Company could be
      expected to discover or otherwise become aware of such fact or matter in the
      ordinary course of fulfilling the responsibilities of an executive
      officer.

     

    7.9  Interpretation/Representation.
      Wherever
      the context of this Agreement requires, all words used in the singular shall
      be
      construed to have been used in the plural, and vice versa, and the use of any
      gender specific pronoun shall include any other appropriate gender. The term
      “person” shall refer to any individual, corporation or legal entity having
      standing to bring an action in its own name under applicable state law. The
      conjunctive “or” shall mean “and/or” unless otherwise required by the context in
      which the conjunctive “or” is used.

     

    7.10  Survival.
      The
      representations, warranties, covenants and agreements made herein shall survive
      any investigation made by the Purchaser and the closing of the transactions
      contemplated hereby to the extent provided therein. All statements as to factual
      matters contained in any certificate or other instrument delivered by or on
      behalf of the Company pursuant hereto in connection with the transactions
      contemplated hereby shall be deemed to be representations and warranties by
      the
      Company hereunder solely as of the date of such certificate or
      instrument.

     

    
      
        
        

      

      
        15

        
          

        

      

       

    

     

    7.11  Successors.
      Except
      as otherwise expressly provided herein, the provisions hereof shall inure to
      the
      benefit of, and be binding upon, the successors, heirs, executors and
      administrators of the parties hereto and shall inure to the benefit of and
      be
      enforceable by each person who shall be a holder of the Shares from time to
      time, other than the holders of Common Stock which has been sold by the
      Purchasers pursuant to Rule 144 or an effective registration
      statement.

     

    7.12  Amendment
      and Waiver. 
       

     

    (a)
         This Agreement may be amended or modified only upon the written
      consent of the Company and a majority in interest of the
      Purchasers.

     

    (b)
         The obligations of the Company and the rights of the Purchasers
      under this Agreement may be waived only with the written consent of a majority
      in interest of the Purchasers.

     

    (c)
         The obligations of the Purchasers and the rights of the Company
      under this Agreement may be waived only with the written consent of the
      Company.

     

    7.2.  Delays
      or Omissions.
      It is
      agreed that no delay or omission to exercise any right, power or remedy accruing
      to any party, upon any breach, default or noncompliance by another party under
      this Agreement or the Related Agreements, shall impair any such right, power
      or
      remedy, nor shall it be construed to be a waiver of any such breach, default
      or
      noncompliance, or any acquiescence therein, or of or in any similar breach,
      default or noncompliance thereafter occurring. All remedies, either under this
      Agreement or the Related Agreements, by law or otherwise afforded to any party,
      shall be cumulative and not alternative.

     

    [Remainder
      of Page Intentionally Left Blank.]

     

    
      
        
        

      

      
        16

        
          

        

      

       

    

     

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the date set forth in the
      first paragraph hereof.

     

    COMPANY:

    

    The
      Singing Machine Company, Inc. 

    a
      Delaware corporation

     

    
      	
               

            	
               

            	
               

            	
               

            
	
              /s/ Danny
                Zheng

            	
               

            	
               

            	
               

            
	
              
                

              

              Danny
                Zheng, Interim 

              Chief Executive
                Officer

            	
               

            	
               

            	 

    

     

    PURCHASERS:

     

    Gentle
      Boss Investments Ltd.

     

    
      	
               

            	
               

            	
               

            	
               

            	
               

            
	
              By:

            	
              /s/
                Hamen Fan

            	
               

            	
               

            	
               

            
	
               

               

               

            	
              
                

              

              Name:
                Hamen Fan

              
                Its:
                  Director

              

            	
               

            	
               

            	 
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Address:

            	
              Unit
                6, 9/F, Tower B

              55
                Hoi Yuen Road

              Kwun
                Tong, Kowloon

              Hong
                Kong

            	
               

            	
               

            	
               

            

    

    
      
        
        

      

      
        17

        
          

        

      

       

    

     

    EXHIBIT
      A

    

    Closing
      Share Distribution Schedule

     

    
      	
              Gentle
                Boss Investments Ltd.

            	
               

            	
              720,000
                shares for total of
                US$600,000.00

            

    

       

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.1: Company and Subsidiary Identification

    

    The
      Singing Machine Holdings Ltd. (A BVI Corporation)

     

    100%
      owned by The Singing Machine Company, Inc.

    Registered
      Office: C/O Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O.
      Box
      146, Road Town, Tortola, British Virgin Islands

    

    SMC
      (Comercial Offshore de Macau) Limitada (A Macau
      Corporation)

     

    100%
      owned by The Singing Machine Holdings Ltd.

    Office
      address: Alameda Dr. Carlos d’Assumpcao, No. 263, Efificio China Civil Plaza, 20
      andar, Macau

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.2: Ownership of Subsidiaries

    

    (See
      Above at Schedule 4.1)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.9 Title
      to Properties and Assets; Liens, Etc

    

    Properties
      pledged as collateral to Crestmark Bank, a lender

    

    All
      personal properties of The Singing Machine Company, Inc., which
      including:

     

    
      	
              1)  

            	
              Accounts
                receivable

            
	
               

            	
               

            
	
              2)  

            	
              Inventory

            
	
               

            	
               

            
	
              3)  

            	
              Chattel
                paper (N/A)

            
	
               

            	
               

            
	
              4)  

            	
              Equipment

            
	
               

            	
               

            
	
              5)  

            	
              Investment
                property (N/A)

            
	
               

            	
               

            
	
              6)  

            	
              Deposit
                account

            
	
               

            	
               

            
	
              7)  

            	
              General
                Intangible

            

    

     

    As
      of
      December 31, 2006, our loan balance with the Crestmark Bank was
      $1,157,806.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.14: Tax Returns and Payments

    

    All
      the
      tax liabilities has been included in our latest consolidated financial
      statements filed with SEC dated September 30, 2006.THE
      SINGING MACHINE COMPANY, INC.

    

    SECURITIES
      PURCHASE AGREEMENT

    

    This
      Securities Purchase Agreement (this “Agreement”) is dated as of January 16,
      2007, among The Singing Machine Company, Inc., a Delaware corporation (the
      “Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”).

    

    RECITALS

    

    WHEREAS,
      the
      Company has authorized the sale and issuance to the Purchasers of an aggregate
      of up to 480,000 shares (the “Shares”) of the Company’s Common Stock, par value
      $0.01 (the “Common Stock”); and

    

    WHEREAS,
      Purchasers desire to purchase and the Company desires to sell the Shares on
      the
      terms and conditions set forth herein.

    

    NOW,
      THEREFORE,
      in
      consideration of the foregoing recitals and the mutual promises,
      representations, warranties and covenants hereinafter set forth and for other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

    

    AGREEMENT

    

    1. 
      Purchase
      and Sale.
      Pursuant
      to the terms and conditions set forth in this Agreement, the Company agrees
      to
      sell to the Purchasers, and the Purchasers hereby agree to purchase the Shares
      at a purchase price of $0.833 per share, for a total purchase price equal to
      $400,000 US Dollars (the “Purchase Price”).

