As filed with the Securities and Exchange Commission on September 15, 2006
Reg. No. 333-99543
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
POST EFFECTIVE AMENDMENT NO. 2 TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
The Singing Machine Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 95-3795478
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
6601 Lyons Road, Building A-7
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Coconut Creek, FL 33073
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(Address of principal executive offices) (Zip Code)
YEAR 2001 STOCK OPTION PLAN, AS AMENDED
(full title of plan)
Yi Ping Chan
Chief Executive Officer
The Singing Machine Company, Inc.
6601 Lyons Road, Building A-7
Coconut Creek, FL 33073
(954) 596-1000
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(Name, address, and telephone number of agent for service)
With a copy to:
Darrin M. Ocasio, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of Americas
New York, NY 10018
(212) 930-9700
Fax: (212) 930-9725
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered (1) Per Share (3) Price Fee
---------- ---------- ----------- ---------- -----------
Common Stock, 39,063 (2) $0.30 $11,718.90 $1.25
$.001 par value
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Total: 39,063 $11,718.90 $1.25
----------- ---------- ---------- -----------
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended, this registration statement covers such indeterminate additional shares
of common stock to be offered or issued to prevent dilution as a result of
future stock splits, stock dividends or other similar transactions.
(2) Includes shares of common stock issued pursuant to our Year 2001 Stock
Option Plan, as amended.
(3) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, using the average
of the high and low price as reported on the American Stock Exchange on
September 14, 2006 of $0.30 per share.
2
EXPLANATORY NOTE
Pursuant to General Instruction E of Form S-8, this Post-Effective
Amendment No. 2 Registration Statement is being filed in order to include a Form
S-3 resale prospectus with respect to the resale by the selling stockholders
named herein of up to an aggregate of 39,063 shares of common stock, $0.01 par
value per share, of The Singing Machine Company, Inc. with respect to its Year
2001 Stock Option Plan, as amended. No additional securities are being
registered.
On September 13, 2002, we filed with the Securities and Exchange
Commission ("SEC') a Registration Statement on Form S-8 (File No. 333-99543), as
amended, pertaining to our Year 2001 Stock Option Plan, which provided for the
granting of stock options to eligible participants under the Plan. At our Annual
Shareholder Meeting held on February 26, 2004, our shareholders approved an
amendment to our Year 2001 Stock Option Plan which permits us to award shares of
common stock to eligible participants under the Year 2001 Stock Option Plan in
addition to stock options. We filed Post Effective Amendment No. 1 on April 20,
2004 to file our Year 2001 Stock Option Plan, as amended.
The Prospectus filed as part of this Registration Statement has been
prepared in accordance with the requirements of Form S-3 and may be used for
reofferings and resales of registered shares of common stock which have been
issued upon the grants of common stock and/or options to purchase shares of
common stock to executive officers and directors of The Singing Machine Company,
Inc.
PART I
Item 1. Plan Information.
The documents containing the information specified in Item 1 will be sent
or given to participants in the Year 2001 Stock Option Plan, as amended, as
specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the
"Securities Act"). Such documents are not required to be and are not filed with
the Securities and Exchange Commission (the "SEC") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424. These documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act.
Item 2. Registrant Information and Employee Plan Annual Information.
Upon written or oral request, any of the documents incorporated by
reference in Item 3 of Part II of this Registration Statement (which documents
are incorporated by reference in this Section 10(a) Prospectus), other documents
required to be delivered to eligible employees, non-employee directors and
consultants, pursuant to Rule 428(b) are available without charge by contacting:
Yi Ping Chan, Interim Chief Executive Officer
The Singing Machine Company, Inc.
6601 Lyons Road, Building A-7
Coconut Creek, FL 33073
(954) 596-1000
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3
Prospectus
The Singing Machine Company, Inc.
39,063 SHARES OF COMMON STOCK
issued pursuant to the
Year 2001 Stock Option Plan, as amended
This prospectus relates to the sale of up to 39,063 shares of common stock
of The Singing Machine Company, Inc. offered by certain holders of our
securities issued to such persons pursuant to our Year 2001 Stock Option Plan,
as amended. The shares may be offered by the selling stockholders from time to
time in regular brokerage transactions, in transactions directly with market
makers or in certain privately negotiated transactions. For additional
information on the methods of sale, you should refer to the section entitled
"Plan of Distribution." We will not receive any of the proceeds from the sale of
the shares by the selling stockholders.
Our common stock trades on The American Stock Exchange under the symbol
"SMD." On September 14, 2006, the closing sale price of the common stock was
$0.30 per share.
The securities offered hereby are speculative and involve a high degree of risk
and substantial dilution. Only investors who can bear the risk of loss of their
entire investment should invest. See "Risk Factors" beginning on page 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is September 15, 2006.
4
TABLE OF CONTENTS
Page
Prospectus Summary 6
Risk Factors 7
Selling Stockholders 15
Plan of Distribution 16
Interests of Named Experts and Counsel 16
Incorporation of Certain Documents by Reference 16
Disclosure of Commission Position on Indemnification For Securities Act Liabilities 17
Available Information 18
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
5
Prospectus Summary
Overview
We are engaged in the production and distribution of karaoke machine and
audio software. Our electronic karaoke machines and audio software products are
marketed under the Singing Machine(R), MTV(R), Nickelodeon(R), Motown(R), Hi-5
(R) and Bratz(R) brand names. Our products are sold throughout the United
States, primarily through department stores, lifestyle merchants, mass
merchandisers, direct mail catalogs and showrooms, music and record stores,
national chains, specialty stores and warehouse clubs.
