# EDGAR Filing Document

**Accession Number:** 0000923601
**File Stem:** 0001493152-26-014724
**Filing Date:** 2026-4
**Character Count:** 448676
**Document Hash:** 7cc097e3bd715cdaa47d3572d1772001
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-014724.hdr.sgml**: 20260402

**ACCESSION NUMBER**: 0001493152-26-014724

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 106

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260402

**DATE AS OF CHANGE**: 20260401

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Algorhythm Holdings, Inc.
- **CENTRAL INDEX KEY:** 0000923601
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 953795478
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41405
- **FILM NUMBER:** 26829764

**BUSINESS ADDRESS:**
- **STREET 1:** 6301 NW 5TH WAY, STE 2900
- **CITY:** FORT LAUDERDALE
- **STATE:** FL
- **ZIP:** 33309
- **BUSINESS PHONE:** (954) 596-1000

**MAIL ADDRESS:**
- **STREET 1:** 6301 NW 5TH WAY, STE 2900
- **CITY:** FORT LAUDERDALE
- **STATE:** FL
- **ZIP:** 33309

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SINGING MACHINE CO INC
- **DATE OF NAME CHANGE:** 19940523

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

(Mark One)

☒ **Annual Report Pursuant to Section 13 or 15(** **d) of the Securities Exchange Act of 1934** 

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| | |
|:---|:---|
| For the fiscal year ended: | **December 31, 2025** |

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☐ **Transition Report Pursuant to Section 13 or 15(** **d) of the Securities Exchange Act of 1934**

For the transition period from __________ to ___________

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| | |
|:---|:---|
| Commission File Number: | **001-41405** |

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![](form10-k_001.jpg)

**<u>ALGORHYTHM HOLDINGS, INC.</u>**

*(Exact name of registrant as specified in its charter)*

 

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| | |
|:---|:---|
| **Delaware** | **95-3795478** |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |

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**6301 NW 5<sup>th</sup> Way, Suite 2900, Fort Lauderdale, FL 33309**

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(Address of principal executive offices) (Zip Code)

(954) 800-0425

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**(**Registrant's telephone number, including area code**)**

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **Title of Class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, Par Value $0.01 | RIME | The Nasdaq Stock Market LLC |

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**Securities registered pursuant to Section 12(g) of the Act: None**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|  |  | Emerging growth company | ☐ |

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If an emerging growth company, indicate by check mark 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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of June 30, 2025, the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing price for the common stock on such date of $2.45, as reported on the Nasdaq Stock Market, was $6,101,120.

As of March 27, 2026, there were 14,651,665 shares of the registrant's common stock outstanding.

**DOCUMENTS INCORPORATED BY REFERENCE**

None.

**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
|  |  | Page |
| **[PART I](#sh_001)** | **[PART I](#sh_001)** | 2 |
| Item 1. | [Business](#sh_002) | 2 |
| Item 1A. | [Risk Factors](#sh_003) | 10 |
| Item 1B. | [Unresolved Staff Comments](#sh_004) | 35 |
| Item 1C. | [Cybersecurity](#sh_005) | 35 |
| Item 2. | [Properties](#sh_006) | 36 |
| Item 3. | [Legal Proceedings](#sh_007) | 36 |
| Item 4. | [Mine Safety Disclosures](#sh_008) | 36 |
| **[PART II](#wg_01)** | **[PART II](#wg_01)** | 37 |
| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#wg_02) | 37 |
| Item 6. | [\[Reserved\]](#wg_03) | 37 |
| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#wg_04) | 38 |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#wg_05) | 48 |
| Item 8. | [Financial Statements and Supplementary Data](#wg_06) | 48 |
| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#wg_07) | 49 |
| Item 9A. | [Controls and Procedures](#wg_08) | 49 |
| Item 9B. | [Other Information](#wg_09) | 51 |
| Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#wg_10) | 51 |
| **[PART III](#wg_11)** | **[PART III](#wg_11)** | 52 |
| Item 10. | [Directors, Executive Officers and Corporate Governance](#wg_12) | 52 |
| Item 11. | [Executive Compensation](#wg_13) | 59 |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#wg_14) | 65 |
| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#wg_15) | 67 |
| Item 14. | [Principal Accountant Fees and Services](#wg_16) | 70 |
| **[PART IV](#wg_17)** | **[PART IV](#wg_17)** | 71 |
| Item 15. | [Exhibits and Financial Statement Schedules](#wg_18) | 71 |
| Item 16. | [Form 10-K Summary](#wg_19) | 76 |

---

i

**DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS**

This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenue and costs, and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expects," "intends," "plans," "projects," "estimates," "anticipates," or "believes" or the negative thereof or any variation thereon or similar terminology or expressions.

We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results to differ materially from results proposed in such statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:

● our ability to fund our future growth;

● our ability to executed upon our business plan;

● our ability to attract and retain management;

● market acceptance and demand of our services;

● labor shortages and changes in employee compensation costs;

● our ability to maintain and increase the value of our businesses;

● changes in consumer preferences;

● our ability to incorporate new and changing technologies;

● the impact of inflation and other pricing pressures on our business;

● the affect of competition and consolidation in the industries in which we operate;

● the impact of any failure of our information technology system, any breach of our network security, and any security breaches of confidential customer information;

● our ability to comply with applicable international, federal, state and local laws and regulations;

● our ability to protect our trademarks and other intellectual property;

● our ability to obtain debt, equity or other financing on favorable terms, or at all;

● the condition of the securities and capital markets generally;

● general economic conditions, whether internationally, nationally or in the regional and local market areas in which we are doing business, that may be less favorable than expected;

● other economic, competitive, governmental (including new tariffs), legislative, regulatory, geopolitical and technological factors that may negatively impact our business, operations and pricing;

and statements of assumption underlying any of the foregoing, as well as any other factors set forth herein under *Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations* and *Item 1A. Risk Factors.* All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise our forward-looking statements.