     

    2. 
      Closing,
      Delivery and Payment. 

     

    2.1. 
      Closing.
      Subject
      to the terms and conditions herein, the closing of the transactions contemplated
      hereby (“Closing”) shall take place on the first business day following such
      date as the Company and each Purchaser has satisfied all of the closing
      conditions set forth herein (the “Closing Date”) at the offices of Sichenzia
      Ross Friedman Ference LLP, located at 1065 Avenue of the Americas, New York,
      New
      York. The Shares sold and issued on the Closing Date will be, and will be
      distributed among the Purchasers, as set forth on Exhibit A.

     

    2.2. 
      Closing
      Deliverables. 

     

    (a)
        At the Closing, and as a condition to the Purchaser’s obligations
      hereunder, the Company will deliver the following to the
      Purchasers:

     

    (i)
        an executed copy of this Agreement;

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (ii)
        an executed copy of corporate resolutions and Board authorizations which
      pursuant to Delaware law authorize the issuance of the Shares to Purchasers
      as
      set forth herein;

     

    (iii)
        Such documents from the American Stock Exchange, and any other applicable
      regulatory bodies (collectively “AMEX”) which set forth that Purchasers’
purchase of the Shares on the terms set forth in this Agreement and the Related
      Agreements (as hereinafter defined) has been approved by the AMEX such that
      Purchasers’ purchase of the Shares is completely free and clear of any voting
      restrictions which may be imposed by the AMEX pursuant to Section 713, and
      any
      other applicable sections, of the American Stock Exchange Company Guide, and
      any
      additional applicable and related regulations (collectively “Regulatory
      Approval”);

     

    (iv)
        an opinion of Company counsel that the Shares have been properly
      authorized, conform with all laws relating to their issuance, and are free
      and
      clear of all liens, charges, or assessments of any form and character as of
      the
      Closing Date;

     

    (v)
        stock certificates representing the Shares purchased at the Closing;
      and

     

    This
      Agreement are referred to herein as the “Related Agreements.”

     

    (b)
        At the Closing, each Purchaser will deliver the following to the
      Company:

     

    (i)
        an executed copy of this Agreement; and

     

    (ii)
        the purchase consideration for the Shares to be purchased by such
      Purchaser at the Closing, via wire transfer to an account designated by the
      Company.

     

    3. 
      Representations
      and Warranties of the Company.
      Except
      as set forth in the Company’s filings under the Securities Exchange Act of 1934
      (collectively, the “Exchange Act Filings”), copies of which have been made
      available to the Purchasers, the Company hereby represents and warrants to
      the
      Purchaser as follows:

     

    3.1. 
      Organization,
      Good, Standing and Qualification.
      Each of
      the Company and its active Subsidiaries (as defined below) is an entity duly
      incorporated or otherwise organized, validly existing and in good standing
      under
      the laws of the jurisdiction of its incorporation or organization (as
      applicable), with the requisite power and authority to own and use its
      properties and assets and to carry on its business as currently conducted.
      Set
      forth on the attached Schedule 3.1 is a list identifying the name of the Company
      and each Subsidiary, its jurisdiction of incorporation and foreign status
      registration(s) as well as its directors and officers. Neither the Company
      nor
      any active Subsidiary is in violation of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the active Subsidiaries is duly
      qualified to do business and is in good standing as a foreign corporation or
      other entity in each jurisdiction in which the nature of the business conducted
      or property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not,
      individually or in the aggregate: (i) adversely affect the legality, validity
      or
      enforceability of this Agreement or the Related Agreements, (ii) have or result
      in or be reasonably likely to have or result in a material adverse effect on
      the
      results of operations, assets, business or condition (financial or otherwise)
      of
      the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
      the Company's ability to perform fully on a timely basis its obligations under
      this Agreement or the Related Agreements (any of (i), (ii) or (iii), a “Material
      Adverse Effect”).

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    3.2. 
      Subsidiaries.
      Each
      direct and indirect Subsidiary of the Company, the direct owner of such
      Subsidiary and its percentage ownership thereof, is set forth on the attached
      Schedule 3.2. For the purpose of this Agreement, a “Subsidiary” of any person or
      entity means (i) a corporation or other entity whose shares of stock or other
      ownership interests having ordinary voting power (other than stock or other
      ownership interests having such power only by reason of the happening of a
      contingency) to elect a majority of the directors of such corporation, or other
      persons or entities performing similar functions for such person or entity,
      are
      owned, directly or indirectly, by such person or entity or (ii) a corporation
      or
      other entity in which such person or entity owns, directly or indirectly, more
      than 50% of the voting interests at such time.

     

    3.3. 
      Capitalization;
      Voting Rights. 

     

    (a)
        The authorized capital stock of the Company, as of the date hereof
      consists of 100,000,000 shares of common stock par value $0.01 of which
      25,274,883 are issued and outstanding and 1,000,000 shares of preferred stock
      $0.10 par value, of which none are issued and outstanding. All issued and
      outstanding shares of the Company’s Common Stock: (a) have been duly authorized
      and validly issued and are fully paid and nonassessable; and (b) were issued
      by
      the Company in full compliance with all applicable state and federal laws
      concerning the issuance of securities.

     

    (b)
        The rights, preferences, privileges and restrictions of the shares of the
      Common Stock are as stated in the Company’s Certificate of Incorporation, as
      amended (the “Charter”) and pursuant to applicable law.

     

    3.4. 
      Authorization
      and Binding Obligations.
      All
      corporate, partnership or limited liability company, as the case may be, action
      on the part of the Company (including the respective officers and directors)
      necessary for the authorization of this Agreement and the Related Agreements,
      the performance of all obligations of the Company hereunder and under the other
      Related Agreements at the Closing and, the authorization, sale, issuance and
      delivery of the Shares has been taken or will be taken prior to the Closing.
      This Agreement and the Related Agreements, when executed and delivered will
      be
      valid and binding obligations of each of the Company enforceable against the
      Company in accordance with their terms, except as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or other laws of general
      application affecting enforcement of creditors’ rights and general principles of
      equity that restrict the availability of equitable or legal
      remedies.

     

    3.5. 
      Liabilities.
      Neither
      the Company nor any of its Subsidiaries has any material contingent liabilities,
      except current liabilities incurred in the ordinary course of business and
      liabilities disclosed in the Company’s Exchange Act Filings.

