Singing Machine (MICS) to Acquire SemiCab

The Singing Machine Company, Inc. (“Singing Machine”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products, today announced it has executed a definitive agreement to acquire SemiCab, Inc. (“SemiCab”), a leading artificial intelligence technology company that optimizes freight for Fortune 1000 clients in the US and Indian markets.

SemiCab’s AI technology was developed specifically to build a hyper-efficient trucking network that operates at a 90%+ utilization level, well above the industry standard of 65%. This technology connects thousands of parties on a single network, building fully optimized transit routes that drive costs efficiencies for both the customer and the shipper. SemiCab’s founder and software development team has more than 30 years of experience developing increasingly complex software solutions for the global freight and logistics market.

“We are very pleased to announce the acquisition of SemiCab,” commented Gary Atkinson, CEO of Singing Machine. “They have a 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 alike 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 be a global force in the logistics space for many years to come,” concluded Mr. Atkinson.

“I am very proud that our company was able to partner with Mr. Atkinson and the team at Singing Machine,” commented Ajesh Kapoor, founder and Chief Technology Officer at SemiCab. “For the past six years, we developed a powerful, disruptive AI-powered technology. We leveraged this to quickly attract a number of world-class pilot clients in the US.”

Mr. Kapoor continued, “We quickly parlayed our successful US pilot to expand and partner with multiple Fortune 1000 clients across much of India. The only missing ingredient was an efficient, scalable path to growth capital. Today, our partnership with the team at the Singing Machine is the first step in scaling our client footprint across the US, India, and hopefully many more markets to come.”

“We view the Indian market specifically as a path that offers tremendous growth potential. A group of approximately 30 Fortune 1000 clients with over $1 billion in annual shipping expenses in the Indian markets recognized the potential benefits of establishing a National Digital Freight Exchange (“NDFE”) and made it a priority to leverage the freight optimization capabilities of SemiCab’s AI-powered technology. Semi-Cab already serves almost a third of the NDFE members today, and we are very excited to expand our relationships in that market in the near term.”

“We believe we are at least five years ahead of any potential competitors in terms of the capabilities and validation of our technology. To capitalize on this, we saw the opportunity to partner with Singing Machine as a very cost effective, sensible way to unlock the value of our business for all shareholders. We look forward to being a part of what we believe will be a compelling success story in the adoption of AI-driven technology to impact one of the largest global industry verticals for many years to come,” concluded Mr. Kapoor.

Overview of the transaction

The transaction was structured as an asset purchase/sale. At closing, Singing Machine will issue to SemiCab 952,710 shares of its common stock, which represents approximately 15% of the Company’s issued and outstanding common stock as of June 11, 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. The acquisition is subject to various closing conditions, including the Company consummating a capital raise of $1.7 million and other customary closing conditions.

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 314,485 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. These figures are not included in the financial statements filed by the Company in its Form 8-K filed today.

For more information regarding the acquisition, please see current report on Form 8-K, which the Company intends to file with the Securities and Exchange Commission today. There can be no assurance that the Company will be able to successfully consummate the acquisition or that it will realize the benefits it anticipates from the acquisition.

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