What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-07-14 compared with 2022-07-14 · 258 added, 136 removed, 99 unchanged (80% of the section changed)

are primarily engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories and musical recordings.

are the leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke and music

enabled consumer products for adults and children.

Our products are among the most widely available karaoke products in the world.

mission is to “create joy through music.” In order to deliver on this mission, we are focused on the following multi-prong

We believe we are a leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke

and music enabled consumer products for adults and children.

Our products are among the most widely available karaoke products in the

Our mission is to “create joy through music.” In order to deliver on this mission, we are focused on the following

multi-prong approach:

the short-term, improve profitability by optimizing operations and continue to expand gross margins;

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vast distribution relationships and sourcing abilities.

Events and Developments

Redemption Agreement

to August 10, 2021, we were partially held by koncepts International Limited (“koncepts”) which was a major stockholder of

our company, that beneficially owned approximately 49% of our shares of common stock outstanding as of March 31, 2021.

We were also partly

held by Treasure Green Holdings Ltd.

(“Treasure Green”), which owned approximately 2% of our common stock.

In total, approximately

51% of our shares of common stock on a fully diluted basis as of March 31, 2021 were previously owned by koncepts and Treasure Green.

koncepts and Treasure Green are owned by Fairy King Prawn Holdings Limited (“Fairy King”), an investment holding company

incorporated in the British Virgin Islands, principally owned by our then Chairman, Philip Lau.

August 5, 2021, we entered into a stock redemption agreement (the “Redemption Agreement”) with koncepts and Treasure Green,

pursuant to which we redeemed 654,105 shares of our common stock (the “Redeemed Shares”).

The closing of the transaction

set forth in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were assigned and transferred

back to us in consideration of a payment by us of approximately $7.2 million to koncepts and Treasure Green.

The Redeemed Shares were

retired and returned as unissued authorized capital.

to August 10, 2021, we did business with a number of entities that are principally owned by our former Chairman, Philip Lau, including

Starlight R&D Ltd (“SLRD”), Starlight Consumer Electronics USA, Inc., (“SCE”), Cosmo Communications Corporation

of Canada, Inc.

(“Cosmo”), Winglight Pacific, Ltd (“Winglight”) and Starlight Electronics Company Ltd (“SLE”),

among others.

to the Redemption Agreement, neither koncepts nor Treasure Green remained stockholders of our company and SLRD, SCE, Cosmo, Winglight

and SLE are no longer related parties.

Stock Split and Nasdaq Listing

May 23, 2022, we effected a reverse stock split of our shares of common stock in a ratio of 1:30.

The reverse stock split was affected

to meet The Nasdaq Capital Market’s minimum bid price requirement.

All information in this

Annual Report on Form 10-K has been retroactively adjusted to give effect to this 1-for-30 reverse stock split.

common stock was approved for listing on the Nasdaq Capital Market under the symbol “MICS” and began trading on the Nasdaq

Capital Market on May 24, 2022.

Public Offering

May 23, 2022, we entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp., who acted

as the sole underwriter (the “Underwriter”), in a firm commitment underwritten public offering pursuant to which we sold

to the Underwriter 1,000,000 shares of our common stock for gross proceeds of $4.0 million, prior to deducting underwriting discounts

and commissions and other estimated offering expenses of approximately $0.6 million.

The price to the public in the offering was $4.00

per share, before underwriting discounts and commissions.

The offering closed on May 26, 2022.

We received net proceeds of approximately

$3.4 million.

to the terms of the Underwriting Agreement, we issued to the Underwriter warrants to purchase up to 100,000 shares of common stock, representing

10% of the shares sold in the offering, excluding any shares sold through the over-allotment option.

The warrants are exercisable six

months from the commencement of sales under the offering, have an exercise price of $5.00 per share and expire five years from the date

June 13, 2022, Ault Alliance, Inc.