     

    3.6. 
      Agreements;
      Action. 

     

    (a)
        there are no agreements, understandings, instruments, contracts, proposed
      transactions, judgments, orders, writs or decrees to which the Company or any
      of
      its Subsidiaries is a party or by which it is bound which may involve: (A)
      obligations (contingent or otherwise) of, or payments to, the Company in excess
      of $100,000; or (B) provisions restricting the development, manufacture or
      distribution of the Company’s products or services.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)
        For the purposes of this Section 3.6, all indebtedness, liabilities,
      agreements, understandings, instruments, contracts and proposed transactions
      involving the same person or entity (including persons or entities the Company
      has reason to believe are affiliated therewith) shall be aggregated for the
      purpose of meeting the individual minimum dollar amounts of such
      subsections.

     

    3.7. 
      Obligations
      to Related Parties.
      There
      are no obligations of the Company or any of its Subsidiaries to officers,
      directors, stockholders or employees of the Company or any of its Subsidiaries
      other than:

     

    (a)
        for payment of salary for services rendered and for bonus
      payments;

     

    (b)
        reimbursement for reasonable expenses incurred on behalf of the Company
      and its Subsidiaries; and

     

    (c)
        for other standard employee benefits made generally available to all
      employees (including stock option agreements outstanding under any stock option
      plan approved by the Board of Directors of the Company).

     

    Further,
      except as described above, none of the officers, directors or, to the best
      of
      the Company’s knowledge, key employees or stockholders of the Company or any
      members of their immediate families, are indebted to the Company, individually
      or in the aggregate, in excess of $5,000 or have any direct or indirect
      ownership interest in any firm or corporation with which the Company is
      affiliated or with which the Company has a business relationship, or any firm
      or
      corporation which competes with the Company, other than passive investments
      in
      publicly traded companies (representing less than one percent (1%) of such
      company) which may compete with the Company. Except as described above, no
      officer, director or stockholder, or any member of their immediate families,
      is,
      directly or indirectly, interested in any material contract with the Company
      and
      no agreements, understandings or proposed transactions are contemplated between
      the Company and any such person. Except as set forth on Schedule 3.7, the
      Company is not a guarantor or indemnitor of any indebtedness of any other
      person, firm or corporation.

    

    3.8. 
      Changes.
      Since
      September 30, 2006, except as disclosed or any other Schedule to this Agreement
      or to any of the Related Agreements, there has not been:

     

    (a)
        any change in the business, assets, liabilities, condition (financial or
      otherwise), properties or operations of the Company or any of its Subsidiaries,
      which individually or in the aggregate has had, or could reasonably be expected
      to have, individually or in the aggregate, a Material Adverse
      Effect;

     

    (b)
        any resignation or termination of any officer, key employee or group of
      employees of the Company or any of its Subsidiaries;

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c)
        any material change, except in the ordinary course of business, in the
      contingent obligations of the Company or any of its Subsidiaries by way of
      guaranty, endorsement, indemnity, warranty or otherwise;

     

    (d)
        any damage, destruction or loss, whether or not covered by insurance, has
      had, or could reasonably be expected to have, individually or in the aggregate,
      a Material Adverse Effect;

     

    (e)
        any waiver by the Company or any of its Subsidiaries of a valuable right
      or of a material debt owed to it;

     

    (f)
        any direct or indirect loans made by the Company or any of its
      Subsidiaries to any stockholder, employee, officer or director of the Company
      or
      any of its Subsidiaries, other than advances made in the ordinary course of
      business;

     

    (g)
        any material change in any compensation arrangement or agreement with any
      employee, officer, director or stockholder of the Company or any of its
      Subsidiaries;

     

    (h)
        any declaration or payment of any dividend or other distribution of the
      assets of the Company or any of its Subsidiaries;

     

    (i)
        any labor organization activity related to the Company or any of its
      Subsidiaries;

     

    (j)
        any debt, obligation or liability incurred, assumed or guaranteed by the
      Company or any of its Subsidiaries, except those for immaterial amounts and
      for
      current liabilities incurred in the ordinary course of business;

     

    (k)
        any sale, assignment, hypothecation or transfer of any patents,
      trademarks, copyrights, trade secrets or other intangible assets owned by the
      Company or any of its Subsidiaries;

     

    (l)
        any change in any material agreement to which the Company or any of its
      Subsidiaries is a party or by which either the Company or any of its
      Subsidiaries is bound which either individually or in the aggregate has had,
      or
      could reasonably be expected to have, individually or in the aggregate, a
      Material Adverse Effect;

     

    (m)
        any other event or condition of any character that, either individually
      or in the aggregate, has had, or could reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect; or

     

    (n)
        any arrangement or commitment by the Company or any of its Subsidiaries
      to do any of the acts described in subsection (a) through (m)
      above.

     

    3.9. 
      Title
      to Properties and Assets; Liens, Etc.
      Except
      as set forth on Schedule 3.9, the Company and each of its Subsidiaries has
      good
      and marketable title to its properties and assets, and good title to its
      leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
      encumbrance or charge, other than:

    

    (a)
        those resulting from taxes which have not yet become
      delinquent;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b)
        minor liens and encumbrances which do not materially detract from the
      value of the property subject thereto or materially impair the operations of
      the
      Company or any of its Subsidiaries; and

     

    (c)
        those that have otherwise arisen in the ordinary course of
      business.

     

    All
      facilities, machinery, equipment, fixtures, vehicles and other properties owned,
      leased or used by the Company and its Subsidiaries are in good operating
      condition and repair and are reasonably fit and usable for the purposes for
      which they are being used. Except as set forth on Schedule 3.9, the Company
      and
      its Subsidiaries are in compliance with all material terms of each lease to
      which it is a party or is otherwise bound except where such failure to be in
      compliance, either individually or in the aggregate has had, or could reasonably
      be expected to have, individually or in the aggregate, a Material Adverse
      Effect.

    

    3.10. 
      Intellectual
      Property. 

     

    (a)
        Each of the Company and each of its Subsidiaries owns or possesses
      sufficient legal rights to all patents, trademarks, service marks, trade names,
      copyrights, trade secrets, licenses, information and other proprietary rights
      and processes necessary for its business as now conducted, as presently proposed
      to be conducted (the “Intellectual Property”), without any infringement of the
      rights of others. There are no outstanding options, licenses or agreements
      of
      any kind relating to the foregoing proprietary rights, nor is the Company or
      any
      of its Subsidiaries bound by or a party to any options, licenses or agreements
      of any kind with respect to the patents, trademarks, service marks, trade names,
      copyrights, trade secrets, licenses, information and other proprietary rights
      and processes of any other person or entity other than such licenses or
      agreements arising from the purchase of “off the shelf” or standard
      products.

     

    (b)
        Neither the Company nor any of its Subsidiaries are in breach of any
      intellectual property right of any third party nor have they received any
      communications alleging that the Company or any of its Subsidiaries has violated
      any of the patents, trademarks, service marks, trade names, copyrights or trade
      secrets or other proprietary rights of any other person or entity, nor is the
      Company or any of its Subsidiaries aware of any basis therefor.