Our karaoke machines and karaoke software are currently sold in such major
retail outlets as Best Buy, Costco, Kohl's, J.C. Penney, Radio Shack, Wal-Mart
and Sam's Club.
Our corporate offices are located at 6601 Lyons Road, Building A-7,
Coconut Creek, Florida 33073, and our telephone number is (954) 596-1000.
This Offering
Shares of common stock outstanding prior to this offering............... 22,935,818 as of August 21, 2006
Shares offered in this prospectus.................................................... 39,063
Total shares outstanding after this offering .................................. 22,974,881
Use of proceeds................. We will not receive any proceeds from the sale of the shares of common
stock offered in this prospectus. We will receive proceeds to the extent
that currently outstanding options are exercised for cash. We will use
the exercise proceeds, if any, for working capital and general corporate
purposes.
Risk Factors.................... The purchase of our common stock involves a high degree of risk. You
should carefully review and consider "Risk Factors" beginning on page 7.
American Stock Exchange Symbol.. SMD
6
Risk Factors
Investment in our common stock involves a high degree of risk. You should
consider the following discussion of risks as well as other information in this
prospectus. The risks and uncertainties described below are not the only ones.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. If any of the
following risks actually occur, our business could be harmed. In such case, the
trading price of our common stock could decline.
Except for historical information, the information contained in this
prospectus are "forward-looking" statements about our expected future business
and performance. Our actual operating results and financial performance may
prove to be very different from what we might have predicted as of the date of
this prospectus.
RISKS ASSOCIATED WITH OUR BUSINESS
WE HAVE SIGNIFICANT WORKING CAPITAL NEEDS AND IF WE ARE UNABLE TO OBTAIN
ADDITIONAL FINANCING, WHEN NEEDED, WE MAY NOT HAVE SUFFICIENT CASH FLOW TO RUN
OUR BUSINESS.
As of June 30, 2006, our cash on hand is limited. We need approximately
$1.05 million in working capital in order to finance our operations over the
next three months. We will finance our working capital needs from the collection
of accounts receivable, and sales of existing inventory. As of June 30, 2006,
our inventory was valued at $1.6 million. See "Liquidity" beginning on page 15.
If these sources do not provide us with adequate financing, we may try to seek
financing from lenders and investors. If we are not able to obtain adequate
financing, when needed, it will have a material adverse effect on our cash flow
and our ability to continue as a going concern. If we have a severe shortage of
working capital, we may not be able to continue our business operations and may
be required to file a petition for bankruptcy under Chapter 11 of the U.S.
Bankruptcy Code or enter into some other form of liquidation or reorganization
proceeding.
WE MAY BE DEEMED INSOLVENT AND WE MAY GO OUT OF BUSINESS.
As of June 30, 2006, our cash position is limited and we had negative
equity. We are not able to pay all of our creditors on a timely basis. We are
not current on our accounts payable of $0.4 million to our factory in China. If
we are not able to pay our current debts as they become due, we may be deemed to
be insolvent. We may be required to file a petition for bankruptcy under Chapter
11 of the U.S. Bankruptcy Code or enter into some other form of liquidation or
reorganization proceedings.
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM RAISED SUBSTANTIAL DOUBT ABOUT
OUR ABILITY TO CONTINUE AS A GOING CONCERN AS OF MARCH 31, 2006.
We received a report dated May 26, 2006 from our independent certified
public accountants covering the consolidated financial statements for our fiscal
year ended March 31, 2006 that included an explanatory paragraph which stated
that the financial statements were prepared assuming that the Singing Machine
would continue as a going concern. This report stated that our operating
performance in fiscal 2006 and our minimal liquidity raised substantial doubt
about our ability to continue as a going concern. If we are not able to raise
additional capital, we may need to curtail or stop our business operations. We
may be required to file a petition for bankruptcy under Chapter 11 of the U.S.
Bankruptcy Code or enter into some other form of liquidation or reorganization
proceedings.
A SMALL NUMBER OF OUR CUSTOMERS ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR
REVENUES, AND THE LOSS OF ONE OR MORE OF THESE KEY CUSTOMERS COULD SIGNIFICANTLY
REDUCE OUR REVENUES AND CASH FLOW.
We rely on a few large customers to provide a substantial portion of our
revenues. As a percentage of total revenues, our net sales to our five largest
customers during the year ended March 31, 2006 and year ended March 31, 2005
were approximately 56% and 40%, respectively. We do not have long-term
contractual arrangements with any of our customers and they can cancel their
orders at any time prior to delivery. A substantial reduction in or termination
of orders from any of our largest customers would decrease our revenues and cash
flow.
7
WE ARE RELYING ON ONE FACTORY TO MANUFACTURE AND PRODUCE THE MAJORITY OF OUR
KARAOKE MACHINES FOR FISCAL 2007, AND IF THE RELATIONSHIP WITH THIS FACTORY IS
DAMAGED OR INJURED IN ANY WAY, IT WOULD REDUCE OUR REVENUES AND PROFITABILITY.
We have worked out a written agreement with factories in China to produce
most of our karaoke machines for fiscal 2007. We owe one factory approximately
$0.4 million as of June 30, 2006 and have worked out a verbal payment plan with
it. If the factory is unwilling or unable to deliver our karaoke machines to us,
our business will be adversely affected. Because our cash on hand is minimal, we
are relying on revenues received from the sale of our ordered karaoke machines
to provide cash flow for our operations. If we do not receive cash from these
sales, we may not be able to continue our business operations.