**PART I**

**Item 1. Business.**

*Unless the context requires otherwise, references in this Annual Report to "we," "us," and "our," refer to Algorhythm Holdings, Inc. and its consolidated subsidiaries. Unless otherwise expressly provided in this Annual Report, all historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents set forth herein relating to our common stock have been adjusted to give effect to a reverse stock split of our common stock in a ratio of 1-for-200 effected on February 10, 2025.*

**Overview**

We are an artificial intelligence ("AI") technology company focused on the growth and development of SemiCab. SemiCab is an AI-enabled software logistics and distribution business that utilizes our SemiCab technology platform to enable retailers, brands and transportation providers to address common supply chain problems globally. We operate our SemiCab business through our subsidiary, SemiCab Holdings, LLC.

Prior to August 1, 2025, we had a second business, which was Singing Machine. Singing Machine was a home karaoke consumer products business that designed and distributed karaoke products to retailers and ecommerce partners globally through our subsidiary, The Singing Machine Company, Inc. We sold our Singing Machine business on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business.

Our operations include our wholly-owned subsidiaries, SMC Logistics, Inc., a California corporation ("SMCL"), SMC-Music, Inc., a Florida corporation ("SMCM"), SMC (HK) Limited, a Hong Kong company ("SMH"), The Singing Machine Company, Inc., a Delaware corporation ("SMC"), and RIME Holdings, LLC ("Rime"), and our 80%-owned subsidiaries, SemiCab Holdings, LLC, a Nevada limited liability company ("SemiCab Holdings") and SMCB Solutions Private Limited, an Indian company ("SMCB").

**Recent Events and Developments**

*Reverse Stock Split and Increase in Authorized Shares*

On January 13, 2025, our stockholders voted to authorize our board of directors to effect a reverse stock split of the outstanding shares of our common stock at a specific ratio within a range of 1-for-10 to a maximum of 1-for-250 and to amend our certificate of incorporation to increase the number of authorized common stock from 100,000,000 to 800,000,000 shares. On January 14, 2025, our board of directors approved a reverse stock split of 1-for-200 ratio and approved the filing of a certificate of amendment to our certificate of incorporation to effect the reverse stock split and to increase our authorized shares of common stock from 100,000,000 to 800,000,000. The reverse stock split took effect on February 10, 2025.

*Acquisition of SMCB*

On May 2, 2025, we and SemiCab Holdings entered into an equity purchase agreement with SemiCab Inc. pursuant to which: (i) SemiCab Holdings purchased 9,999 shares of the issued and outstanding equity shares, Rs. 10 par value, of SMCB, representing 99.99% of the issued and outstanding equity shares of SMCB, for $1,750,000, the payment of which amount was evidenced by the issuance of a promissory note by us to SemiCab, Inc., and (ii) we purchased the 20% membership interest in SemiCab Holdings then held by SemiCab, Inc. for aggregate consideration consisting of 119,742 shares of our common stock. The transactions closed on May 2, 2025. The promissory note provides that $1,500,000 is due and payable by us on the first anniversary of the closing date and the remaining $250,000 is due and payable by us on the 18-month anniversary of the closing date. The promissory note bears interest at six percent per annum.

On the closing date, we and SemiCab Holdings entered into an amended and restated employment agreement with each of Ajesh Kapoor and Vivek Sehgal pursuant to which Mr. Kapoor agreed to serve as the Chief Executive Officer and Chief Technology Officer of SemiCab Holdings and Mr. Sehgal agreed to serve as the Chief Product Officer of SemiCab Holdings. Pursuant to the terms of the employment agreements, SemiCab Holdings granted Messrs. Kapoor and Sehgal a membership interest in SemiCab Holdings with three quarters of each such grant subject to certain forfeiture rights tied to continued employment with SemiCab Holdings. Additionally, Mr. Kapoor was granted the right to serve as a member of our board of directors and the right to appoint an additional member of our board of directors upon the occurrence of certain specified events.

Also on the closing date, we, SemiCab Holdings, Ajesh Kapoor and Vivek Sehgal entered into an amended and restated limited liability company agreement for SemiCab Holdings which sets forth the terms and conditions governing the operation and management of SemiCab Holdings.

In January 2026, the Indian government approved the purchase of the remaining outstanding equity share of SMCB, representing 0.01% of the issued and outstanding equity shares of SMCB, from Sudheer Srinivas Kadandale for $10.

 

 

*Sale of Singing Machine*

 

On August 1, 2025, we entered into an asset purchase agreement with SMC and Stingray Music USA, Inc. ("Stingray USA"), a related party and subsidiary of the Stingray Group, Inc. ("Stingray Group"), pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with our Singing Machine business for $500,000. The transaction closed on August 1, 2025.

 

*Streeterville Capital Transaction*

On August 21, 2025, we entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company ("Streeterville"), pursuant to which we agreed to issue and sell to Streeterville shares of our common stock in one or more pre-paid purchases (each, a "Pre-Paid Purchase" and collectively, the "Pre-Paid Purchases") for an aggregate purchase price of up to $20,000,000 (the "Streeterville Transaction"). We also agreed to issue an additional 95,694 shares of our common stock to Streeterville as a commitment fee for the pre-paid purchase facility established under the securities purchase agreement (the "Commitment Shares"). The securities purchase agreement provides for a two-year commitment period during which, subject to certain specified conditions, we may request additional Pre-Paid Purchases from Streeterville provided that the amount requested is no less than $250,000 and the total outstanding balance of all Pre-Paid Purchases does not exceed $3,000,000. The original issue discount for each additional Pre-Paid Purchase will be nine percent of the amount set forth in the applicable request and each additional Pre-Paid Purchase will accrue interest at the rate of nine percent per annum. We also executed a guaranty, a security agreement, and intellectual property security agreement in favor of Streeterville as part of the Streeterville Transaction. The Streeterville Transaction closed on August 21, 2025.