     

    (c)
        The Company does not and will not utilize any inventions, trade secrets
      or proprietary information of any of its employees made prior to their
      employment by the Company or any of its Subsidiaries, except for inventions,
      trade secrets or proprietary information that have been rightfully assigned
      to
      the Company or any of its Subsidiaries.

     

    3.11. 
      Compliance
      with other Instruments.
      Neither
      the Company nor any of its Subsidiaries is in violation or default of (i) any
      material term of its Charter or Bylaws, or (ii) of any provision of any
      indebtedness, mortgage, indenture, contract, agreement or instrument to which
      it
      is party or by which it is bound or of any judgment, decree, order or writ,
      which violation or default, in the case of this clause (ii), has had, or could
      reasonably be expected to have, either individually or in the aggregate, a
      Material Adverse Effect. The execution, delivery and performance of and
      compliance with this Agreement and the Related Agreements to which it is a
      party, and the issuance and sale of the Shares by the Company pursuant hereto,
      will not, with or without the passage of time or giving of notice, result in
      any
      such material violation, or be in conflict with or constitute a default under
      any such term or provision, or result in the creation of any mortgage, pledge,
      lien, encumbrance or charge upon any of the properties or assets of the Company
      or any of its Subsidiaries or the suspension, revocation, impairment, forfeiture
      or nonrenewal of any permit, license, authorization or approval applicable
      to
      the Company, its business or operations or any of its assets or
      properties.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    3.12. 
      Filings,
      Consents and Approvals.
      Neither
      the Company nor any Subsidiary is required to obtain any consent, waiver,
      authorization or order of, give any notice to, or make any filing or
      registration with, any court or other federal, state, local or other
      governmental authority or other person in connection with the execution,
      delivery and performance by the Company of this Agreement or the Related
      Agreements, other than (i) a current report on Form 8-K announcing the
      transactions contemplated under this Agreement, (ii) the filing of a
      registration statement with the SEC as required under the Registration Rights
      Agreement, (iii) the notice and/or application(s) to the American Stock Exchange
      (“AMEX”) for the issuance and sale of the Shares for trading thereon in the time
      and manner required thereby, and (iv) the filing of Form D with the SEC and
      applicable Blue Sky filings (collectively, the “Required
      Approvals”).

     

    3.13. 
      Litigation.
      There is
      no action, suit, proceeding or investigation pending or, to the Company’s
      knowledge, currently threatened against the Company or any of its Subsidiaries
      that prevents the Company or any of its Subsidiaries from entering into this
      Agreement or the other Related Agreements, or from consummating the transactions
      contemplated hereby or thereby, or which has had, or could reasonably be
      expected to have, either individually or in the aggregate, a Material Adverse
      Effect or any change in the current equity ownership of the Company or any
      of
      its Subsidiaries, nor is the Company aware that there is any basis to assert
      any
      of the foregoing. Neither the Company nor any of its Subsidiaries is a party
      or
      subject to the provisions of any order, writ, injunction, judgment or decree
      of
      any court or government agency or instrumentality. There is no action, suit,
      proceeding or investigation by the Company or any of its Subsidiaries currently
      pending or which the Company or any of its Subsidiaries intends to
      initiate.

     

    3.14. 
      Tax
      Returns and Payments.
      Except
      as set forth on Schedule 3.14, the Company and each of its Subsidiaries have
      timely filed all tax returns (federal, state, local, and foreign) required
      to be
      filed by it. All taxes shown to be due and payable on such returns, any
      assessments imposed, and all other taxes due and payable by the Company or
      any
      of its Subsidiaries on or before the Closing, have been paid or will be paid
      prior to the time they become delinquent. Except as set forth on Schedule 3.14,
      neither the Company nor any of its Subsidiaries has been advised:

     

    (a)
        that any of its returns, federal, state, local, foreign, or other, have
      been or are being audited as of the date hereof; or

     

    (b)
        of any deficiency in assessment or proposed judgment to its federal,
      state, local, foreign, or other taxes.

     

    The
      Company has no knowledge of any liability for any tax to be imposed upon its
      properties or assets as of the date of this Agreement that is not adequately
      provided for.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    3.15. 
      Employees.
      Neither
      the Company nor any of its Subsidiaries has any collective bargaining agreements
      with any of its employees. There is no labor union organizing activity pending
      or, to the Company’s knowledge, threatened with respect to the Company or any of
      its Subsidiaries. Neither the Company nor any of its Subsidiaries is a party
      to
      or bound by any currently effective employment contract with its corporate
      officers, deferred compensation arrangement, bonus plan, incentive plan, profit
      sharing plan, retirement agreement or other employee compensation plan or
      agreement. To the Company’s knowledge, no employee of the Company or any of its
      Subsidiaries, nor any consultant with whom the Company or any of its
      Subsidiaries has contracted, is in violation of any term of any employment
      contract, proprietary information agreement or any other agreement relating
      to
      the right of any such individual to be employed by, or to contract with, the
      Company or any of its Subsidiaries because of the nature of the business to
      be
      conducted by the Company or any of its Subsidiaries; and to the Company’s
      knowledge the continued employment by the Company or any of its Subsidiaries
      of
      its present employees, and the performance of the Company’s and its
      Subsidiaries’ contracts with its independent contractors, will not result in any
      such violation. Neither the Company nor any of its Subsidiaries is aware that
      any of its employees is obligated under any contract (including licenses,
      covenants or commitments of any nature) or other agreement, or subject to any
      judgment, decree or order of any court or administrative agency, that would
      interfere with their duties to the Company or any of its Subsidiaries. Neither
      the Company nor any of its Subsidiaries has received any notice alleging that
      any such violation has occurred. Except for employees who have a current
      effective employment agreement with the Company or any of its Subsidiaries,
      no
      employee of the Company or any of its Subsidiaries has been granted the right
      to
      continued employment by the Company or any of its Subsidiaries or to any
      material compensation following termination of employment with the Company
      or
      any of its Subsidiaries. The Company is not aware that any officer, key employee
      or group of employees intends to terminate his, her or their employment with
      the
      Company or any of its Subsidiaries, nor does the Company or any of its
      Subsidiaries have a present intention to terminate the employment of any
      officer, key employee or group of employees.