(“Ault Alliance”), formerly BitNile Holdings, Inc., a Delaware corporation, Ault Lending,

LLC (“Ault Lending”), a California limited liability company and subsidiary of Ault Alliance, and Milton C.

Ault, III (“Ault”),

Founder and Executive Chairman of Ault Alliance (collectively the “Reporting Persons”) filed a joint Schedule 13D filing

(the “Schedule 13D”) reporting that the Reporting Persons acquired, in the aggregate, 1,405,000 shares, or 52.8% of the issued

and outstanding shares of our common stock, through open market purchases.

disclosed in the Schedule 13D, as amended and subsequent Section 16 filings, Ault Lending currently owns, and Ault Alliance and Ault

may be deemed to beneficially own, an aggregate of 1,808,000 shares of common stock, or approximately 42.8% of the outstanding shares

of common stock as of the date of this Annual Report.

The reduction in beneficial ownership percentage was a result of us selling stock

in our ATM Offering (as defined and discussed below), and not from any sales of our common stock by Ault Lending.

October 14, 2022, we and our wholly-owned subsidiary, SMC Logistics, Inc.

(“SMC”), entered into a Credit and Security Agreement

(the “Credit Agreement”) with Fifth Third Bank, National Association, as Lender (“Fifth Third”).

The Credit Agreement

provides for a three-year secured revolving credit facility in an aggregate principal amount of up to $15,000,000 decreased to $7,500,000

during the period of January 1 through July 31 of each year (the “Credit Facility”).

The Credit Agreement matures on October

revolving Credit Facility bears interest of (a) the Prime Rate plus 0.50% or (b) the 30 day Term SOFR rate plus 3.00% (subject in each

case to a floor of 0.50%), depending on the type of loan we request.

“Term SOFR” means the forward-looking SOFR rate administered

by CME Group, Inc.

(or other administrator selected by Fifth Third) and published on the applicable Bloomberg LP screen page (or such

other commercially available source providing such quotations as may be selected by Fifth Third), fixed by the administrator thereof

two business days prior to the commencement of the applicable interest period (provided, however, that if Term SOFR is not published

for such business day, then Term SOFR shall be determined by reference to the immediately preceding business day on which such rate is

published), rounded upwards, if necessary, to the next 1/8th of 1% and adjusted for reserves if Fifth Third is required to maintain reserves

with respect to the relevant loans.

are required to pay an unused line fee of 0.35% per annum equal to the difference between (i) the maximum revolving loan limit then in

effect and (ii) the average daily balance of the revolving loans for each month, which fee shall be fully earned by Fifth Third and payable

monthly in arrears on the first business day of each month.

Said fee shall be calculated on the basis of a 360 day year.

The Credit Agreement

provides for an early termination fee of 2% if we prepay or terminate Fifth Third’s commitment to make loans under the Credit Agreement

two or more years prior to the maturity or 0.5% if such prepayment occurs less than two year prior to the maturity or during any renewal

obligations under the Credit Agreement are secured by all of our assets and the assets of SMC, presently owned or later acquired, and

all cash and non-cash proceeds thereof (including, without limitation, insurance proceeds).

of March 31, 2023, we were in default under the Credit Agreement due to non-compliance with the fixed charge coverage ratio covenant

On May 19, 2023, we executed a Waiver and First Amendment agreement which provides for a waiver of previous defaults and

new covenants that are required.

We must comply monthly with minimum liquidity (defined as excess loan availability plus cash on hand)

of $2.5 million between February and July and $4.0 million between September and June.

We must also maintain pre-defined minimum operating

cash flows between February and August 2023, until we achieve a fixed charge ratio of 1.15 :

1.0 beginning in September 2023 and throughout

the remaining term of the Credit Agreement.

February 15, 2023, we entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Aegis Capital Corp,

as sales agent (the “Agent”), pursuant to which we could offer and sell, from time to time, through the Agent (the “ATM

Offering”), up to approximately $1.8 million in shares of its common stock.

Shares offered and sold in the ATM Offering were issued

pursuant to the registration statement on Form S-3 (File No.

