Singing Machine Company Inc (MICS)

[NobleRoman]

The Penny Warrant

Also known more rhetorically favoriable as the "prefunded warranted."

This probably explains it all. This SC-1 filing:

https://www.marketwatch.com/investing/stock/smdm/financials/secfilings?docid=15211665

OnAugust 10, 2021, we issued to certain institutional investors in a private placement (i) 16,500,001 shares of our common stock at a purchaseprice per share of $0.30 and pre-funded warrants exercisable into 16,833,333 shares of common stock at an exercise price of $0.01 pershare, for aggregate gross proceeds of $10,000,000, and (ii) warrants to purchase up to 33,333,334 shares of our common stock at an exerciseprice per share of $0.35 per share, which were exercisable immediately at closing for a period of five years. In connection with theprivate placement, we issued 571,428 shares of common stock as consulting fees to a principal of Deka Consulting, as consulting fee andwarrants exercisable for an aggregate of approximately 1,333,333 shares of our common stock at an exercise price of $0.35 per share toA.G.P./Alliance Global Partners and certain designees thereof, as a portion of transaction fees. For additional details, see “Descriptionof Private Placement” on page 12.

That's the sweetener the analyst was referring to I suppose. So, yes, it is a way to short. They do pay up at .30 per unit, can exercise at .35. But they also have the sweetener penny warrant in there. That's where the "shorting" is coming from, to my understanding. Rounding up, that does put Stringray's 20% position calculated on the true current share count (after retirement) of the 36 million shares. That makes sense.

But it is finite. It's bitter/sweet. Toxic but not a death spiral cyanide pill, as I see it. Maybe more akin to an overdose. Alcohol poisoning. Oh well, it gives a discounted price I think. That let me in. The supply is finite, and fundamentals will ultimately prevail. The fundamentals are good. Now I think it's a case of a literal penny-per-share supply outstripping demand, hence the "short position." from long term investors. A paradox of sorts. A sweetner of a deal to get the old investors out. That explains the rhetoric better. To my understanding. That's an excellent instant return. And a guaranteed foot it in the door over .35. They win if we fail. They win if we win. They win period. Over and over!

That's why they hush hush it and push it under the carpet, and the investor/analsyst in the conference call doesn't elaborate. But is kinda PO'd that he didn't get offered the sweet deal. That's how I see it, anyway. Yeah, that's a sweet deal. Win short term, win long term. Win no matter how the cards fall. I"d like in on that deal too!

But, I'll just keep buying in, the lower the price goes, IFFFF it goes lower . Overall, the capital structure when all the dust clears seems good, and the metrics are good value here. Value given to us by alcohol poisoning, so to speak. as a best-way metaphorical understanding to my understanding. But nothing we can't recover from. Just a bad hangover.

Better than long term debt and bad interest rates I suppose. We do have alignment of long term interests. Insiders are swallowing the pill with us. I can live with that.

The End