Following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from us that number of shares of common stock up to the lesser of: (i) a number of shares of common stock equal in value to the outstanding balance of the funded amount, and (ii) that number of shares of common stock such that Streeterville will not beneficially own greater than 9.99% of our outstanding shares of common stock. The purchase price of the shares of common stock will be 90% of the lowest daily volume weighted average price during the 10 trading days immediately prior to the purchase notice date, but not less than the floor price, which is the greater of: (i) 20% of the "Minimum Price" as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid Purchase, and (ii) $0.10.

Pursuant to the terms of the securities purchase agreement, we filed a registration statement on Form S-1 under the Securities Act with the SEC to register the resale of the Commitment Shares and all shares of common stock issuable pursuant to the Pre-Paid Purchases. The registration statement became effective on November 10, 2025.

Nasdaq Listing Rule 5635(d) provides that shareholder approval is required prior to the issuance of shares of our common stock equal or greater in number to 20% of the number of shares of our common stock issued and outstanding immediately prior to the completion of the proposed issuance at a price that is less than the "Minimum Price" as such term is defined under Nasdaq Listing Rule 5635(d) in a transaction that is not a public offering. We obtained the requisite shareholder approval for the Streeterville Transaction on November 20, 2025.

We may at any time prepay all or any portion of the outstanding balance of a Pre-Paid Purchase. In the event we elect to do so, we must pay Streeterville an amount equal to 110% multiplied by the portion of the outstanding balance we elected to prepay. If an event of default occurs under a Pre-Paid Purchase, the outstanding balance will become immediately due and payable. At anytime thereafter, upon written notice given by Streeterville, the outstanding balance will increase by seven-and-a half percent and interest will begin accruing at a rate of the lesser of 18% per annum or the maximum rate permitted under applicable law. Our obligations are secured by all of our assets pursuant to a security agreement and have been guaranteed by our operating subsidiaries pursuant to a guarantee, each entered into with Streeterville on August 21, 2025.

Univest Securities, LLC served as the placement agent in the offering ("Univest"). We agreed to pay Univest a cash fee equal to eight percent of the aggregate gross proceeds that we receive from any Pre-Paid Purchases that we complete and reimburse Univest for legal fees in the amount of $40,000.

Pre-Paid Purchase #1

The securities purchase agreement provides for an initial Secured Pre-Paid Purchase in the principal amount of $4,390,000, before deducting an original issue discount of $360,000 and transaction expenses of $30,000 (the "First Pre-Paid Purchase"), the terms of which are set forth on secured prepaid purchase #1 ("Pre-Paid Purchase #1"). The First Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years. We paid Univest a cash fee equal to eight percent of the aggregate gross proceeds that we received from the First Pre-Paid Purchase. We currently have principal in the amount of approximately $1,085,000 outstanding under the First Pre-Paid Purchase.

Pre-Paid Purchase #2

On November 13, 2025, we entered into Secured Pre-Paid Purchase #2 with Streeterville ("Pre-Paid Purchase #2"). Pre-Paid Purchase #2 provides for a second Pre-Paid Purchase in the principal amount of $5,450,000, before deducting an original issue discount of $450,000 (the "Second Pre-Paid Purchase"). The Second Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years.

The Second Pre-Paid Purchase was similar to the First Pre-Paid Purchase, however the Second Pre-Paid Purchase is secured by cash in an amount not less than the lesser of: (i) $4,500,000, and (ii) 90% of the then-current outstanding balance of the Second Pre-Paid Purchase (the "PPP2 Minimum Balance Amount"). The secured funds are being held in a deposit account (the "DACA Account") held by RIME Holdings, LLC, a Utah limited liability company and wholly-owned subsidiary of ours that we formed in connection with this transaction ("RIME Holdings"), pursuant to a Deposit Account Control Agreement, dated November 13, 2025, by and among RIME Holdings, Lakeside Bank, an Illinois banking company ("Lakeside Bank"), and Streeterville. Accordingly, of the $5,000,000 proceeds that we received from the Second Pre-Paid Purchase, $4,500,000 were placed in the DACA Account.

We have the right to use funds in the DACA Account to repay any portion of the outstanding balance of the Second Pre-Paid Purchase, but only so long as the payment does not cause the outstanding balance to drop below the PPP2 Minimum Balance Amount. As long as no event of default has occurred, the Company may withdraw from the Deposit Account any funds in excess of the PPP2 Minimum Balance Amount. RIME Holdings executed a guaranty of the obligations outstanding under the Second Pre-Paid Purchase for the benefit of Streeterville.

We entered into a new placement agency agreement with Univest that superseded the placement agency agreement that we previously entered into with them on August 21, 2025. We agreed to pay Univest a cash fee equal to eight percent of the aggregate gross proceeds that we receive from any Pre-Paid Purchases that we complete and reimburse Univest for legal fees in the amount of $50,000. The Second Pre-Paid Purchase was repaid in full on December 11, 2025.

Pre-Paid Purchase #3

On December 19, 2025, we entered into Secured Pre-Paid Purchase #3 with Streeterville ("Pre-Paid Purchase #3"). Pre-Paid Purchase #3 provides for a third Pre-Paid Purchase in the principal amount of $1,090,000, before deducting an original issue discount of $90,000 (the "Third Pre-Paid Purchase"). The Third Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years. We paid Univest a cash fee equal to eight percent of the aggregate gross proceeds that we received from the Third Pre-Paid Purchase. The Third Pre-Paid Purchase was repaid in full on December 23, 2025.