333-269183) filed with the Securities and Exchange Commission (the “SEC”)

on January 11, 2023 and declared effective by the SEC on January 20, 2023, and the prospectus supplement relating to the ATM Offering

filed with the SEC on February 15, 2023.

During the fiscal year ended March 31, 2023, we received total net proceeds from the ATM Offering

of approximately $36,000 on sales of 14,230 shares of common stock at an average price of $2.56 per share.

Through May 12, 2023, we received

total net proceeds from the ATM Offering of approximately $1.7 million on sales of 1,052,770 shares of common stock at an average price

of $1.64 per share.

The Sales Agreement has been terminated.

Product Portfolio

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via our mobile apps available on iOS and Android platforms.

We believe our core karaoke line offers best-in-class innovative features

that, including but not limited to enables customers to output video to a TV screen, correct singer’s pitch in real-time, stream

karaoke content directly to the machine, sing duets, display scrolling lyrics in-time with the song, and play custom karaoke CD+G discs.

The Company’s products are sold directly to consumers via its retail channels, ecommerce, its own website, and distributors worldwide.

We believe our core karaoke line offers best-in-class advanced features,

including but not limited to, enabling customers to output video to a TV screen, correcting singer’s pitch in real-time with our

proprietary PitchLab™ technology, streaming karaoke content directly to the machine via WiFi, casting karaoke songs from a mobile

device to our karaoke machines through our SingCast™ casting technology, singing duets, and displaying scrolling lyrics in-time

with the song.

Our products are sold directly to consumers via our retail channels, ecommerce, our own website, and distributors worldwide.

This product category accounted for approximately 73% of our net sales in our fiscal year ended March 31, 2023.

Products — including brands such as Carpool Karaoke.

In 2019, we entered into a 3-year license agreement with CBS® for its

Carpool Karaoke brand, made popular by James Corden on The Late Show with James Corden.

We launched an innovative Carpool Karaoke Microphone

that works specifically in the car.

This license agreement with CBS® expires on September 30, 2022.

We are actively exploring renewing

the license agreement and exploring new licensing opportunities.

This product category accounted for approximately 3% of our net sales

in our fiscal year ended March 31, 2022.

In 2019, we entered into a 3-year license agreement with CBS ®

for its Carpool Karaoke brand, made popular by James Corden on The Late Show with James Corden.

We launched an innovative Carpool

Karaoke Microphone that works specifically in the car.

This license agreement with CBS expired on September 30, 2022.

On February 28,

2023, we renewed this license agreement for an additional three years.

On March 16, 2023, we entered into a three-year license agreement

with Sesame Street Workshop for its Sesame Street brand for karaoke and singalong toy products, effective January 1, 2023.

license agreement, we will be able to develop and offer for sale all the iconic and beloved Sesame Street characters like Elmo, Big Bird,

Cookie Monster, Abby Cadabby, and many more.

This product category accounted for less than 1% of our net sales in our fiscal year ended

March 31, 2023.

and Accessories — we currently offer a line of traditional microphone accessories that are compatible with our karaoke machines.

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We are also seeing growth in portable Bluetooth microphones which are marketed under our Party Machine brand.

This product category accounted for approximately 9% of our net sales in our fiscal year ended March 31, 2022.

product category accounted for approximately 20% of our net sales in our fiscal year ended March 31, 2023.

Machine Kids Youth Electronics — including the brand Singing Machine Kids.

Our kids line of products offer fun music entertainment

features designed specifically for children.

Our kids’ products provide a high-quality introduction to singing and music entertainment

for young singers and offer innovative features like voice changing effects, recording, Bluetooth® compatibility, and portability.

Our kids’ line of products offers fun music

entertainment features designed specifically for children.

Our kids’ products provide a high-quality introduction to singing and

music entertainment for young singers and offer advanced features, such as voice changing effects, recording, Bluetooth compatibility,

and portability.

This product category accounted for approximately 5% of our net sales in our fiscal year ended March 31, 2023.