     

    3.16. 
      Compliance
      with Laws; Permits.
      Neither
      the Company nor any of its Subsidiaries is in violation of any applicable
      statute, rule, regulation, order or restriction of any domestic or foreign
      government or any instrumentality or agency thereof in respect of the conduct
      of
      its business or the ownership of its properties which has had, or could
      reasonably be expected to have, either individually or in the aggregate, a
      Material Adverse Effect. No governmental orders, permissions, consents,
      approvals or authorizations are required to be obtained and no registrations
      or
      declarations are required to be filed in connection with the execution and
      delivery of this Agreement or any other Related Agreement and the issuance
      of
      any of the Shares, except such as has been duly and validly obtained or filed,
      or with respect to any filings that must be made after the Closing, as will
      be
      filed in a timely manner. Each of the Company and its Subsidiaries has all
      material franchises, permits, licenses and any similar authority necessary
      for
      the conduct of its business as now being conducted by it, the lack of which
      could, either individually or in the aggregate, reasonably be expected to have
      a
      Material Adverse Effect.

     

    3.17. 
      Environmental
      and Safety Laws.
      Neither
      the Company nor any of its Subsidiaries is in violation of any applicable
      statute, law or regulation relating to the environment or occupational health
      and safety and no material expenditures are or will be required in order to
      comply with any such existing statute, law or regulation except for such
      violations that individually, or in the aggregate, have had, or could reasonably
      be expected to have, individually or in the aggregate, a Material Adverse
      Effect. No Hazardous Materials (as defined below) are used or have been used,
      stored, or disposed of by the Company or any of its Subsidiaries or, to the
      Company’s knowledge, by any other person or entity on any property owned, leased
      or used by the Company or any of its Subsidiaries. For the purposes of the
      preceding sentence, “Hazardous Materials” shall mean:

     

    (a)
        materials which are listed or otherwise defined as “hazardous” or “toxic”
under any applicable local, state, federal and/or foreign laws and regulations
      that govern the existence and/or remedy of contamination on property, the
      protection of the environment from contamination, the control of hazardous
      wastes, or other activities involving hazardous substances, including building
      materials; or

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b)
        any petroleum products or nuclear materials.

     

    3.18. 
      Insurance.
      Each of
      the Company and each of its Subsidiaries have general commercial, fire and
      casualty insurance policies with coverages which the Company believes are
      customary for companies similarly situated to the Company and its Subsidiaries
      in the same or similar business.

     

    3.19. 
      SEC
      Reports.
      The
      Company has timely filed all proxy statements, reports and other documents
      required to be filed by it under the Securities Exchange Act 1934, as amended
      (the “Exchange Act”). The Company has made available to the Purchaser copies of:
      (i) its Annual Reports on Form 10-K for its fiscal year ended March 31, 2006;
      (ii) its quarterly reports on Form 10-Q for the fiscal quarters ended June
      30,
      2004, September 30, 2004, December 31, 2004, June 30, 2005, September 30, 2005,
      December 31, 2005, June 30, 2006 and September 30, 2006 and (iii) its reports
      on
      Form 8-K which have been filed from July 31, 2006 to date (collectively, the
      “SEC Reports”). Each SEC Report was, at the time of its filing, in substantial
      compliance with the requirements of its respective form and none of the SEC
      Reports, nor the financial statements (and the notes thereto) included in the
      SEC Reports, as of their respective filing dates, contained any untrue statement
      of a material fact or omitted to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading.

     

    4. 
      Representations,
      Warranties and Covenants of the Purchaser.
      Each
      Purchaser hereby represents, warrants and covenants to the Company as
      follows:

     

    4.1. 
      Authorization;
      Enforceability.
      Each
      Purchaser has the power and authority to purchase the Shares and to execute
      and
      deliver this Agreement and the Related Agreements to which such Purchaser is
      a
      party and to perform the provisions hereof and thereof. This Agreement
      constitutes, and upon execution and delivery thereof, each other Related
      Agreement to which such Purchaser is a party will constitute, such Purchaser’s
      valid and legally binding obligation, enforceable in accordance with its terms,
      subject to (i) applicable bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium or other similar laws of general application relating
      to or affecting the enforcement of creditors’ rights generally and (ii) general
      principles of equity.

     

    4.2. 
      No
      Conflict with Other Instruments.
      The (i)
      execution, delivery and performance of this Agreement by each Purchaser and
      the
      other Related Agreements to which such Purchaser is a party, and (ii)
      consummation of the transactions contemplated hereby and thereby by such
      Purchaser has not and will not result in default (and to the knowledge of such
      Purchaser, no event has occurred which, with notice or lapse of time or both,
      would constitute a default) under any provision of any instrument or contract
      to
      which such Purchaser is a party or by which such Purchaser or any of its
      property is bound, or in violation of any provision of any governmental
      requirement applicable to such Purchaser.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    4.3. 
      Consent. 
      Filings,
      Consents and Approvals.
      No
      Purchaser is required to obtain any consent, waiver, authorization or order
      of,
      give any notice to, or make any filing or registration with, any court or other
      federal, state, local or other governmental authority or other person in
      connection with the execution, delivery and performance by the Purchaser of
      this
      Agreement or the Related Agreements, other than the Required Approvals or any
      other filing or notice required under federal or state securities laws to report
      the transactions contemplated in this Agreement and the Related
      Agreements.

     

    4.4. 
      Investment
      for Own Account.
      Such
      Purchaser will hold the Shares for their own account for investment purposes
      only, and not with a view to, or for resale in connection with, any distribution
      that would require registration under the Securities Act or the securities
      laws
      of any state. Such Purchaser does not presently have any reason to anticipate
      any change in circumstances or other particular occasion or event which would
      require selling the Shares or any part thereof or interest therein. Such
      Purchaser understands that there will be no established market for the Shares
      and that such Purchaser may be restricted from selling the Shares except in
      a
      sale exempt under federal and state securities laws.

     

    4.5. 
      No
      Registration.
      Such
      Purchaser understands that: (a) the Shares (i) have not been registered under
      the Securities Act or any state securities laws, (ii) will be issued in reliance
      upon an exemption from the registration and prospectus delivery requirements
      of
      the Securities Act which relate to private offerings, (iii) may be required
      to
      be held by such Purchaser indefinitely, and (b) such Purchaser must therefore
      bear the economic risk of such investment indefinitely unless a subsequent
      disposition thereof is registered under the Securities Act and applicable state
      securities laws or is exempt therefrom. Such Purchaser further understands
      that
      such exemptions depend upon, among other things, the accuracy of such
      Purchaser’s representations set forth in this Section 4.

     

    4.6. 
      Access
      to Information.
      Such
      Purchaser has had an opportunity to ask questions of, and receive satisfactory
      answers from, the Company and its representatives or agents concerning the
      terms
      of this investment and the undersigned’s potential acquisition of the Shares,
      and all such questions have been answered to such Purchaser’s full satisfaction.
      Such Purchaser has been furnished by the Company all information (or provided
      access to all information) regarding the business and financial condition of
      the
      Company, the attributes of the Shares and the merits and risks of an investment
      in the Shares which such Purchaser has requested or otherwise needs to evaluate
      the investment in the Shares, and such Purchaser does not desire any further
      information or data concerning the Company. Specifically, such Purchaser
      acknowledges receipt from the Company of, without limitation, the following
      information (collectively, the “Investment Information”):

     

    (a)
        the Company’s Exchange Act Filings; and

     

    (b)
        the Company’s Charter and Bylaws.  