Pre-Paid Purchase #4

On February 17, 2026, we entered into Secured Pre-Paid Purchase #4 with Streeterville ("Pre-Paid Purchase #4"). Pre-Paid Purchase #4 provides for a fourth Pre-Paid Purchase in the principal amount of $10,355,000, before deducting an original issue discount of $855,000 (the "Fourth Pre-Paid Purchase"). The Fourth Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years. The Fourth Pre-Paid Purchase is similar to the Second Pre-Paid Purchase in that the Fourth Pre-Paid Purchase is secured by cash in an amount not less than the lesser of: (i) $3,500,000, and (ii) 90% of the then-current outstanding balance of the Fourth Pre-Paid Purchase (the "PPP4 Minimum Balance Amount"). Accordingly, of the $9,500,000 in proceeds that we received from the Fourth Pre-Paid Purchase, $3,500,000 was placed in the DACA Account.

We have the right to use funds in the DACA Account to repay any portion of the outstanding balance of the Fourth Pre-Paid Purchase, but only so long as the payment does not cause the outstanding balance to drop below the PPP4 Minimum Balance Amount. As long as no event of default has occurred, we may withdraw from the Deposit Account any funds in excess of the PPP4 Minimum Balance Amount. RIME Holdings executed a guaranty of the obligations outstanding under the Fourth Pre-Paid Purchase for the benefit of Streeterville.

We paid Univest a cash fee equal to eight percent of the aggregate gross proceeds received by us from the Fourth Pre-Paid Purchase that were not placed in the DACA Account. We will pay Univest a cash fee equal to eight percent of the funds held in the DACA Account when they are released to us.

We have not repaid any of the principal outstanding under the Fourth Pre-Paid Purchase.

**Our SemiCab Technology Platform**

Traditional logistics platforms and systems optimize visible demand by optimizing individual lanes within the logistics network. Freight planning, execution, and exception management rely heavily on manual workflows and fragmented systems. As volumes increase, costs typically scale linearly with headcount, limiting profitability and operational flexibility.

Our SemiCab technology platform is an AI-enabled, cloud-based collaborative transportation platform that operates at the network level. It achieves the scalability required to predict and optimize millions of loads and hundreds of thousands of trucks. It uses real-time data from application programming interface ("API")-based load tendering and pre-built integrations with transportation management system ("TMS") partners, warehouse management system ("WMS") partners, and electronic logging device ("ELD") partners to orchestrate collaboration across manufacturers, retailers, distributors, and their carriers. It uses AI and machine learning predictions and advanced predictive optimization models to enable fully loaded round trips. By pooling demand and supply across shippers, regions, and timeframes, the platform identifies return legs and cross-lane flows that are invisible under conventional planning models. This approach enables structural efficiency improvements rather than episodic or temporary gains.

The platform directly supports stronger unit economics and capital efficiency for our customers. It has successfully enabled individual operators to manage more than 2,000 loads annually. As volumes increase, our customers benefit from lower cost per load, greater asset utilization, lower administrative overhead and more predictable service levels. By automating network-level decision-making, the platform allows organizations to scale throughput without proportional increases in labor, infrastructure, or overhead.

We are focused on expanding and enhancing our SemiCab technology platform to provide better transportation services to our customers as well as to automate operational processes. The objective of these additions and enhancements is to build additional functionality and improve or automate existing functions. This will make us more efficient, lower our costs of operation, enable us to provide more consistent and reliable services, and reduce potential human error in our processes targeting transportation execution and billing.

We employ a dedicated software development team that maintains and enhances our SemiCab technology platform.

**Our Service Offering**

Our service offering consists of contract-based, long-haul, full truckload transportation logistics and distribution services that utilize our SemiCab technology platform. We currently provide our services in India and are actively marketing our services in the United States and Europe.

*Managed Services*

 

In India, we offer our services through a managed services model to retailers, suppliers and manufacturers and other shippers through our own network of shippers and brokers. We primarily focus on full truck load and over-the-road transportation services. Our services are sold directly to shippers via bids for transportation services. These bids are typically awarded for a selected number of routes for a pre-determined period of time, normally up to a year.

*SaaS-Based Services*

In the U.S. and other countries, we offer our services through a software-as-a-service ("SaaS") model called "Apex" by selling subscriptions to shippers, carriers and third-party logistics providers ("3PLs") to utilize our SemiCab technology platform. Our software enables shippers and carriers to better manage their freight network by creating optimal lane bundles for bidding and optimized execution of loads with better control over their data and analytics. Our software enables 3PLs to better manage their operations for transportation execution by assisting them with shipper management, carrier management, document management, load operations management, invoicing, integration services, and reporting and analytics.

Apex optimizes both visible and predicted demand across the entire freight ecosystem, completely redefining the efficiencies that can be achieved within a logistics network. Through Apex, shippers, carriers and 3PLs can:

● launch their own branded logistics operating systems, embedding SemiCab's AI logic, dashboards, and APIs;

● create multi-party freight networks that reduce empty miles and unlock shared efficiencies;

● integrate seamlessly with existing TMS, WMS, and telematics systems through open APIs; and

● use predictive analytics and benchmarking to identify cost savings and improve yield per lane.

Our SemiCab technology platform enhances traditional logistics platforms by providing them with predictive, self-learning orchestration that automates network coordination at scale. It continuously learns from network activity, dynamically adjusting routing, pooling, and capacity allocation in real time.

**Sales and Marketing**

Our SemiCab logistics and distribution services are sold through our direct sales team who work with shippers, participate in preparing and submitting transportation bids, and onboard shippers and customers to start operations. While the transportation services contracts are signed for longer durations, generally up to a year, revenue from these services is recognized only after the loads from shippers are executed and delivered by us. Our platform subscriptions are sold through a direct sales team. Sales are recognized on a rolling monthly basis aligned with SaaS revenue models. We engage in only limited marketing and promotions at this time as we are primarily focused on creating name recognition and visibility through appropriate social media channels, blogs, and press releases to share industry awards and customer acquisition news.