Subscriptions — in conjunction with our premium partner, Stingray Digital, we offer karaoke music subscription services for

the iOS and Android platforms as well as a web-based download store and integrated streaming services for our hardware.

offer almost 20,000 licensed karaoke songs in the catalog.

This product category accounted for approximately 1% of our net sales in our

fiscal year ended March 31, 2022.

In January 2023, we announced at the Consumer Electronics Show that we will be entering the connected vehicle karaoke device market in

partnership with Stingray Group, Inc.

(“Stingray”).

We have developed microphone hardware utilizing our PitchLab™ technology

to offer integrated wireless microphones for connection with major automotive brand’s vehicles.

We are currently in discussion

with many automotive brands to offer our products.

This product category is new and did not contribute to net sales in our fiscal year

ended March 31, 2023.

Subscriptions — in conjunction with our premium partner, Stingray, we offer karaoke music subscription services for the

iOS and Android platforms as well as a web-based download store and integrated streaming services for our hardware.

We currently offer

almost 20,000 licensed karaoke songs in the catalog.

This product category accounted for approximately 2% of our net sales in our fiscal

year ended March 31, 2023.

Development and Design

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and Australia,

where we sell through international distributors, representatives.

We also sell to select international retail customers in geographic

locations where we do not have a direct sales presence.

where we sell through international distributors.

We also sell to select international retail customers in geographic locations where

we do not have a direct sales presence.

and Manufacturing

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We are not dependent on any one supplier as we use many

manufacturers (currently over 5) to make our products.

manufacturers (currently five) to make our products.

We maintain a Hong Kong office that provides us with factory management, sourcing,

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for manufacturing, however in limited circumstances where we develop proprietary hardware and software, we will secure the proprietary

circuits and provide to our contract manufacturers for assembly into the final product.

While we are not responsible for sourcing raw

materials, we rely on our contract manufacturers’ ability to secure injected plastic, wood cabinets, integrated circuits, display

circuits and provide them to our contract manufacturers for assembly into the final product.

While we are not responsible for sourcing

raw materials, we rely on our contract manufacturers’ ability to secure injected plastic, wood cabinets, integrated circuits, display

panels, speaker drivers, and other components that are necessary for assembly into our final products.

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Historically, most of our customers pick up goods from our warehouse (freight collect).

On August 31, 2023, the lease at our Ontario,

California warehouse facility will terminate.

We do not intend to renew the lease agreement and have signed a service agreement with

a third-party logistics company to provide domestic and Canadian warehousing services, effective September 1, 2023.

and Marketing

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during business hours.

youth electronics, toy, and music industry has many participants, none of which has dominant market share, though certain companies may

have disproportionate strength in specific product categories.

youth electronics, toy, and music industries have many participants, none of which have a dominant market share, though certain companies

may have disproportionate strength in specific product categories.

We compete with a number of different companies in a variety of categories,

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Singtrix ® , eKids ® , Bonaok, Karaoke USA ™ , and Ion ® Audio.

primary method of competition in the industry consists of brand positioning, product innovation, quality, price, and timely distribution.

Our competitive strengths include our ability to develop innovative new products, speed to market, our relationships with major retailers,

and the quality and pricing of our products.

primary methods of competition in the industry consist of brand positioning, product innovation, quality, price, and timely distribution.

Our competitive strengths include our ability to develop innovative new products and features, speed to market, our relationships with

major retailers, and the quality and pricing of our products.

rely on a combination of word and design mark trademarks and trade secrets to protect our intellectual property.

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are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.

to our top five customers together comprised approximately 90% of our net sales in both fiscal years ended March 31, 2022 and March 31,

In our fiscal year ended March 31, 2022, revenues from three of these customers represented greater than 10% of net sales at a

percentage of 37%, 18%, and 17% of total net sales.

