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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 3, 2024
THE SINGING MACHINE COMPANY, INC.
(Exact name of registrant as specified in charter)
| Delaware | 001-41405 | 95-3795478 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
6301 NW 5th Way, Suite 2900
Fort Lauderdale, FL 33309
(Address of principal executive offices) (Zip Code)
(954) 596-1000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common stock, par value $0.01 per share | MICS | The Nasdaq Stock Market LLC (The Nasdaq Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth ☐
If an emerging growth company, indicate by check mart if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry Into A Material Definitive Agreement
As previously reported on June 11, 2024, The Singing Machine Company, Inc., a Delaware corporation (the “Company”) and its wholly owned subsidiary SemiCab Holdings, LLC, a Nevada limited liability company (“SemiCab LLC” and collectively with the Company, the “Buyer”), SemiCab, Inc., a Delaware corporation (“SemiCab” or the “Seller”), Ajesh Kapoor and Vivek Sehgal entered into an asset purchase agreement (the “Asset Purchase Agreement”) pursuant to which Seller agreed to sell and assign to the Buyer, and the Buyer agreed to purchase and assume from Seller, substantially all the assets, and certain specified liabilities relating to the business of the Seller. Subject to certain exceptions set forth in the Asset Purchase Agreement, the parties agreed that the Buyer will not assume the liabilities of the Seller.
On July 3, 2024, the parties to the Asset Purchase Agreement entered into Amendment No. 1 to the Asset Purchase Agreement (the “Amendment”). The Amendment provides for, among other things, (i) the modification to the equity consideration for the acquisition to be issued to the Seller from 962,710 to 641,806 shares of the Company’s common stock, and (ii) the modification to the equity consideration to be issued in exchange for all of the issued and outstanding capital securities of SMCB Solutions Private Limited, a wholly owned subsidiary of the Seller, from 314,485 to 320,903 shares of the Company’s common stock.
All references to the Asset Purchase Agreement and the Amendment to this Current Report are qualified, in their entirety, by the text of such exhibits. A copy of the Asset Purchase Agreement was previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on June 11, 2024 as Exhibit 2.1 and the Amendment is included as Exhibit 2.2 to this Current Report and are each incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
On July 3, 2024 (the “Closing Date”), the Seller waived the closing condition requiring the consummation of a financing transaction for gross proceeds of no less than $1,700,000 prior to the Closing Date and the transactions contemplated by the Asset Purchase Agreement, as amended, were consummated (the “Closing”). In connection with the Closing, the Company issued to Seller: (i) 641,806 shares of its common stock, par value $0.01 (the “Shares”); (ii) and a twenty percent (20%) membership interest in SemiCab LLC.
In addition, at the Closing,
| ● | SemiCab LLC and SemiCab, entered into an operating agreement of SemiCab LLC (the “Operating Agreement”) which sets forth the terms and conditions governing the operation and management of SemiCab LLC. | |
| ● | The Buyer and Seller entered into an option agreement (the “Option Agreement”), granting the Buyer the right to acquire all of the issued and outstanding capital securities of SMCB Solutions Private Limited, a wholly owned subsidiary of the Seller, in consideration for 320,903 shares of common stock of the Company. | |
| ● | SemiCab LLC also entered into employment agreements with each of Ajesh Kapoor and Vivek Sehgal. |
All references to the Operating Agreement to this Current Report are qualified, in its entirety, by the text of such exhibit. A copy of the Operating Agreement was previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on June 11, 2024, as Exhibit 10.1 and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities
The disclosure included in Item 2.01 above is incorporated herein by reference. The Shares issued in connection with the Closing were not registered under the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) and Regulation D, Rule 506 thereunder, as transactions by an issuer not involving a public offering.
Item 7.01 Regulation FD Disclosure.
On July 5, 2024, the Company issued a press release announcing the closing of the foregoing transactions. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by reference.
The information furnished pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing made by us under the Exchange Act or Securities Act, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statement and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of SemiCab, were previously filed as Exhibit 99.2 and 99.3 to the Current Report on Form 8-K on June 11, 2024 and are incorporated herein by reference.
(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated financial information of the Company in connection with the acquisition was previously filed as Exhibit 99.4 to the Current Report on Form 8-K on June 11, 2024 and are incorporated herein by reference.