WE ARE RELYING ON ONE DISTRIBUTOR TO DISTRIBUTE OUR MUSIC PRODUCTS, IF THE
DISTRIBUTION AGREEMENT IS TERMINATED, IT WOULD REDUCE OUR REVENUES AND
PROFITABILITY.
We are relying on Warner Elektra Atlantic Corporation (WEA) to distribute
our music products in fiscal 2007, if the distribution agreement is terminated,
our music revenues might decrease as well as our profitability.
WE ARE SUBJECT TO THE RISK THAT SOME OF OUR LARGE CUSTOMERS MAY RETURN KARAOKE
PRODUCTS THAT THEY HAVE PURCHASED FROM US AND IF THIS HAPPENS, IT WOULD REDUCE
OUR REVENUES AND PROFITABILITY.
In fiscal 2006 and 2005, a number of our customers and distributors
returned karaoke products that they had purchased from us. Our customers
returned goods valued at $2.4 million, or 7.4% of our net sales in fiscal 2006.
Some of the returns resulted from customer's overstock of the products. Although
we were not contractually obligated to accept this return of the products, we
accepted the return of the products because we valued our relationship with our
customers. Because we are dependent upon a few large customers, we are subject
to the risk that any of these customers may elect to return unsold karaoke
products to us in the future. If any of our customers were to return karaoke
products to us, it would reduce our revenues and profitability.
WE ARE SUBJECT TO PRESSURE FROM OUR CUSTOMERS RELATING TO PRICE REDUCTION AND
FINANCIAL INCENTIVES AND IF WE ARE PRESSURED TO MAKE THESE CONCESSIONS TO OUR
CUSTOMERS, IT WILL REDUCE OUR REVENUES AND PROFITABILITY.
Because there is intense competition in the karaoke industry, we are
subject to pricing pressure from our customers. Many of our customers have
demanded that we lower our prices or they will buy our competitor's products. If
we do not meet our customer's demands for lower prices, we will not sell as many
karaoke products. In the fiscal year ended March 31, 2006, our sales to
customers in the United States decreased because of increased price competition.
We are also subject to pressure from our customers regarding certain financial
incentives, such as return credits or large advertising or cooperative
advertising allowances, which effectively reduce our profit. We gave advertising
allowances in the amount of $0.2 million during fiscal 2006 and $0.6 million
during fiscal 2005. We have historically offered advertising allowances to our
customers because it is standard practice in the retail industry.
WE EXPERIENCE DIFFICULTY FORECASTING THE DEMAND FOR OUR KARAOKE PRODUCTS AND IF
WE DO NOT ACCURATELY FORECAST DEMAND, OUR REVENUES, NET INCOME AND CASH FLOW MAY
BE AFFECTED.
Because of our reliance on manufacturers in China for our machine
production, our production lead times range from one to four months. Therefore,
we must commit to production in advance of customers orders. It is difficult to
forecast customer demand because we do not have any scientific or quantitative
method to predict this demand. Our forecasting is based on management's general
expectations about customer demand, the general strength of the retail market
and management's historical experiences. We overestimated demand for our
products in fiscal 2003 and 2004 and had $5.9 million in inventory as of March
31, 2004. Because of this excess inventory, we had liquidity problems in fiscal
2005 and our revenues, net income and cash flow were adversely affected.
8
WE ARE SUBJECT TO THE COSTS AND RISKS OF CARRYING INVENTORY FOR OUR CUSTOMERS
AND IF WE HAVE TOO MUCH INVENTORY, IT WILL AFFECT OUR REVENUES AND NET INCOME.
Many of our customers place orders with us several months prior to the
holiday season, but they schedule delivery two or three weeks before the holiday
season begins. As such, we are subject to the risks and costs of carrying
inventory during the time period between the placement or the order and the
delivery date, which reduces our cash flow. As of June 30, 2006 we had $1.6
million in inventory on hand. It is important that we sell this inventory during
fiscal 2007, so we have sufficient cash flow for operations.
OUR GROSS PROFIT MARGINS HAVE DECREASED OVER THE PAST YEAR AND WE EXPECT A
COMPETITIVE MARKET.
Over the past year, our gross profit margins have generally decreased due
to the competition except for fiscal 2005 when we had developed several new
models, which were in demand and yielded higher profit margins. We expect that
our gross profit margin might decrease under downward pressure in fiscal 2007.
OUR BUSINESS IS SEASONAL AND THEREFORE OUR ANNUAL OPERATING RESULTS WILL DEPEND,
IN LARGE PART, ON OUR SALES DURING THE RELATIVELY BRIEF HOLIDAY SEASON.
Sales of consumer electronics and toy products in the retail channel are
highly seasonal, with a majority of retail sales occurring during the period
from September through December in anticipation of the holiday season, which
includes Christmas. A substantial majority of our sales occur during the second
quarter ending September 30 and the third quarter ending December 31. Sales in
our second and third quarter, combined, accounted for approximately 87.9%, 86.7%
and 87.2% of net sales in fiscal 2006, 2005 and 2004, respectively.
IF WE ARE UNABLE TO COMPETE IN THE KARAOKE PRODUCTS CATEGORY, OUR REVENUES AND
NET PROFITABILITY WILL BE REDUCED.
Our major competitor for karaoke machines and related products is Memorex.
We believe that competition for karaoke machines is based primarily on price,
product features, reputation, delivery times, and customer support. Our primary
competitors for producing karaoke music are Compass, Pocket Songs, Sybersound,
UAV and Sound Choice. We believe that competition for karaoke music is based
primarily on popularity of song titles, price, reputation, and delivery times.