**Customers**

Our customers are comprised primarily of large, fast-moving consumer products companies in India. Our target customers in the United States and Europe are comprised primarily of 3PLs and carriers and shippers of consumer products.

**Competition**

The transportation services industry is highly competitive and fragmented. We compete with traditional and non-traditional logistics companies, including transportation providers that own equipment, third-party freight brokers, technology matching services, internet freight brokers, carriers offering logistics services, and on-demand transportation service providers. We win business by providing reliable services at lower costs and creating an industry-wide network that can operate more efficiently with less empty miles than the industry norm, thus creating a more sustainable transportation network for the entire industry.

**Intellectual Property**

We rely on a combination of cybersecurity, trademarks, copyrights, trade secrets, and nondisclosure and non-competition agreements to establish and protect our intellectual property and proprietary technology. In certain circumstances, we will partner with third parties to develop proprietary technology, and, where appropriate, we have license agreements related to the use of third-party innovation in our technology. The duration of our trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.

**Seasonality**

Our operating results have been subject to seasonal trends as a result of, or as influenced by, numerous factors, including national holidays, weather patterns, consumer demand, economic conditions, and other similar and subtle forces. Although seasonal changes in the transportation industry have not had a significant impact on our cash flow or results of operations, we cannot guarantee that they will not adversely impact us in the future.

**Regulatory Matters**

The Ministry of Road Transport and Highways is the primary regulator for the road transport and automotive industry in India, overseeing policy, regulations, and standards in that country. The U.S. Department of Transportation regulates the transportation industry in the United States. This federal agency mandates licensing, insurance and service requirements on the operators in this industry.

We are also subject to laws and regulations in the United States and India concerning the handling of personal information, including laws that require us to notify governmental authorities and/or affected individuals of data breaches involving certain personal information.

Additionally, as a publicly-traded company and issuer of stock, we are subject to and maintain compliance with various anti-corruption and anti-bribery statutes such as the U.S. Foreign Corrupt Practices Act. We may in the future be subject to certain other foreign countries' equivalent statutes or programs in the countries in which we operate.

**Employees**

As of March 27, 2026, we had a total of 49 employees, of which 46 were full-time employees and three were part-time employees. None of our employees are represented by a collective bargaining unit or is a party to a collective bargaining agreement.

**Available Information**

We file reports and other materials with the Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements. We make available free of charge through our website at https://algoholdings.com/filings all materials that we file electronically with the SEC as soon as reasonably practicable after electronically filing or furnishing such material with the SEC. These materials are also available on the SEC's website at www.sec.gov.

The information contained on, or accessible through, our website and the SEC's website does not constitute a part of this report. The inclusion of our website and the SEC's website in this report is an inactive textual reference only.

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**Item 1A. Risk Factors.**

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors in addition to other information in this report before purchasing our common stock. The risks and uncertainties described below are those that we currently deem to be material and that we believe are specific to us, our industry and our stock. In addition to these risks, our business may be subject to risks currently unknown to us. If any of these or other risks actually occurs, our business may be adversely affected, the trading price of our common stock may decline and you may lose all or part of your investment.

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**Summary Risk Factors**

***Risks Related to Our Company***

● We have a history of losses, we can provide no assurance that we will ever become profitable, and the audit report issued by M&K CPAs, PLLC in connection with our audited financial statements as of and for the year ended December 31, 2025 includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

● We will need to raise additional capital in the future, which capital may not be available or, if available, may not be available on acceptable terms.

● Our growth could strain our personnel and infrastructure resources.

● Strategic acquisitions and other transactions that we complete in the future could prove difficult to integrate, disrupt our business, adversely affect our operating results and dilute stockholder value.

● We depend upon our executive officers and may not be able to retain or replace these individuals or recruit additional personnel if they leave, which could harm our business.

● Our success depends on our SemiCab technology platform attaining market acceptance by transportation providers.

● Our failure or inability to enforce our trademarks, trade secrets and other proprietary rights could adversely affect our image, brands and competitive position.

● We may not be able to protect our intellectual property rights throughout the world.

● Our information technology systems or data, or those of our service providers or customers or users, could be subject to cyber-attacks or other security incidents, which could result in significant liability, reputational damage and other adverse consequences to us.

● The failure of our information technology systems could significantly disrupt the operation of our business.

● We rely on third parties for most of our management information systems and for other back-office functions.

● Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation.

● Issues in the use of AI technologies in our SemiCab business may result in reputational harm or liability to us, and our business, operating results, and financial results may be adversely affected.

● Any significant changes in U.S. trade or other policies that block or restrict imports or increase import tariffs could have a material adverse effect on results of operations.

● Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine and the Middle East and other geopolitical tensions.

● High inflation and unfavorable economic conditions could negatively affect our business, financial condition and results of operations.

● We are exposed to the credit risk of customers who are experiencing financial difficulties and if these customers are unable to pay us, our revenue and results of operations will be adversely impacted.

● We may have trouble hiring additional qualified personnel.

● The industries in which we operate are subject to international, federal, state and local laws, compliance with which is both complex and costly.

● We could be a party to litigation that could adversely affect us by diverting management attention, increasing our expenses and subjecting us to significant monetary damages and other remedies.

● Our certificate of incorporation provides limitations on director liability and indemnification of directors and officers and employees.

● Our insurance may not provide adequate levels of coverage against claims.

● Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.

● An impairment in the carrying value of our fixed assets, intangible assets or goodwill could adversely affect our financial condition and results of operations.

● We are subject to risks related to the sale of our Singing Machine business.

● Significant adverse weather conditions and other disasters could negatively impact our results of operations.

***Risks Related to the Streeterville Transaction***

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● The sale of a substantial number of our securities in the public market by Streeterville and/or by our existing security holders could cause the price of our common stock to fall.

● Shares of our common stock purchased by Streeterville may be issued at a price significantly below the prevailing market price of our common stock, resulting in substantial dilution of existing stockholders and a decrease in the price of our common stock.