In our fiscal year ended March 31, 2021, revenues from four of these customers represented

greater than 10% of net sales at a percentage of 36%, 20%, 13% and 12% of total net sales.

to our top five customers together comprised approximately 89% and 90% of our net sales for fiscal years ended March 31, 2023 and 2022,

respectively.

In our fiscal year ended March 31, 2023, revenues from two of these customers represented greater than 10% of net sales,

at 48% and 21% of total net sales.

In our fiscal year ended March 31, 2022, revenues from three of these customers represented greater

than 10% of net sales, at 37%, 18%, and 17% of total net sales.

have no long-term contracts with these customers, and as a result, our success depends heavily on our customers’ willingness to

purchase and provide shelf space for our products.

purchase and provide floor or shelf space for our products.

do experience heightened seasonal demand for our products in our second and third quarters of our fiscal year.

In our fiscal year ended

March 31, 2022 and our fiscal year ended March 31, 2021, approximately 81% and 86%, respectively, of our net sales shipped in our second

and third quarters.

However, we continually look for products and new categories to reduce our exposure to seasonality variances.

In our fiscal years ended

March 31, 2023 and 2022, approximately 62% and 81%, respectively, of our net sales shipped in our second and third quarters.

we continually look for products and new categories to reduce our exposure to seasonality variances.

of our products is designed to comply with all applicable mandatory and voluntary safety standards.

In the United States, these safety

standards are promulgated by federal, state and independent agencies such as the US Consumer Product Safety Commission, ASTM, the Federal

Communications Commission, the Food and Drug Administration, the Federal Trade Commission, and various states Attorney Generals and state

regulatory agencies.

All of our products are independently tested by third party laboratories accepted by the Consumer Product Safety

Commission to verify compliance to applicable safety standards.

standards are promulgated by federal, state and independent agencies such as the US Consumer Product Safety Commission, ASTM International,

the Federal Communications Commission, and various states Attorney Generals and state regulatory agencies.

All of our products are independently

tested by third party laboratories accepted by the Consumer Product Safety Commission to verify compliance to applicable safety standards.

A similar approach is used to design and test products sold internationally.

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Capital Resources

believe that the development, attraction and retention of employees is an important factor to our Company’s success.

employees a wide range of benefits, including 100% paid health benefits for the employee, generous leave, vacation, and personal paid

time-off, 12 paid company holidays a year, and flexible work hours to work-from-home.

To support the advancement of our employees, we

offer training and development programs encouraging advancement from within.

As of the filing of this report, we had 32 employees, 17

of which are located at our corporate office and 15 at our logistics center in Ontario, California.

During peak shipping season, (July

through December), we rely heavily on temporary labor at our logistics warehouse to handle the increased shipment volume.

Environmental

may be subject to legal and financial obligations under environmental, health and safety laws in the United States and in other jurisdictions

where we operate.

We are not currently aware of any material environmental liabilities associated with any of our operations.

to March 31, 2022, and as of the date of this report, Digital Power Lending, LLC

(“Digital Power Lending ”) beneficially

owns and BitNile Holdings, Inc.

(“BitNile Holdings”) and Milton C.

Ault, III (“Ault,” and collectively with

Digital Power Lending and BitNile Holdings, “BitNile”) may be deemed to beneficially own an aggregate of 1,568,849

shares of our common stock or approximately 52.0% of our outstanding shares.

Digital Power Lending is a wholly owned subsidiary of

BitNile Holdings.

Ault is the Executive Chairman of BitNile Holdings.

longs as BitNile continues to hold more than 50% of the voting power of our Company, we

will be a “controlled company” as defined under Nasdaq Marketplace Rules.

so long as we are a controlled company under Nasdaq Marketplace Rules, we are permitted to elect to rely on certain exemptions from corporate

governance rules, including:

exemption from the rule that a majority of our board of directors must be independent directors;

exemption from the rule that the compensation of our CEO must be determined or recommended solely by independent directors;

exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

has indicated that it intends to appoint two directors to our Board of Directors.