To the extent that we lower prices to attempt to enhance or retain market share,
we may adversely impact our operating margins. Conversely, if we opt not to
match competitor's price reductions we may lose market share, resulting in
decreased volume and revenue. To the extent our leading competitors reduce
prices on their karaoke machines and music, we must remain flexible to reduce
our prices. If we are forced to reduce our prices, it will result in lower
margins and reduced profitability. Because of intense competition in the karaoke
industry in the United States during fiscal 2006, we expect that the intense
pricing pressure in the low end of the market will continue in the karaoke
market in the United States in fiscal 2007. In addition, we must compete with
all the other existing forms of entertainment including, but not limited to:
motion pictures, video arcade games, home video games, theme parks, nightclubs,
television, prerecorded tapes, CD's and video cassettes.
IF WE ARE UNABLE TO DEVELOP NEW KARAOKE PRODUCTS, OUR REVENUES MAY NOT CONTINUE
TO GROW.
The karaoke industry is characterized by rapid technological change,
frequent new product introductions and enhancements and ongoing customer demands
for greater performance. In addition, the average selling price of any karaoke
machine has historically decreased over its life, and we expect that trend to
continue. As a result, our products may not be competitive if we fail to
introduce new products or product enhancements that meet evolving customer
demands. The development of new products is complex, and we may not be able to
complete development in a timely manner. To introduce products on a timely
basis, we must:
9
o accurately define and design new products to meet market needs;
o design features that continue to differentiate our products from
those of our competitors;
o transition our products to new manufacturing process technologies;
o identify emerging technological trends in our target markets;
o anticipate changes in end-user preferences with respect to our
customers' products;
o bring products to market on a timely basis at competitive prices;
and
o respond effectively to technological changes or product
announcements by others.
We believe that we will need to continue to enhance our karaoke machines
and develop new machines to keep pace with competitive and technological
developments and to achieve market acceptance for our products. At the same
time, we need to identify and develop other products which may be different from
karaoke machines.
OUR PRODUCTS ARE SHIPPED FROM CHINA AND ANY DISRUPTION OF SHIPPING COULD PREVENT
OR DELAY OUR CUSTOMERS' RECEIPT OF INVENTORY.
We rely principally on four contract ocean carriers to ship virtually all
of the products that we import to our warehouse facility in Compton, California.
Retailers that take delivery of our products in China rely on a variety of
carriers to import those products. Any disruptions in shipping, whether in
California or China, caused by labor strikes, other labor disputes, terrorism,
and international incidents may prevent or delay our customers' receipt of
inventory. If our customers do not receive their inventory on a timely basis,
they may cancel their orders or return products to us. Consequently, our
revenues and net income would be reduced.
OUR MANUFACTURING OPERATIONS ARE LOCATED IN THE PEOPLE'S REPUBLIC OF CHINA,
SUBJECTING US TO RISKS COMMON IN INTERNATIONAL OPERATIONS. IF THERE IS ANY
PROBLEM WITH THE MANUFACTURING PROCESS, OUR REVENUES AND NET PROFITABILITY MAY
BE REDUCED.
We are using six factories in the People's Republic of China to
manufacture the majority of our karaoke machines. These factories will be
producing approximately 98% of our karaoke products in fiscal 2007. Our
arrangements with these factories are subject to the risks of doing business
abroad, such as import duties, trade restrictions, work stoppages, and foreign
currency fluctuations, limitations on the repatriation of earnings and political
instability, which could have an adverse impact on our business. Furthermore, we
have limited control over the manufacturing processes themselves. As a result,
any difficulties encountered by our third-party manufacturers that result in
product defects, production delays, cost overruns or the inability to fulfill
orders on a timely basis could adversely affect our revenues, profitability and
cash flow. Also, since we do not have written agreements with any of these
factories, we are subject to additional uncertainty if the factories do not
deliver products to us on a timely basis.
WE DEPEND ON THIRD PARTY SUPPLIERS FOR PARTS FOR OUR KARAOKE MACHINES AND
RELATED PRODUCTS, AND IF WE CANNOT OBTAIN SUPPLIES AS NEEDED, OUR OPERATIONS
WILL BE SEVERELY DAMAGED.
Our growth and ability to meet customer demand depends in part on our
capability to obtain timely deliveries of karaoke machines and our electronic
products. We rely on third party suppliers to produce the parts and materials we
use to manufacture and produce these products. If our suppliers are unable to
provide our factories with the parts and supplies, we will be unable to produce
our products. We cannot guarantee that we will be able to purchase the parts we
need at reasonable prices or in a timely fashion. In the last several years,
there have been shortages of certain chips that we use in our karaoke machines.
If we are unable to anticipate any shortages of parts and materials in the
future, we may experience severe production problems, which would impact our
sales.
10
CONSUMER DISCRETIONARY SPENDING MAY AFFECT KARAOKE PURCHASES AND IS AFFECTED BY
VARIOUS ECONOMIC CONDITIONS AND CHANGES.
Our business and financial performance may be damaged more than most
companies by adverse financial conditions affecting our business or by a general
weakening of the economy. Purchases of karaoke machines and music are considered
discretionary for consumers. Our success will therefore be influenced by a
number of economic factors affecting discretionary and consumer spending, such
as employment levels, business, interest rates, and taxation rates, all of which
are not under our control. Additionally, other extraordinary events such as
terrorist attacks or military engagements, which adversely affect the retail
environment may restrict consumer spending and thereby adversely affect our
sales growth and profitability.
