Singing Machine Company, Inc. produces karaoke equipment.

The Complaint alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 9, 2001 and June 27, 2003. The Complaint alleges that Singing Machine emerged from bankruptcy in 1998, and issued a series of press releases emphasizing "record" net income to foster the impression that the Company had profitably emerged from bankruptcy and had successfully completed its corporate turnaround. In response to the Company's barrage of press release and public filings reporting strong financial results, Singing Machine's stock price soared to over $26 per share in March 2002.

The Complaint further alleges that on June 27, 2003, Singing Machine shocked the market by announcing it would restate 2002 and possibly 2001 financial results, and would not be able to timely file its Annual Report on Form 10-K for the fiscal year ended March 31, 2003 in order to properly account for income tax provisions for fiscal 2003, and to report an inventory reserve for fiscal 2003. As a results, Defendants revealed that net income for fiscal 2003 will be significantly below prior expectations. Singing Machine announced that the restatement will have the effect of reducing net income for fiscal 2002 and possibly fiscal 2001. On June 27, 2003, in late afternoon trading alone, Singing Machine stock lost over 30% of its value on enormous trading volumes of over 460,000 shares traded - in contrast to average trading volumes of around 50,000 shares. The Company alleges that the financial statements issued by the Company made during the class Period, all of which implicitly and/or expressly were prepared in conformity with generally accepted accounting principles (GAAP), were materially false and misleading because the Company materially overstated its net income in its publicly issued financial statements. As a result of the Company's misrepresentations, Singing Machine investors have sustained tremendous losses, and stand to lose much more as the full extent and magnitude of the restatement is disclosed.

Note: According to a Press Release dated July 15, 2003, the class period was expanded to include the purchasers of the securities of Singing Machine between February 14, 2001 and July 14, 2003. Originally, the class period included the purchasers of the securities of Singing Machine between August 9, 2001 and June 27, 2003.

The parties entered into a Stipulation and Agreement of Settlement on April 23, 2004. The Court granted preliminary approval of the Settlement on April 30. On July 30, the Court granted final approval of the Settlement, including an award of Attorneys’ Fees and Expenses, and entered Final Judgment.