Upon the appointment of the BitNile nominees, our Board of Directors will increase in size to seven directors, of which less than a majority will

be “independent” as defined under Nasdaq Marketplace Rules.

Stock Split and Nasdaq Listing

May 23, 2022, the Company effected a reverse stock split of its shares of common stock in a ratio of 1:30.

The reverse stock split was

affected to meet The Nasdaq Capital Market’s minimum bid price requirement.

All information

in this Annual Report on Form 10-K has been retroactively adjusted to give effect to this 1-for-30 reverse stock split.

common stock was approved for listing on the Nasdaq Capital Market under the symbol “MICS” and began trading on the Nasdaq

Capital Market on May 24, 2022.

May 23, 2022, we consummated a public offering of 1,000,000 shares of our common stock for gross proceeds of $4.0 million prior to deducting

underwriting discounts and commissions and other estimated offering expenses of approximately $0.7 million.

The offering closed on May

As compensation, we issued to the underwriter in the public offering warrants to purchase up to 100,000 shares of our common

The warrants are exercisable six months from the commencement of sales under the public offering, have an exercise price of $5.00

per share and expire five years from the date of issuance.

Redemption Agreement

to August 10, 2021, the Company was partially held by koncepts International Limited (“koncepts”) which was a major shareholder

of the Company that owned approximately 49% of our shares of common stock outstanding on a fully diluted basis as of March 31, 2021.

The Company was also partly held by Treasure Green Holdings Ltd.

(“Treasure Green) which owned approximately 2% of our common stock.

In total approximately 51% of the Company’s shares of common stock on a fully diluted basis as of March 31, 2021 were previously

owned by koncepts and Treasure Green.

koncepts and Treasure Green are owned by Fairy King Prawn Holdings Limited (“Fairy King”),

an investment holding company incorporated in the British Virgin Islands, principally owned by the Company’s then Chairman, Philip

August 5, 2021, the Company entered into a stock redemption agreement (the “Redemption Agreement”) with koncepts and Treasure

Green, pursuant to which the Company redeemed 654,105 shares of common stock of the Company (the “Redeemed Shares”).

closing of the transaction set forth in the Redemption Agreement took place on August 10, 2021, at which time the Redeemed Shares were

assigned and transferred back to the Company in consideration of a payment by the Company of approximately $7,162,000 to koncepts and

Treasure Green.

The Redeemed Shares were retired and returned to the unissued authorized capital of the Company.

to August 10, 2021, we did business with a number of entities that are principally owned by the Company’s former Chairman, Philip

Lau, including Starlight R&D Ltd (“SLRD”), Starlight Consumer Electronics USA, Inc., (“SCE”), Cosmo Communications

Corporation of Canada, Inc.

(“Cosmo”), Winglight Pacific, Ltd (“Winglight”) and Starlight Electronics Company

Ltd (“SLE”), among others.

to the Redemption Agreement, neither koncepts nor Treasure Green remained shareholders of the Company and SLRD, SCE, Cosmo, Winglight

and SLE are no longer related parties.

Company is incorporated under the laws of the State of Delaware and was formed in 1994.

Our common stock is traded on the NASDAQ Capital

Market under the symbol “MICS”.

Our principal executive offices are located at 6301 NW 5 th Way, Suite 2900, Fort

Lauderdale, FL, and our telephone number is (954) 596-1000.

are committed to attracting and retaining the brightest and best talent, so investing in human capital is critical to our success.

employee traits we value include industriousness, intellectual curiosity, growth mindset and deeply caring about the quality of work.

The human capital measures and objectives that we focus on in managing our business include employee safety, talent acquisition and retention,

employee engagement, development and training, diversity and inclusion, and compensation and pay equity.

of March 31, 2023, we had 37 employees, with 18 located at our corporate office, 12 at our logistics center in Ontario, California and

7 in our office in Hong Kong.

Of our employees, 1 was engaged in engineering and product development, 7 in sales and marketing, 20 in

customer support or general operations and 9 in general administration and finance.