WE MAY HAVE INFRINGED THE COPYRIGHTS OF CERTAIN MUSIC PUBLISHERS AND IF WE
VIOLATE FEDERAL COPYRIGHT LAWS, WE WILL BE SUBJECT TO MONETARY PENALTIES.
Over the past several years, Singing Machine (like its competitors) has
received notices from certain music publishers alleging that the full range of
necessary rights in their copyrighted works has not been properly licensed in
order to sell those works as part of products known as "compact discs with
graphics" ("CDG"s). CDG's are compact discs which contain the musical recordings
of karaoke songs and graphics which contain the lyrics of the songs. Singing
Machine has negotiated licenses with the complaining parties, or is in the
process of settling such claims, with each one of the complaining copyright
owners. As with any alleged copyright violations, unlicensed users may be
subject to damages under the U.S. Copyright Act. Such damages and claims could
have a negative effect on Singing Machine's ability to sell its music products
to its customers if left unchecked or unresolved, the reason Singing Machine
pursues licenses so diligently.
WE MAY BE SUBJECT TO CLAIMS FROM THIRD PARTIES FOR UNAUTHORIZED USE OF THEIR
PROPRIETARY TECHNOLOGY, COPYRIGHTS OR TRADE SECRETS AND ANY CLAIMS ASSERTED
AGAINST US COULD AFFECT OUR NET PROFITABILITY.
We believe that we independently developed the technology used in our
electronic and audio software products and that it does not infringe on the
proprietary rights, copyrights or trade secrets of others. However, we cannot
assure you that we have not infringed on the proprietary rights of third parties
or those third parties will not make infringement violation claims against us.
During fiscal 2000, Tanashin Denki, Ltd., a Japanese company that holds a patent
on a cassette tape drive mechanism alleged that some of our karaoke machines
violated their patents. We settled the matters with Tanashin in December 1999.
Subsequently in December 2002, Tanashin again alleged that some of our karaoke
machines violated their patents. We entered into another settlement agreement
with them in May 2003. In addition to Tanashin, we could receive infringement
claims from other third parties. Any infringement claims may have a negative
effect on our profitability and financial condition.
WE ARE EXPOSED TO THE CREDIT RISK OF OUR CUSTOMERS, WHO ARE EXPERIENCING
FINANCIAL DIFFICULTIES, AND IF THESE CUSTOMERS ARE UNABLE TO PAY US, OUR
REVENUES AND PROFITABILITY WILL BE REDUCED.
We sell products to retailers, including department stores, lifestyle
merchants, direct mail retailers, which are catalogs and showrooms, national
chains, specialty stores, and warehouse clubs. Some of these retailers, such as
K-Mart, FAO Schwarz and KB Toys, have engaged in leveraged buyouts or
transactions in which they incurred a significant amount of debt, and operated
under the protection of bankruptcy laws. As of June 30, 2006, we are aware of
only three customers, FAO Schwarz, Musicland and KB Toys, which are operating
under the protection of bankruptcy laws. Deterioration in the financial
condition of our customers could result in bad debt expense to us and have a
material adverse effect on our revenues and future profitability.
11
A DISRUPTION IN THE OPERATION OF OUR WAREHOUSE CENTERS IN CALIFORNIA OR FLORIDA
COULD IMPACT OUR ABILITY TO DELIVER MERCHANDISE TO OUR STORES, WHICH COULD
ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY.
A significant amount of our merchandise is shipped to our customers from one of
our two warehouses, which are located in Compton, California, and Coconut Creek,
Florida. Events such as fire or other catastrophic events, any malfunction or
disruption of our centralized information systems or shipping problems may
result in delays or disruptions in the timely distribution of merchandise to our
customers, which could substantially decrease our revenues and profitability.
OUR BUSINESS OPERATIONS COULD BE DISRUPTED IF THERE ARE LABOR PROBLEMS ON THE
WEST COAST.
During fiscal 2006, approximately 33% of our sales were domestic warehouse
sales, which were made from our warehouses in California and Florida. During the
third quarter of fiscal 2003, the dock strike on the West Coast affected sales
of two of our karaoke products and we estimate that we lost between $3 and $5
million in orders because we could not get the containers of these products off
the pier. If another strike or work slow-down occurs and we do not have a
sufficient level of inventory, a strike or work slow-down would result in
increased costs to us and may reduce our profitability.
RISKS ASSOCIATED WITH OUR CAPITAL STRUCTURE
THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE WHICH MAY CAUSE INVESTORS
TO LOSE ALL OR A PORTION OF THEIR INVESTMENT.
From December 1, 2004 through June 30, 2006, our common stock has traded
between a high of $.95 and a low of $0.26. During this period, we had liquidity
problems and incurred a net loss of $1.9 million in fiscal 2006 and loss of $3.6
million in fiscal 2005. Our stock price may continue to be volatile based on
similar or other adverse developments in our business. In addition, the stock
market periodically experiences significant adverse price and volume
fluctuations which may be unrelated to the operating performance of particular
companies.
IF INVESTORS SHORT OUR SECURITIES, IT MAY CAUSE OUR STOCK PRICE TO DECLINE.
During the past year, a number of investors have held a short position in
our common stock. As of July 11, 2006, investors hold a short position in
approximate 283,000 shares of our common stock which represents 4.0% of our
public float. The anticipated downward pressure on our stock price due to actual
or anticipated sales of our stock by some institutions or individuals who engage
in short sales of our common stock could cause our stock price to decline.
Additionally, if our stock price declines, it may be more difficult for us to
raise capital.