(d) Exhibits. Exhibit No. Description
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Certain schedules and exhibits have been omitted pursuant to Items 601(a)(5) and 601(b)(2) of Regulation S-K. The Company will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. The Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
** In accordance with Item 601(b)(10) of Regulation S-K, certain provisions or terms of the Agreement have been redacted. The Company will provide an unredacted copy to the exhibit on a supplemental basis to the SEC or its staff upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 5, 2024
| THE SINGING MACHINE COMPANY, INC. | ||
| By: | /s/ Gary Atkinson | |
| Gary Atkinson | ||
| Chief Executive Officer | ||
Exhibit 2.2
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
This Amendment No. 1 to Asset Purchase Agreement (this “Amendment”) dated this July 3, 2024, is by and among SemiCab, Inc., a Delaware corporation (the “Seller”), The Singing Machine Company, Inc., a Delaware corporation and its wholly owned subsidiary, SemiCab Holdings, LLC, a Nevada limited liability company (collectively the “Buyer”).
WHEREAS, the Seller and the Buyer are party to that asset purchase agreement, dated June 11, 2024 (the “Purchase Agreement”);
WHEREAS, the Seller and the Buyer desire to amend the Purchase Agreement as more particularly set forth below;
WHEREFORE, the parties do hereby agree as follows:
1. Section 2.05 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:
Section 2.05 Purchase Price. The aggregate purchase price for the Purchased Assets shall be (a) 641,806 shares of Common Stock, par value $0.01 of the Singing Machine Company, Inc. (the “Parent”), and (b) a Twenty percent (20%) membership interest in SemiCab Holdings, LLC (the “Equity Interests” or the “Purchase Price”), plus the assumption of the Assumed Liabilities. The Purchase Price shall be paid as provided in Section 3.02.
2. Section 7.01(c) of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:
(c) Buyer and Seller shall have entered into an Option Agreement, in the form of Exhibit C hereto, granting Buyer the right to acquire all of the issued and outstanding capital securities of SMCB Solutions Private Limited, in consideration for the issuance of 320,903 shares of Common Stock of Parent.
3. Section 7.03(f) of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:
(f) [Reserved.]
4. Except as modified herein, the terms of the Purchase Agreement shall remain in full force and effect.
5. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same Amendment. A signature delivered by facsimile or email shall constitute an original.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.
| SEMICAB, INC. | ||
| By | /s/ Ajesh Kapoor | |
| Name: | Ajesh Kapoor | |
| Title: |
Chief Executive Officer |
|
| SemiCab, Inc. | ||
| SEMICAB HOLDINGS, LLC | ||
| By | /s/ Gary Atkinson | |
| Name: | Gary Atkinson | |
| Title: | Chairman | |
| THE SINGING MACHINE COMPANY, INC. | ||
| By | /s/ Gary Atkinson | |
| Name: | Gary Atkinson | |
| Title: | Chief Executive Officer | |
| /s/ Ajesh Kapoor | ||
| Ajesh Kapoor | ||
| /s// Vivek Sehgal | ||
| Vivek Sehgal | ||
Exhibit 99.1
FOR IMMEDIATE RELEASE
Singing Machine Completes Acquisition of
Leading AI Logistics Company
Company Now Well Positioned for Accelerated Revenue Growth
Fort Lauderdale, FL, July 5, 2024 – The Singing Machine Company, Inc. (“Singing Machine”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products, today announced it has successfully completed the acquisition of SemiCab, Inc. (“SemiCab”), a leading artificial intelligence technology company in the global logistics space.
“We are very pleased to complete the acquisition of SemiCab,” commented Gary Atkinson, CEO of Singing Machine. “They have disruptive, cutting-edge, AI-powered technology. They have world class customers that are eager to expand their current relationships. Lastly, SemiCab’s technology creates a compelling financial win-win for carriers and enterprise-level Fortune 1000 clients through significant cost savings and efficiencies. For the benefit of our shareholders, we view this transaction as a complete overhaul of our growth prospects, our ability to create shareholder value, and to scale SemiCab to a global force in the logistics space for many years to come,” continued Mr. Atkinson.
Awarded Gartner Cool Vendor in 2020, SemiCab is a global leader in the AI-driven logistics space and developed by a pair of life-long former Google and GT Nexus technology innovators in the logistics industry. The Company launched its first revenue-generating software platform in 2021, immediately securing several enterprise clients in the US.
SemiCab expanded its platform to the Indian market, driven by strong client demand from several global leaders in the consumer, non-durables space. In 2021, the India national government launched a large-scale infrastructure modernization program called the Gati Shakti National Master Plan. For more information on this Master Plan, please see the following link: https://www.investindia.gov.in/team-india-blogs/pm-gati-shakti-master-plan.