● We may be required to make substantial cash payments to Streeterville, which could reduce the amount of cash available to fund our operations.

***Risks Related to Ownership of Our Securities***

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● We may raise additional funds in the future through the issuance of equity securities or debt, which funding may be dilutive to stockholders or impose operational restrictions on us.

● The market price of our common stock is likely to be highly volatile and subject to wide fluctuations.

● Our quarterly and annual operating results may fluctuate due to increases and decreases in sales and other factors.

● Our common stock may be affected by price fluctuations, which could adversely impact the value of our common stock.

● FINRA sales practice requirements may limit a stockholder's ability to buy and sell our securities.

● An investment in our securities is speculative, and there can be no assurance of any return on any such investment.

● We identified material weaknesses in our internal control over financial reporting during the assessment of our internal control that we performed in connection with the preparation of our audited consolidated financial statements included herein.

● If we are unable to establish and maintain an effective system of internal control, we may not be able to accurately report our financial results on a timely basis or prevent fraud.

● The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members.

● If we are not able to comply with the applicable continued listing requirements of the Nasdaq, it could delist us, which may adversely affect the market price and liquidity of our common stock.

● New laws, regulations, and standards relating to corporate governance and public disclosure may create uncertainty for public companies, increase legal and financial compliance costs and make some activities more time consuming.

● As a "smaller reporting company" under applicable law, we are subject to lessened disclosure requirements, which could leave our stockholders without information or rights available to stockholders of more mature companies.

● Applicable SEC rules governing the trading of "penny stocks" may limit the trading and liquidity of our common stock, which may affect the trading price of our common stock.

● We have never paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future.

***Risks Related to Our Company***

***We have a history of losses, we can provide no assurance that we will ever become profitable, and the audit report issued by M&K CPAs, PLLC in connection with our audited financial statements as of and for the year ended December 31, 2025 includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.***

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We incurred net losses available to common stockholders of $15,900,000 and $23,257,000 for our fiscal years ended December 31, 2025 and 2024, respectively, and had accumulated deficits of $65,072,000 and $49,172,000 as of December 31, 2025 and 2024, respectively. In addition, net cash used by operating activities was $7,309,000 and $3,985,000 for our fiscal years ended December 31, 2025 and 2024, respectively. Based upon this, our current cash resources and our internally generated cash flow projections, the audit report issued by M&K CPAS, PLLC in connection with our audited financial statements as of and for the year ended December 31, 2025 includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern. Our future profitability is dependent upon our ability to successfully execute upon our business plan. We can provide no assurance that we will be able to sustain or increase profitability on a quarterly or annual basis. Accordingly, we may continue to generate losses in the future and, in the extreme case, may need to discontinue operations.

***We will need to raise additional capital in the future, which capital may not be available or, if available, may not be available on acceptable terms.***

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Our current cash resources will not be sufficient to sustain our current operations for the next 12 months. As a result, we will need to obtain additional capital through external sources of financing. We may attempt to obtain additional capital through the sale of equity securities or the issuance of short- and long-term debt. If we raise additional funds by issuing shares of our common stock, our stockholders will experience dilution. If we raise additional funds by issuing securities exercisable or convertible into shares of our common stock, our stockholders will experience dilution in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity or debt securities that we issue may have rights, preferences and privileges senior to those of the securities held by our stockholders.

While we are optimistic about our ability to raise sufficient funds to continue our operations for at least one year after the date of this report, we have not made arrangements to obtain additional capital and can provide no assurance that additional financing will be available in an amount or on terms acceptable to us, if at all. Our ability to obtain additional capital will be subject to a number of factors, including maintenance of our listing on the Nasdaq, market conditions and our operating performance. These factors may make the timing, amount, terms or conditions of any proposed future financing transactions unattractive to us. If we cannot raise additional capital when needed, or if such capital cannot be obtained on acceptable terms, we may not be able to pay our costs and expenses as they are incurred, take advantage of future acquisition opportunities, respond to competitive pressures or unanticipated events, or otherwise execute upon our business plan. This may adversely affect our business, financial condition and results of operations and, in the extreme case, cause us to discontinue operations.

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***Our growth could strain our personnel and infrastructure resources.***

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We expect to enter a stage of rapid growth in our operations which could place a significant strain on our management, administrative, operational and financial infrastructure. Our future success will depend in part upon the ability of our management to manage growth effectively. Our existing management systems, financial and management controls, and information and reporting systems and procedures may not be adequate to support our expansion. Our ability to manage our growth effectively will require us to continue to enhance these systems, controls and procedures and to locate, hire, train and retain qualified management and operating personnel. If we fail to successfully manage our growth, we may be unable to execute upon our business plan, which could have an adverse effect on our business, financial condition and results of operations.

***Strategic acquisitions and other transactions that we complete in the future could prove difficult to integrate, disrupt our business, adversely affect our operating results and dilute stockholder value.***

 

On July 3, 2024, we completed the acquisition of substantially all of the assets and the assumption of certain liabilities of SemiCab, Inc., which was the owner of the United States component of our AI logistics and distribution business. On May 2, 2025, we and SemiCab Holdings completed the acquisition of substantially all of the issued and outstanding equity shares of SMCB and we purchased the 20% membership interest in SemiCab Holdings then held by SemiCab, Inc. We may continue to expand our business through the acquisition of additional businesses in the future.