OUR COMMON STOCK MAY BE DELISTED FROM THE AMERICAN STOCK EXCHANGE, WHICH MAY
HAVE A MATERIAL ADVERSE IMPACT ON THE PRICING AND TRADING OF OUR COMMON STOCK.
The Company has received a non-compliance notice from The American Stock
Exchange (the "Amex") on July 18, 2005. The notice indicated that the Company
has fallen below the continued listing standards of the Amex and that its
listing is being continued pursuant to an extension. Specifically, for the
fiscal year ended March 31, 2005, the Company was not in compliance with the
minimum shareholders' equity requirement of $2,000,000, and had reported net
losses in each of the past two fiscal years, resulting in the Company's
non-compliance with Sections 1003(a)(i) and 1003(a)(iv) of the Amex Company
Guide. In addition, the Company failed to announce in a press release, as
required by Section 610(b) of the Amex Company Guide, that it received an audit
opinion which contained a going concern qualification as disclosed in its Form
10-K for fiscal 2005 that was filed on June 29, 2005.
In order to maintain its Amex listing, the Company submitted a plan by
August 18, 2005 advising the Amex of actions it will take, which may allow it to
regain compliance within a maximum of 18 months and 12 months from July 18,
2005, respectively.
The Exchange has completed its review of The Singing Machine's plan of
compliance and supporting documentation and has determined that, in accordance
with Section 1009 of the Company Guide, the Plan makes a reasonable
demonstration of the Company's ability to regain compliance with the continued
listing standards within a maximum of 18 months and 12 months from July 18,
2005, respectively.
12
The Company must regain compliance with the $4,000,000 minimum
shareholders' equity requirement by January 18, 2007. Failure to regain
compliance within these time frames likely will result in the Exchange Staff
initiating delisting proceedings pursuant to Section 1009 of the Company Guide.
Further, if our common stock is removed from listing on Amex, it may become more
difficult for us to raise funds through the sales of our common stock or
securities.
IF OUR OUTSTANDING DERIVATIVE SECURITIES ARE EXERCISED OR CONVERTED, OUR
EXISTING SHAREHOLDERS WILL SUFFER DILUTION.
As of June 30, 2006, there were outstanding stock options to purchase an
aggregate of 2,005,410 shares of common stock at exercise prices ranging from
$.32 to $11.09 per share, not all of which are immediately exercisable. The
weighted average exercise price of the outstanding stock options is
approximately $1.17 per share. As of June 30, 2006, there were outstanding
immediately exercisable options to purchase an aggregate of 576,515 shares of
our common stock. There were outstanding stock warrants to purchase 5,591,040
shares of common stock at exercise prices ranging from $.23 to $4.03 per share,
all of which are exercisable. The weighted average exercise price of the
outstanding stock warrants is approximately $0.48 per share.
FUTURE SALES OF OUR COMMON STOCK HELD BY CURRENT STOCKHOLDERS AND INVESTORS MAY
DEPRESS OUR STOCK PRICE.
As of June 30, 2006, there were 22,935,818 shares of our common stock
outstanding. We have filed two registration statements registering an aggregate
3,794,250 of shares of our common stock (a registration statement on Form S-8 to
register the sale of 1,844,250 shares underlying options granted under our 1994
Stock Option Plan and a registration statement on Form S-8 to register 1,950,000
shares of our common stock underlying options granted under our Year 2001 Stock
Option Plan). An additional registration statement on Form S-1 was filed in
October 2003, registering an aggregate of 2,795,465 shares of our common stock.
The market price of our common stock could drop due to the sale of large number
of shares of our common stock, such as the shares sold pursuant to the
registration statements or under Rule 144, or the perception that these sales
could occur.
OUR STOCK PRICE MAY DECREASE IF WE ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK.
Our Certificate of Incorporation authorizes the issuance of 100,000,000
shares of common stock as amended in January 2006. As of June 30, 2006, we had
22,935,818 shares of common stock issued and outstanding and an aggregate of
7,596,450 shares issuable under our outstanding options and warrants. As such,
our Board of Directors has the power, without stockholder approval, to issue up
to 69,467,732 shares of common stock.
Any issuance of additional shares of common stock, whether by us to new
stockholders or the exercise of outstanding warrants or options, may result in a
reduction of the book value or market price of our outstanding common stock.
Issuance of additional shares will reduce the proportionate ownership and voting
power of our then existing stockholders.
PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MAKE IT DIFFICULT FOR A
THIRD PARTY TO ACQUIRE OUR COMPANY AND COULD DEPRESS THE PRICE OF OUR COMMON
STOCK.
Delaware law and our certificate of incorporation and bylaws contain
provisions that could delay, defer or prevent a change in control of our company
or a change in our management. These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders to elect
directors and take other corporate actions. These provisions of our restated
certificate of incorporation include: authorizing our board of directors to
issue additional preferred stock, limiting the persons who may call special
meetings of stockholders, and establishing advance notice requirements for
nominations for election to our board of directors or for proposing matters that
can be acted on by stockholders at stockholder meetings.
13
FORWARD-LOOKING STATEMENTS
We and our representatives may from time to time make written or oral
statements that are "forward-looking," including statements contained in this
prospectus and other filings with the Securities and Exchange Commission,
reports to our stockholders and news releases. All statements that express
expectations, estimates, forecasts or projections are forward-looking statements
within the meaning of the Act. In addition, other written or oral statements
which constitute forward-looking statements may be made by us or on our behalf.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," "projects," "forecasts," "may," "should," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions which are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in or suggested by such forward-looking statements. We
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
14
Selling Stockholders
The table below sets forth information concerning the resale of the shares
of common stock by the selling stockholders. We will not receive any proceeds
from the resale of the common stock by the selling stockholders.