To support this plan, the National Digital Freight Exchange (“NDFE”) was created to help improve shipping efficiencies within the largest population centers of India. SemiCab was selected to partner with the NDFE, delivering AI-powered software solutions to members of the exchange. For more information on the NDFE, please see the following link: https://www.ndfe.in/aboutus
SemiCab’s software has the potential to disrupt the global logistics industry through several powerful aspects of its solution:
| ● | Improved Efficiency: SemiCab’s software improves freight utilization rates from 65% to 90%. This is believed to be one of the highest utilization rate in the industry. | |
| ● | Cost Savings: These utilization rates enable SemiCab to pass on significant cost savings to end customers. In many cases this represents more than a 10% reduction in overall costs. Truck-based shipping is typically 3% of total sales for most companies. | |
| ● | Labor Reduction: The utilization of AI across the freight the entire process has a dramatic impact of the staffing required to schedule, monitor, and bill for freight services. | |
| ● | Sustainability: The reduction of truck usage by up to 35% has the potential to be one of the least invasive, low-cost ways to dramatically reduce the carbon footprint and greenhouse gas emissions of the global logistics space. This is a benefit that can be measured, monetized, and implemented with no costly changes to existing infrastructure, staffing or operations. |
Overview of the transaction
The transaction was structured as an asset purchase/sale. At closing, Singing Machine will issue to SemiCab 641,806 shares of its common stock, which represents approximately 10% of the Company’s issued and outstanding common stock as of July 3, 2024 and the assumption of approximately $2.6 million in liabilities as of March 31, 2024. In addition, at closing Singing Machine will issue to SemiCab a 20% membership interest in its newly formed wholly owned subsidiary, SemiCab Holdings, LLC.
As part of the transaction, the Company also entered into an option agreement to acquire SMCB Solutions Private Limited, an Indian based wholly owned subsidiary of SemiCab. This entity currently operates from Bangalore India and serves the combined businesses technology needs as well as India-based enterprise customers. Consideration for this part of the transaction will include an additional 320,903 shares of the Company’s Common Stock. This transaction is expected to close before August 31, 2024, subject to certain regulatory compliance and approvals in India. This subsidiary has generated approximately $1.4 million in sales for the last twelve-month period ended March 31, 2024. The figures are not included in the financial statements included in this release.
For more information regarding the acquisition, please see current report on Form 8-K, which the Company filed with the Securities and Exchange Commission on June 12, 2024.
About SemiCab
SemiCab is a cloud-based Collaborative Transportation Platform built to achieve the scalability required to predict and optimize millions of loads and hundreds of thousands of trucks. To orchestrate collaboration across manufacturers, retailers, distributors, and their carriers, SemiCab uses real-time data from API-based load tendering and pre-built integrations with TMS and ELD partners. To build fully loaded round trips, SemiCab uses AI/ML predictions and advanced predictive optimization models. On the SemiCab platform, shippers pay less and carriers make more while not having to change a thing.
Since 2020, SemiCab has enabled major retailers, brands and transportation providers to address these common supply-chain problems globally. SemiCab’s Orchestrated Collaboration™ AI model has proven to increase transportation capacity, improve asset utilization, reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show the technology has the capability of saving shippers tens of billions of dollars annually through optimization. Further, SemiCab’s technology also has the potential to play a key role in the improved sustainability model globally. Based on its proven ability to improve truck utilization rates from 65% to over 90%, this results in a dramatic reduction in the carbon footprint of the industry. The optimization of existing truck utilization can add approximately 30% more trucking capacity without adding more trucks, drivers or driven miles which addresses common problems plaguing the industry like severe driver shortage and road congestion. Trucking optimization could also eliminate approximately 25% of CO2 emissions attributable to road freight.
About Singing Machine
For additional information regarding SemiCab: http://www.semicab.com The Singing Machine Company, Inc. (NASDAQ: MICS) is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry’s widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.
Investor Relations Contact:
investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors
Forward Looking Statements
This press release contains or may contain forward-looking statements and information that is based upon beliefs of, and information currently available to, the Company’s management, as well as estimates and assumptions made by the Company’s management. When used in this press release, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to Company or Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to the Company’s industry and Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Risks and uncertainties related to the proposed transaction include, among others: the risk that the conditions to the closing of the acquisition are not satisfied; potential adverse reactions or changes to business, including those resulting from the announcement or completion of the transaction; unexpected costs, charges or expenses resulting from the transaction; and any changes in general economic and/or industry specific conditions. Consequently, all of the forward-looking statements made by the Company, in this and in other documents or statements are qualified by factors, risks and uncertainties, including, but not limited to, those set forth under the headings titled “Disclosure Regarding Forward-Looking Statements” and “Risk Factors” in the Company’s Transition Report on Form 10-KT for the transition period from April 1, 2023 to December 31, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and other reports filed by the Company with the SEC, which are available at the SEC’s website http://www.sec.gov.
You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this press release. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this press release to conform our statements to actual results or changed expectations, or the results of any revision to these forward-looking statements.