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Such
      Purchaser has received, read and understands the Investment Information. Such
      Purchaser has examined all written materials furnished by the Company, or caused
      the same to be examined by such Purchaser’s representatives, to the extent such
      Purchaser deemed necessary or appropriate. The undersigned acknowledges that
      the
      Company has made available to the undersigned the opportunity to obtain
      additional information to verify the accuracy of any material shown to the
      undersigned by the Company and to evaluate the merits and risks of this
      investment.

    

    4.7. 
      Accredited
      Investor.
      Such
      Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D
      promulgated under the Securities Act, and such Purchaser, or those persons
      retained by such Purchaser, have knowledge, skill and experience in financial,
      business and investment matters relating to an investment of this type and
      are
      capable of evaluating the merits and risks of such investment and protecting
      such Purchaser in connection with an investment in the Shares. At such
      Purchaser’s own expense, the undersigned has, to the extent deemed necessary by
      such Purchaser, retained and relied upon appropriate professional advice
      regarding the investment, tax and legal merits and consequences of an investment
      in the Shares. Such Purchaser has not received any legal, business, tax or
      other
      advice from the Company, its counsel or other representatives.

     

    4.8. 
      Risk
      of Investment.
      Such
      Purchaser acknowledges that (i) it has been called to such Purchaser’s attention
      that such Purchaser’s investment in the Shares involves a high degree of risk,
      (ii) any investment in the Company is not insured by any governmental or other
      entity, and (iii) such Purchaser understands that the Shares will be an illiquid
      investment. Further, such Purchaser acknowledges that there are certain tax
      risks associated with the proposed investment and no assurances are being made
      that existing tax laws and regulations will not be modified in the future,
      thus
      altering tax consequences associated with this potential investment. The Company

      has never made any representation, guarantee or warranty (a) as to the
      approximate or exact length of time that such Purchaser will be required to
      remain an owner of the Shares (or any other securities of the Company); (b)
      the
      percentage of profit, amount of or type of consideration and/or profit or loss,
      if any, that will result from an investment in the Shares; or (c) that any
      future expectations relating to the Company’s performance indicate in any way
      what the Company’s financial condition or results of operations will be in the
      future. Such Purchaser understands the speculative nature of an investment
      in
      the Shares and the financial risks associated with the Shares.

     

    4.9. 
      Restrictions
      on Transfer.
      The
      Offering is being made in reliance upon exemptions from registration under
      the
      Securities Act and applicable state securities laws for an offer and sale of
      securities not involving a public offering. The Shares may not be sold,
      transferred or otherwise disposed of without satisfaction of certain conditions,
      including registration under, or the availability of an exemption from
      registration under, the Securities Act and applicable state securities laws.
      Such Purchaser agrees that the Company may permit the transfer of the Shares
      out
      of such Purchaser’s name only when any request for transfer is accompanied by an
      opinion of counsel acceptable in form and substance to Company counsel to the
      effect that the proposed transfer results in no violation of the Securities
      Act
      or any applicable state securities laws. A legend to this effect will be placed
      upon each certificate representing the Shares.

     

    4.10. 
      Representations
      and Warranties.
      No
      person or entity, other than the Company, has been authorized to give any
      information or to make any representations on behalf of the Company in
      connection with the offering of the Shares and, if given or made, such
      information or representations have not been relied upon by the undersigned
      as
      having been made or authorized by the Company. The only representations,
      warranties and information made by the Company in connection with the Offering
      are those contained in this Agreement and the Investment
      Information.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    4.11. 
      General
      Solicitation.
      The
      solicitation of an offer to buy the Shares was communicated to such Purchaser
      in
      such a manner that at no time was such Purchaser presented with or solicited
      by
      or through any leaflet, public promotional meeting, television, radio, internet
      or other published advertisement or any other form of general or public
      advertising or solicitation.

     

    4.12. 
      Purchaser’s
      Experience.
      By
      reason of such Purchaser’s business and financial experience, such Purchaser has
      the capacity to protect such Purchaser’s own interests in investments of this
      nature. Such Purchaser has evaluated such Purchaser’s financial resources and
      investment position, and the risks associated with the proposed investment
      and
      concluded that such Purchaser has the ability to bear the economic risks
      associated with this proposed investment.

     

    4.13. 
      Non-public
      Information.
      After
      the date hereof, such Purchaser agrees to hold in strict confidence any
      non-public information of the Company (the “Information”) acquired by such
      Purchaser, and not to use such Information for any competitive purpose. Such
      Purchaser may transmit Information to its partners, directors, officers,
      employees, agents or representatives, including attorneys, accountants and
      consultants (collectively, “Representatives”), but only to such Representatives
      who are informed of the confidential nature of the Information and are directed
      to treat such Information as confidential. Notwithstanding anything to the
      contrary herein, such Purchaser may disclose any Information to the extent
      such
      Information or portion thereof (i) is or becomes generally available to the
      public other than as a result of a disclosure by the undersigned or its
      Representatives in breach of the terms hereof, (ii) is or becomes available
      to
      such Purchaser on a non-confidential basis from a source, other than the Company
      or its representatives, without violation of a duty of confidentiality to the
      Company, or (iii) was known to such Purchaser on a non-confidential basis prior
      to the disclosure to such Purchaser by the Company or any of its
      representatives.

     

    5. 
      Covenants
      of the Company and Purchaser. 

     

    5.1 
      Registration
      Rights.
      If at
      any time after the date hereof, the Company shall determine to prepare and
      file
      with the Commission a registration statement relating to an offering for its
      own
      account or the account of others under the Securities Act of any of its equity
      securities, other than on Form S-4 or Form S-8 (each as promulgated under the
      Securities Act) or their then equivalents relating to equity securities to
      be
      issued solely in connection with any acquisition of any entity or business
      or
      equity securities issuable in connection with stock option or other employee
      benefit plans, then the Company shall use its best efforts to include in such
      registration statement all of such Shares to the extent the Company may do
      so
      without violating registration rights of others which exist as of the date
      of
      this Agreement, subject to customary underwriter cutbacks applicable to all
      holders of registration rights and subject to obtaining any required the consent
      of any selling stockholder(s) to such inclusion under such registration
      statement. The Company shall have a right to postpone, delay or withdraw any
      registration pursuant to this Section 5.1 without obligation to the
      Holder.