The following table also sets forth the name of each person who is
offering the resale of shares of common stock by this prospectus, the number of
shares of common stock beneficially owned by each person, the number of shares
of common stock that may be sold in this offering and the number of shares of
common stock each person will own after the offering, assuming they sell all of
the shares offered.
Shares Beneficially Owned Shares Beneficially Owned
---------------------------- --------------------------------
Prior to the Offering(1) After the Offering
Total
----------------
Name Number Percent Shares Offered Number Percent
-------------------------- ------------- ----------- ------------------ ------------ -----------
Bernard Appel 51,334 * 7,813 (2) 43,521 *
Harvey Judkowitz 51,334 * 7,813 (2) 43,521 *
Josef Bauer 1,377,043 6.00% 7,813 (2) 1,369,230 5.97%
Marc Goldberg 28,987 * 7,813 (2) 21,174 --
Stewart Merkin 28,987 * 7,813 (2) 21,174 --
* Less than one percent.
(1) The number and percentage of shares beneficially owned is determined
in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the selling
stockholder has sole or shared voting power or investment power and
also any shares, which the selling stockholder has the right to
acquire within 60 days. The actual number of shares of common stock
issuable upon the conversion of the debentures and exercise of the
debenture warrants is subject to adjustment depending on, among
other factors, the future market price of the common stock, and
could be materially less or more than the number estimated in the
table.
(2) Includes shares issued under our Year 2001 Stock Option Plan, as
amended.
15
Plan of Distribution
Sales of the shares may be effected by or for the account of the selling
stockholders from time to time in transactions (which may include block
transactions) on the American Stock Exchange, in negotiated transactions,
through a combination of such methods of sale, or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of sale or at
negotiated prices. The selling stockholders may effect such transactions by
selling the shares directly to purchasers, through broker-dealers acting as
agents of the selling stockholders, or to broker-dealers acting as agents for
the selling stockholders, or to broker-dealers who may purchase shares as
principals and thereafter sell the shares from time to time in transactions
(which may include block transactions) on the American Stock Exchange, in
negotiated transactions, through a combination of such methods of sale, or
otherwise. In effecting sales, broker-dealers engaged by a selling stockholder
may arrange for other broker-dealers to participate. Such broker-dealers, if
any, may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of the shares
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act of
1933.
We have agreed to bear all expenses of registration of the shares other
than legal fees and expenses, if any, of counsel or other advisors of the
selling stockholders. The selling stockholders will bear any commissions,
discounts, concessions or other fees, if any, payable to broker-dealers in
connection with any sale of their shares.
We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act of 1933 or to contribute to payments the selling stockholders or
their respective pledgees, donees, transferees or other successors in interest,
may be required to make in respect thereof.
Interests of Named Experts and Counsel
The validity of the shares of common stock offered hereby will be passed
upon for the Registrant by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of
the Americas, 21st Floor, New York, NY 10018.
Information Incorporated by Reference
The Securities and Exchange Commission allows us to incorporate by
reference certain of our publicly-filed documents into this prospectus, which
means that such information is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under all
documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 until the selling stockholders have sold
all of the shares offered hereby or such shares have been deregistered.
The following documents filed with the SEC are incorporated herein by
reference:
o Reference is made to the Registrant's annual report on Form 10-K for
the fiscal year ended March 31, 2006 filed with the SEC on July 14,
2006;
o Reference is made to the Registrant's quarterly report on Form 10-Q
for the fiscal quarter ended June 30, 2006 filed with the SEC on
August 14, 2006;
16
o Reference is made to the Registrant's current reports on Form 8-K
filed on September 6, 2006, August 14, 2006, July 31, 2006, and July
25, 2006; and
o Reference is made to the description of the Registrant's common
stock contained in our Registration Statement on Form 8-A filed with
the SEC on March 2, 2001.
We will provide without charge to each person to whom a copy of this
prospectus has been delivered, on written or oral request a copy of any or all
of the documents incorporated by reference in this prospectus, other than
exhibits to such documents. Written or oral requests for such copies should be
directed to Yi Ping Chan, The Singing Machine Company, Inc., 6601 Lyons Road,
Bldg. A-7, Coconut Creek, Florida 33073, Telephone: (954) 596 -1000.
Disclosure of Commission Position On Indemnification For Securities Act
Liabilities
Our Certificate of Incorporation, as amended and restated, provide to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, that our directors or officers shall not be personally liable
to us or our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Certificate of
Incorporation, as amended and restated, is to eliminate our rights and our
shareholders (through shareholders' derivative suits on behalf of our company)
to recover damages against a director or officer for breach of the fiduciary
duty of care as a director or officer (including breaches resulting from
negligent or grossly negligent behavior), except under certain situations
defined by statute. We believe that the indemnification provisions in our
Articles of Incorporation, as amended, are necessary to attract and retain
qualified persons as directors and officers.