To successfully execute any acquisition or development strategy, we need to identify suitable acquisition or development candidates, negotiate acceptable acquisition or development terms, obtain appropriate financing, and successfully integrate any businesses and assets acquired. Any acquisition or development transaction that we pursue, whether or not successfully completed, will subject us to numerous risks and uncertainties, including:

● our ability to accurately assess the value, growth potential, strengths, weaknesses, contingent and other liabilities, and potential profitability of the target businesses and assets;

● our ability to complete the transaction and integrate the operations, technologies, services and personnel of any businesses or assets acquired;

● the costs associated with the completion of the transaction and the integration of the businesses or assets acquired;

● our ability to generate sufficient revenue to offset the transaction costs and achieve projected economic and operating synergies;

● the diversion of financial and management resources from existing operations and potential loss of key personnel;

● the risks associated with entering new domestic markets and conducting operations where we have little or no prior experience;

● the possible negative impact of the transaction on our reputation and the reputation of the business that we acquire; and

● the effect of any limitations imposed by federal and state tax laws on our ability to use all or a portion of our pre-transaction net operating losses against post-transaction income.

If we fail to properly evaluate and execute any acquisition or development transactions that we are currently pursuing or will pursue in the future, our business, financial condition and results of operations could be seriously harmed. Additionally, we may be limited in our ability to evaluate such acquisitions as a result of incomplete or inaccurate information from the target businesses.

Future acquisitions may provide for additional contingent payments based on the achievement of performance targets or milestones. Management must exercise considerable discretion when estimating the fair value of contingent payments. Although these estimates are based on management's best knowledge of current events, the estimates could change significantly from period to period. Any changes to the significant unobservable inputs used, including a change in the forecast of net sales for the earn-out periods, may result in a change in the fair value of contingent consideration, and could have a material adverse impact on our results of operations. In addition, actual payments of contingent consideration in the future could be different from the current estimated fair value of the contingent consideration. Further, these arrangements can impact or restrict the integration of acquired businesses and can, and frequently do, result in disputes, including litigation. Any such impact, restrictions or disputes could have a material adverse impact on our business and results of operations.

In addition, acquisition and development transactions could result in us issuing equity securities or short- or long-term debt to finance the transaction. The issuance of additional equity securities would result in dilution to our stockholders. The issuance of securities exercisable or convertible into shares of our common stock would result in dilution to our stockholders in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity or debt securities that we issue may have rights, preferences and privileges senior to those of the securities held by our stockholders. Future acquisition and development transactions could also result in us assuming debt obligations and liabilities and incurring impairment charges related to goodwill, investments and other intangible assets.

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***We depend upon our executive officers and may not be able to retain or replace these individuals or recruit additional personnel if they leave, which could harm our business.***

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We believe that we have benefited substantially from the leadership and experience of our executive officers, including Gary Atkinson, who is our Chief Executive Officer, and Alex Andre, who is our Chief Financial Officer and General Counsel. Our executive officers may terminate their employment with us at any time without penalty, and we do not maintain key person life insurance policies on any of our executive officers. The loss of the services of any of our executive officers could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis. In addition, any such departure could be viewed in a negative light by investors and analysts, which could cause the price of our common stock to decline. As our business expands, our future success will depend greatly on our continued ability to attract and retain highly skilled and qualified executive-level personnel. Our inability to attract and retain qualified executive officers could impair our growth and have an adverse effect on our business, financial condition and results of operations.

***Our success depends on our SemiCab technology platform attaining market acceptance by transportation providers.***

The continued growth in market demand for and market acceptance of our SemiCab technology platform is critical to our continued success. Demand for our SemiCab technology platform is affected by a number of factors, many of which are beyond our control, including the extension of our SemiCab technology platform for new use cases, the timing of development and release of new products, features and functionality introduced by us or our competitors, technological change and the growth or contraction of the market in which we compete. We may be unable to effectively adapt our platform and respond to changes in technology and customer needs. If we are unable to meet customer demand, or if we otherwise fail to achieve more widespread market acceptance of our SemiCab technology platform, our business, results of operations, financial condition and growth prospects may be adversely affected.

***Our failure or inability to enforce our trademarks, trade secrets and other proprietary rights could adversely affect our image, brands and competitive position.***

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We own U.S. registered trademarks for many of the signs, designs and expressions that identify the services that we use in our business, including "SemiCab". We also have common law trademark rights for certain of our proprietary marks and rely upon trade secrets to protect certain of our rights. We believe that our trademarks, trade secrets and other proprietary rights have significant value and are important to our business and competitive position. We, therefore, devote time and resources to the protection of these rights. Our policy is to pursue registration of our important trademarks whenever feasible and to oppose vigorously any infringement of our trademarks. We protect our trade secrets and proprietary information, in part, by entering into confidentiality agreements with our employees and consultants. We also seek to preserve the integrity and confidentiality of our proprietary information by maintaining physical security of our premises and physical and electronic security of our information technology systems.

We cannot assure you that the protective actions that we have taken will successfully prevent unauthorized use or imitation of our intellectual property and proprietary rights by other parties. In the event third parties unlawfully use or imitate our intellectual property and proprietary rights, we could suffer harm to our image, brands and competitive position. If we commence litigation to enforce our intellectual property and proprietary rights, we will incur significant legal fees and may not be successful in enforcing our rights. Moreover, we cannot assure you that third parties will not claim infringement by us of their intellectual property and proprietary rights in the future. Any such claim, whether or not it has merit, could be time-consuming and distracting for management to defend, result in costly litigation, require us to enter into royalty or licensing agreements, or cause us to change existing menu items or delay the introduction of new menu items. As a result, any such claim could have a material adverse effect on our business, financial condition and results of operations.

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***We may not be able to protect our intellectual property rights throughout the world.***

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Filing, prosecuting, and defending intellectual property rights on our technology in international jurisdictions is prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained intellectual property rights to develop their own technology and, further, may export otherwise infringing technology to territories where we have intellectual property rights, but where enforcement is not as strong as that in the U.S. Their technology may compete with our technology in jurisdictions where we do not have any issued or licensed patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of any patents we may have in the future, or the use of competing technologies in violation of our proprietary rights generally. Proceedings to enforce any patent rights we may have in the future in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

***Our information technology systems or data, or those of our service providers or customers or users, could be subject to cyber-attacks or other security incidents, which could result in significant liability, reputational damage and other adverse consequences to us.***

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The ever-evolving threat landscape makes data security and privacy a critical priority. We maintain processes for key risk identification, mitigation efforts, and day-to-day management of risks, including cybersecurity risks. In addition, our third-party vendors have experience and expertise supporting mitigation of the potential cyber-attacks facing our organization and vulnerabilities facing our technology infrastructure and potential cyber-attacks.