     

    5.2. 
      Listing.
      The
      Company shall as promptly as practicable after Closing secure the listing of
      the
      Shares on the AMEX (subject to official notice of issuance) and shall maintain
      such listing so long as any other shares of Common Stock shall be so listed.
      The
      Company will use commercially reasonable best efforts to maintain the listing
      of
      its Common Stock on AMEX, and will comply with the Company’s reporting, filing
      and other obligations under the bylaws or rules of the National Association
      of
      Securities Dealers (“NASD”) and such exchanges, as applicable.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    5.3. 
      Market
      Regulations.
      The
      Company shall notify the SEC, NASD and applicable state authorities, in
      accordance with their requirements, of the transactions contemplated by this
      Agreement, and shall take all other necessary action and proceedings as may
      be
      required and permitted by applicable law, rule and regulation, for the legal
      and
      valid issuance of the Shares to the Purchasers and promptly provide copies
      thereof to the Purchasers.

     

    5.4. 
      Reporting
      Requirements;
      Reports for Purchasers.
      The
      Company will timely file with the SEC all reports required to be filed pursuant
      to the Exchange Act and refrain from terminating its status as an issuer
      required by the Exchange Act to file reports thereunder even if the Exchange
      Act
      or the rules or regulations thereunder would permit such termination. The
      Company will prepare and timely file with the Commission, at the Company’s
      expense, any filings pursuant to Section 13 or 16 of the Exchange Act that
      are
  required for Purchasers in connection with this transaction in the
      future; provided,
      however,
      that
      Purchasers agree to deliver any necessary information required to complete
      such
      filings   to the Company no later than the next business day after the
      transaction requiring such filing occurs.      

     

    5.5. 
      Restrictions.
      If
      required by law, until this Agreement and the Related Agreements are approved
      by
      the holders a majority of the outstanding shares of capital stock of the Company
      entitled to vote (“Shareholder Approval”), no holder of Shares shall be entitled
      to vote such holder’s Shares, if such holder will hold more than 9.99% of the
      outstanding Common Stock or voting power of the Company on the date of such
      vote
      or exercise.

     

    6. 
      Indemnification.

     

    6.1. 
      Company
      Indemnification.
      The
      Company agrees to indemnify, hold harmless, reimburse and defend the Purchasers,
      each Purchaser’s officers, directors, agents, affiliates, control persons, and
      principal shareholders, against any claim, cost, expense, liability, obligation,
      loss or damage (including reasonable legal fees) of any nature, incurred by
      or
      imposed upon the Purchasers which results, arises out of or is based upon:
      (i)
      any misrepresentation by the Company or any of its Subsidiaries or breach of
      any
      warranty by the Company or any of its Subsidiaries in this Agreement, any other
      Related Agreement or in any exhibits or schedules attached hereto or thereto;
      or
      (ii) any breach or default in performance by Company or any of its Subsidiaries
      of any covenant or undertaking to be performed by Company or any of its
      Subsidiaries hereunder, under any other Related Agreement or any other agreement
      entered into by the Company and/or any of its Subsidiaries and Purchasers
      relating hereto or thereto.

     

    6.2. 
      Purchasers’
      Indemnification.
      Each
      Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company
      and each of the Company’s officers, directors, agents, affiliates, control
      persons and principal shareholders, at all times against any claim, cost,
      expense, liability, obligation, loss or damage (including reasonable legal
      fees)
      of any nature, incurred by or imposed upon the Company which results, arises
      out
      of or is based upon: (i) any misrepresentation by the Purchasers or breach
      of
      any warranty by the Purchasers in this Agreement, any other Related Agreement
      or
      in any exhibits or schedules attached hereto or thereto; or (ii) any breach
      or
      default in performance by the Purchasers of any covenant or undertaking to
      be
      performed by the Purchasers hereunder, under any other Related Agreement or
      any
      other agreement entered into by the Company and/or any of its Subsidiaries
      and
      Purchasers relating hereto or thereto.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    7.
        Miscellaneous.

     

    7.1. 
      Entire
      Agreement.
      This
      Agreement, the Related Agreements, the exhibits and schedules hereto and thereto
      and the other documents delivered pursuant hereto constitute the full and entire
      understanding and agreement between the parties with regard to the subjects
      hereof and no party shall be liable or bound to any other in any manner by
      any
      representations, warranties, covenants and agreements except as specifically
      set
      forth herein and therein.

     

    7.2 
      Choice
      of Law.
      This
      Agreement shall be governed under the laws of the State of New York, without
      regard to conflicts of law. The parties agree that the venue for the resolution
      of any conflicts arising under this Agreement or for the interpretation of
      this
      Agreement shall be in New York, New York and that the Courts of the State of
      New
      York shall have jurisdiction over any such disputes and over the parties
      hereto.

     

    7.3 
      Attorney’s
      Fees.
      In the
      event any litigation, arbitration, mediation, or other proceeding (“Proceeding”)
      is initiated by any party(ies) against any other party(ies) to enforce,
      interpret or otherwise obtain judicial or quasi-judicial relief in connection
      with this Agreement, the prevailing party(ies) in such Proceeding shall be
      entitled to recover from the unsuccessful party(ies) all costs, expenses, actual
      attorney’s and expert witness fees, relating to or arising out of: (i) such
      Proceeding (whether or not such Proceeding proceeds to judgment), and (ii)
      any
      post-judgment or post-award proceeding including, without limitation, one to
      enforce any judgment or award resulting from any such Proceeding. Any such
      judgment or award shall contain a specific provision for the recovery of all
      such subsequently incurred costs, expenses, actual attorney and expert witness
      fees.

     

    7.4 
      Counterparts.
      This
      Agreement may be signed in one (1) or more counterparts, each of which shall
      constitute an original but all of which together shall be one (1) and the same
      document. Signatures received by facsimile shall be deemed to be original
      signatures.

     

    7.5 
      Partial
      Invalidity.
      Each
      provision of this Agreement will be valid and enforceable to the fullest extent
      permitted by law. If any provision of this Agreement or the application of
      the
      provision to any person or circumstance will, to any extent, be invalid or
      unenforceable, the remainder of this Agreement, or the application of the
      provision to persons or circumstances other than those as to which it is held
      invalid or unenforceable, will not be affected by such invalidity or
      unenforceability, unless the provision or its application is essential to this
      Agreement.

     

    7.6 
      Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    7.7 
      Drafting
      Ambiguities.
      Each
      party to this Agreement and their legal counsel have reviewed and revised this
      Agreement. The rule of construction that any ambiguities are to be resolved
      against the drafting party shall not be employed in the interpretation of this
      Agreement or any amendments or exhibits to this Agreement.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    7.8 
      Notices.
      Any
      notice from one party to another shall be delivered either personally, via
      facsimile or by United States mail, postage fully prepaid, addressed as follows:
      

     

    
      	
              Purchasers:

            	
               

            	
              To
                the respective addresses set forth below the Purchaser’s signature at the
                foot of this Agreement.

            
	
               

            	
               

            	
               

            
	
              With
                a copy (not constituting notice):

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              Company:

            	
               

            	
              The
                Singing Machine Company, Inc.