All of these employees are employed on a full-time

As of March 31, 2023, approximately 51.4% of our current workforce is female, 48.6% male, and our average tenure is 5.48 years.

None of our employees is represented by a collective bargaining unit or is a party to a collective bargaining agreement.

We believe that

our relationship with our employees is good.

core tenet of our talent system is to both develop talent from within and supplement with external hires.

This approach has yielded loyalty

and commitment in our employee base which in turn grows our business, our products, and our customers, while adding new employees and

external ideas supports a continuous improvement mindset and our goals of a diverse and inclusive workforce.

We believe that our average

tenure of 5.48 years as of the end of the fiscal year 2023 reflects the engagement of our employees in this core talent system tenet.

believes that we materially comply with all applicable state, local and international laws governing nondiscrimination in employment

in every location in which we operate.

All applicants and employees are treated with the same high level of respect regardless of their

gender, ethnicity, religion, national origin, age, marital status, political affiliation, sexual orientation, gender identity, disability

or protected veteran status.

Engagement and Development

employee engagement efforts include our frequent and transparent “all-hands” meetings and executive communications, through

which we aim to keep our employees well-informed and to increase transparency.

We believe in continual improvement and use employee feedback

to drive and improve processes that support our customers and ensure a deep understanding of our employees’ needs.

We plan to conduct

annual confidential employee surveys as we believe that ongoing performance feedback encourages greater engagement in our business and

improves individual performance.

Our employees will participate in a 360-degree evaluation process to identify critical capabilities

for development and establish new stretch goals.

employee compensation strategy supports three primary objectives:

attract and retain the best team members;

reflect and reinforce our

most important values;

and align team member interests with stockholder interests in building enduring value.

We believe people should

be paid for what they do and how they do it, regardless of their gender, race or other personal characteristics.

To deliver on that commitment,

we benchmark and set pay ranges based on market data and consider factors such as an employee’s role and experience, the location

of their job, and their performance.

We also regularly review our compensation practices, both in terms of our overall workforce and

individual employees, to ensure our pay is fair and equitable.

part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees

in order to attract and retain superior talent.

In addition to healthy base wages, additional programs include annual bonus opportunities,

12 paid company holidays a year, healthcare and insurance benefits, including 100% paid health benefits for the employee, generous paid

time off and family leave, family care resources and flexible work hours to work-from-home.

We also have a company matched 401(k) plan,

where we make a matching contribution of 100% of salary deferral contributions up to 3% of pay, plus 50% of salary deferral contributions

from 3% to 5% of pay.

To support the advancement of our employees, we offer training and development programs encouraging advancement

success of our business is fundamentally connected to the well-being of our people.

Accordingly, we are committed to the health, safety

and wellness of our employees.

We provide our employees and their families with access to a variety of flexible and convenient health

and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them

improve or maintain their health status;

and that offer choice where possible so they can customize their benefits to meet their needs

and the needs of their families.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that

we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government

This includes having a significant portion of our employees work from home, while implementing additional safety measures

for employees continuing critical on-site work.

are a Delaware corporation that was formed in 1994.

Our common stock is traded on the NASDAQ Capital Market under the symbol “MICS”.

Our principal executive offices are located at 6301 NW 5 th Way, Suite 2900, Fort Lauderdale, FL, and our telephone number

is (954) 596-1000.

We maintain our corporate website at www.singingmachine.com .

also includes corporate governance information, including our Code of Ethics and our Board committee charters.

The information contained

on our website does not constitute a part of this report.

file reports with the Securities and Exchange Commission (“SEC”), including an annual report on Form 10-K, quarterly reports

on Form 10-Q, current reports on Form 8-K, and amendments to those reports that we file with, or furnish to, the SEC.

The SEC maintains

an Internet website, www.sec.gov , that contains reports, proxy and information statements and other information that we file electronically

with the SEC.

Our website also includes corporate governance

information, including our Code of Ethics and our Board committee charters.

The information contained on our website does not constitute

a part of this Annual Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business