Our By Laws also provide that the Board of Directors may also authorize us
to indemnify our employees or agents, and to advance the reasonable expenses of
such persons, to the same extent, following the same determinations and upon the
same conditions as are required for the indemnification of and advancement of
expenses to our directors and officers. As of the date of this Registration
Statement, the Board of Directors has not extended indemnification rights to
persons other than directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
17
Additional Information Available to You
This prospectus is part of a Registration Statement on Form S-8 that we
filed with the SEC. Certain information in the Registration Statement has been
omitted from this prospectus in accordance with the rules of the SEC. We file
annual, quarterly and special reports, proxy statements and other information
with the SEC. You can inspect and copy the Registration Statement as well as
reports, proxy statements and other information we have filed with the SEC at
the public reference room maintained by the SEC at 100 F Street N.E. Washington,
D.C. 20549, You can obtain copies from the public reference room of the SEC at
100 F Street N.E. Washington, D.C. 20549, upon payment of certain fees. You can
call the SEC at 1-800-732-0330 for further information about the public
reference room. We are also required to file electronic versions of these
documents with the SEC, which may be accessed through the SEC's World Wide Web
site at http://www.sec.gov. No dealer, salesperson or other person is authorized
to give any information or to make any representations other than those
contained in this prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by us. This
prospectus does not constitute an offer to buy any security other than the
securities offered by this prospectus, or an offer to sell or a solicitation of
an offer to buy any securities by any person in any jurisdiction where such
offer or solicitation is not authorized or is unlawful. Neither delivery of this
prospectus nor any sale hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of our company since
the date hereof.
18
------------------
39,063 SHARES OF COMMON STOCK
------------------
PROSPECTUS
------------------
September 15, 2006
19
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates by reference into this Registration
Statement the documents listed below. In addition, all documents subsequently
filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents: (Eric: Please update)
o Reference is made to the Registrant's annual report on Form 10-K for
the fiscal year ended March 31, 2006 filed with the SEC on July 14,
2006;
o Reference is made to the Registrant's quarterly report on Form 10-Q
for the fiscal quarter ended June 30, 2006 filed with the SEC on
August 14, 2006;
o Reference is made to the Registrant's current reports on Form 8-K
filed on September 6, 2006, August 14, 2006, July 31, 2006, and July
25, 2006; and
o Reference is made to the description of the Registrant's common
stock contained in our Registration Statement on Form 8-A filed with
the SEC on March 2, 2001.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of common stock offered hereby will be passed
upon for the Registrant by Sichenzia Ross Friedman Ference LLP, 1065 Avenue of
Americas, 21st flr., New York, NY 10018.
Item 6. Indemnification of Directors and Officers.
Our Certificate of Incorporation, as amended and restated, provide to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, that our directors or officers shall not be personally liable
to us or our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Certificate of
Incorporation, as amended and restated, is to eliminate our rights and our
shareholders (through shareholders' derivative suits on behalf of our company)
to recover damages against a director or officer for breach of the fiduciary
duty of care as a director or officer (including breaches resulting from
negligent or grossly negligent behavior), except under certain situations
defined by statute. We believe that the indemnification provisions in our
Articles of Incorporation, as amended, are necessary to attract and retain
qualified persons as directors and officers.
Our By Laws also provide that the Board of Directors may also authorize us
to indemnify our employees or agents, and to advance the reasonable expenses of
such persons, to the same extent, following the same determinations and upon the
same conditions as are required for the indemnification of and advancement of
expenses to our directors and officers. As of the date of this Registration
Statement, the Board of Directors has not extended indemnification rights to
persons other than directors and officers.
20
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling us pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
EXHIBIT
NUMBER EXHIBIT
------- -------
4.1 Year 2001 Stock Option Plan, as amended (incorporated by
reference to the Company's Post Effective Amendment No. 1 on
Form S-8 filed on April 20, 2004).
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
23.1 Consent of Sichenzia Ross Friedman Ference LLP is contained in
Exhibit 5.1
23.2 Consent of Accountants
24.1 Power of Attorney (included in the Signature Page)
21
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i), and (1)(ii) do not apply if the
Registration Statement is on Form S-8 and if the information required to be
included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(A) Each prospectus filed by a Registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the date
the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5) or (b)(7) as part of a registration statement in reliance on Rule
430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required by Section 10(a)
of the Securities Act of 1933 shall be deemed to be part of and included
in the registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which the prospectus
relates, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date.
22
(6) That, for the purpose of determining liability of a Registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities, each undersigned Registrant undertakes that in a primary offering of
securities of an undersigned Registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned Registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of an undersigned
Registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of an undersigned Registrant or used or referred to by an
undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about an undersigned
Registrant or its securities provided by or on behalf of an undersigned
Registrant; and
(iv) Any other communication that is an offer in the offering made
by an undersigned Registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Coconut Creek, State of Florida on September 15, 2006.
THE SINGING MACHINE COMPANY, INC.
By: /s/ Yi Ping Chan
-----------------------------
Yi Ping Chan
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Danny Zheng
-----------------------------
Danny Zheng
Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-8 has been signed below by the following
persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Yi Ping Chan Interim Chief Executive Officer September 15, 2006
----------------------- and Chief Operating Officer
Yi Ping Chan
/s/ Danny Zheng Chief Financial Officer September 15, 2006
-----------------------
Danny Zheng
Director
-----------------------
Josef A. Bauer
/s/ Harvey Judkowitz Director September 15, 2006
-----------------------
Harvey Judkowitz
/s/ Bernard Appel Director September 15, 2006
-----------------------
Bernard Appel
/s/ Stewart Merkin Director September 15, 2006
-----------------------
Stewart Merkin
Director
-----------------------
Marc Goldberg
24
EXHIBIT
NUMBER EXHIBIT
------- -------
4.1 Year 2001 Stock Option Plan, as amended (incorporated by
reference to the Company's Post Effective Amendment No. 1 on
Form S-8 filed on April 20, 2004).
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
23.1 Consent of Sichenzia Ross Friedman Ference LLP is contained
in Exhibit 5.1.
23.2 Consent of Auditors
24.1 Power of Attorney (included in the Signature Page).
25