            
	
               

            	
               

            	
              Attention:
                Danny Zheng

            
	
               

            	
               

            	
              6601
                Lyons Road, Building A-7

            
	
               

            	
               

            	
              Coconut
                Creek, FL 33073

            
	
               

            	
               

            	
               

            
	
              With
                a copy to (not constituting notice):

            	
               

            	
              Sichenzia
                Ross Friedman Ference LLP

            
	
               

            	
               

            	
              Attention:
                Darrin M. Ocasio, Esq.

            
	
               

            	
               

            	
              1065
                Avenue of the Americas

            
	
               

            	
               

            	
              New
                York, NY 10018

            

    

     

    Any
      notice being delivered within the continental United States shall be deemed
      delivered upon (a) personal service, or (b) transmission via facsimile (with
      the
      original thereof to be immediately sent via mail, postage prepaid), or (c)
      forty
      eight (48) hours after the time of deposit in the mail, as the case may be.
      In
      the event any Party changes its address, such change of address shall be
      communicated to the other Party in the manner set forth in this
      Section.

     

    7.8a 
      Definition
      of Knowledge.
      For the
      purposes of this Agreement, the Company shall only be deemed to have “knowledge”
of a particular fact or other matter, if an executive officer of the Company
      is
      actually aware of such fact or matter, or a reasonably prudent individual
      operating in the capacity of an executive officer of the Company could be
      expected to discover or otherwise become aware of such fact or matter in the
      ordinary course of fulfilling the responsibilities of an executive
      officer.

     

    7.9 Interpretation/Representation.
      Wherever
      the context of this Agreement requires, all words used in the singular shall
      be
      construed to have been used in the plural, and vice versa, and the use of any
      gender specific pronoun shall include any other appropriate gender. The term
      “person” shall refer to any individual, corporation or legal entity having
      standing to bring an action in its own name under applicable state law. The
      conjunctive “or” shall mean “and/or” unless otherwise required by the context in
      which the conjunctive “or” is used.

     

    7.10 Survival.
      The
      representations, warranties, covenants and agreements made herein shall survive
      any investigation made by the Purchaser and the closing of the transactions
      contemplated hereby to the extent provided therein. All statements as to factual
      matters contained in any certificate or other instrument delivered by or on
      behalf of the Company pursuant hereto in connection with the transactions
      contemplated hereby shall be deemed to be representations and warranties by
      the
      Company hereunder solely as of the date of such certificate or
      instrument.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    7.11 Successors.
      Except
      as otherwise expressly provided herein, the provisions hereof shall inure to
      the
      benefit of, and be binding upon, the successors, heirs, executors and
      administrators of the parties hereto and shall inure to the benefit of and
      be
      enforceable by each person who shall be a holder of the Shares from time to
      time, other than the holders of Common Stock which has been sold by the
      Purchasers pursuant to Rule 144 or an effective registration
      statement.

     

    7.12 Amendment
      and Waiver. 
       

     

    (a)
        This Agreement may be amended or modified only upon the written consent
      of the Company and a majority in interest of the Purchasers.

     

    (b)
        The obligations of the Company and the rights of the Purchasers under
      this Agreement may be waived only with the written consent of a majority in
      interest of the Purchasers.

     

    (c)
        The obligations of the Purchasers and the rights of the Company under
      this Agreement may be waived only with the written consent of the
      Company.

     

    7.2. 
      Delays
      or Omissions.
      It is
      agreed that no delay or omission to exercise any right, power or remedy accruing
      to any party, upon any breach, default or noncompliance by another party under
      this Agreement or the Related Agreements, shall impair any such right, power
      or
      remedy, nor shall it be construed to be a waiver of any such breach, default
      or
      noncompliance, or any acquiescence therein, or of or in any similar breach,
      default or noncompliance thereafter occurring. All remedies, either under this
      Agreement or the Related Agreements, by law or otherwise afforded to any party,
      shall be cumulative and not alternative.

     

    [Remainder
      of Page Intentionally Left Blank.]

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the date set forth in the
      first paragraph hereof.

     

    COMPANY:

     

    
      	
               The
                Singing Machine Company, Inc. 

               a
                Delaware corporation

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              /s/ Danny
                Zheng   
                

              

              Danny
                Zheng, Interim

              Chief
                Executive Officer

            	
               

            	
               

            	
               

            

    

     

    PURCHASERS:

    
      	
              Timemate
                Industries Limited

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              By: 
                /s/ Tak Cheung Chow

            	
               

            	
               

            	
               

            
	
              
                

              

              Name:
                Tak Cheung Chow

            	 	 	 
	
              Its:
                Director

            	
               

            	
               

            	 
	
               

            	
               

            	
               

            	
               

            
	
              Address:
                Rooms 1002-5 Peninsula Square

               18
                Sung On Street

               Hunghom,
                Kowloon

               Hong
                Kong

            	
               

            	
               

            	
               

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    Closing
      Share Distribution Schedule

     

    
      	
              Timemate
                Industries Limited

            	
               

            	
               

            	
              480,000
                shares for total of US$400,000.00

            	
               

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.1: Company and Subsidiary Identification

    

    The
      Singing Machine Holdings Ltd. (A BVI Corporation)

     

    100%
      owned by The Singing Machine Company, Inc.

    Registered
      Office: C/O Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O.
      Box
      146, Road Town, Tortola, British Virgin Islands

    

    SMC
      (Comercial Offshore de Macau) Limitada (A Macau
      Corporation)

     

    100%
      owned by The Singing Machine Holdings Ltd.

    Office
      address: Alameda Dr. Carlos d’Assumpcao, No. 263, Efificio China Civil Plaza, 20
      andar, Macau

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.2: Ownership of Subsidiaries

    

    (See
      Above at Schedule 4.1)

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.9 Title
      to Properties and Assets; Liens, Etc

    

    Properties
      pledged as collateral to Crestmark Bank, a lender

    

    All
      personal properties of The Singing Machine Company, Inc., which
      including:

     

    
      	
               

            	
              1)

            	
              Accounts
                receivable

            
	 	 	 
	
               

            	
              2)

            	
              Inventory

            
	 	 	 
	
               

            	
              3)

            	
              Chattel
                paper (N/A)

            
	 	 	 
	
               

            	
              4)

            	
              Equipment

            
	 	 	 
	
               

            	
              5)

            	
              Investment
                property (N/A)

            
	 	 	 
	
               

            	
              6)

            	
              Deposit
                account

            
	 	 	 
	
               

            	
              7)

            	
              General
                Intangible

            

    

     

    As
      of
      December 31, 2006, our loan balance with the Crestmark Bank was
      $1,157,806.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.14: Tax Returns and Payments

    

    All
      the
      tax liabilities has been included in our latest consolidated financial
      statements filed with SEC dated September 30, 2006.

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