Although it is difficult to determine the potential impacts from a cyber-attack or other security incident, we may experience negative impacts such as reputational harm, inability to retain existing customers or attract new customers, exposure to legal claims and government action, among others. In particular, given the interconnected nature of the supply chain and our significant presence in the industry, our AI logistics and distribution business may be an attractive target for such attacks. The impact of a cyber-attack or other security incident may have a material adverse impact on our financial condition, results of operations, availability of our systems, and growth prospects, which makes cybersecurity risk management of critical importance.

We have processes and programs in place to meet our global compliance obligations and work with our employees and teams across the globe to ensure security and data protection principles are integrated into the way we conduct our business. Notwithstanding this, our operations may be subject to successful breaches, employee malfeasance, or human or technological error. Any such acts could result in:

● unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third-party data or systems;

● theft of sensitive, regulated, or confidential data including personal information and intellectual property;

● the loss of access to critical data or systems through ransomware, destructive attacks or other means; and

● business delays, service or system disruptions or denials of service.

The occurrence of any of these acts could have a material adverse effect on our business, financial condition and results of operations.

***The failure of our information technology systems could significantly disrupt the operation of our business.***

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We rely on information technology systems and networks as part of our business. As such, we could experience a material disruption to our operations if our internal computer systems and servers fail or suffer security breaches. The secure operation of our information technology, or IT, systems and networks as well as the secure processing and maintenance of information is critical to our operations and business strategy. Our ability to execute our business plan and to comply with regulatory requirements with respect to data control and data integrity depends, in part, on the continued and uninterrupted performance of our IT systems. These systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, we may experience electronic break-ins, computer viruses, sustained or repeated system failures, or problems arising during the upgrade of any of our IT systems that interrupt our ability to generate and maintain data. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

***We rely on third parties for most of our management information systems and for other back-office functions.***

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We use third-party vendors to provide, support and maintain most of our management information systems. We also outsource certain accounting, payroll and human resource functions to third-party service providers. The parties that we utilize for these services may not be able to handle the volume of activity or perform the quality of service necessary for our operations. The failure of these parties to fulfill their support and maintenance obligations or service obligations could disrupt our operations. Furthermore, the outsourcing of certain of our business processes could negatively impact our internal control processes. Any such effects on our operations or internal controls could have an adverse effect on our business, financial condition and results of operations.

***Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation.***

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We receive and maintain certain personal information about our customers and employees. The use of this information by us is regulated at the federal and state levels. If our security and information systems are compromised or our franchisees or employees fail to comply with these laws and regulations and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation and results of operations and could result in litigation against us or the imposition of fines and penalties.

***Issues in the use of AI technologies in our SemiCab business may result in reputational harm or liability to us, and our business, operating results, and financial results may be adversely affected.***

We actively integrate AI technologies in our SemiCab platform to enhance automation, analytics, customer experience, and operational efficiency. As we expand the use of AI-enabled capabilities, we are exposed to risks inherent in the development and deployment of emerging technologies.

AI systems may generate inaccurate, biased, incomplete, or unintended outputs due to limitations in algorithms, data quality, model design, or oversight. If AI-enabled features fail to perform as intended or are perceived as unreliable, we could experience reputational harm, customer dissatisfaction, competitive disadvantage, or legal exposure.

Certain AI capabilities rely on third party service providers, cloud infrastructure, or external models. Disruptions, security incidents, pricing changes, contractual restrictions, or termination of such services could impair the availability or performance of AI-enhanced features and increase our costs.

The regulatory framework governing AI, data privacy, and automated decision-making is evolving in the United States and internationally. New or expanded legal requirements may require product modifications, increased compliance expenditures, or limitations on certain AI-driven functionality.

Our AI-enabled features process sensitive customer data. Any failure to maintain appropriate safeguards, governance controls, or oversight could result in regulatory scrutiny, litigation, or reputational harm.

We have implemented governance frameworks, human oversight, security controls, and monitoring processes designed to manage risks associated with AI-enabled capabilities. However, these measures may not be sufficient to prevent errors, misuse, security incidents, or regulatory non-compliance. If our risk management efforts are ineffective, our business, financial condition, and results of operations could be adversely affected.

***Any significant changes in U.S. trade or other policies that block or restrict imports or increase import tariffs could have a material adverse effect on results of operations.***

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In recent years, the U.S. government has implemented substantial changes to U.S. trade policies, including import restrictions, increased import tariffs and changes in U.S. participation in multilateral trade agreements, such as the United States-Mexico-Canada Agreement to replace the former North American Free Trade Agreement. The U.S. government has assessed supplemental tariffs and quantitative restrictions on U.S. imports of certain products from numerous countries throughout the world. U.S. trade policy continues to evolve in this regard. Any significant changes in current U.S. trade or other policies that restrict imports or increase import tariffs could have a material adverse effect upon results of our operations.

***Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine and the Middle East and other geopolitical tensions.***

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U.S. and global markets are experiencing volatility and disruption as a result of the escalation of geopolitical tensions and military conflicts in and around Ukraine, Israel, and other areas of the world. Although the length and impact of any potential or ongoing military conflict is highly unpredictable, such conflicts have led to market disruptions, including significant volatility in credit and capital markets.

For example, Russia's military interventions in Ukraine have led to sanctions and other penalties being levied by the U.S., European Union and other countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets.

In addition, acts of war, terrorism or political instability in oil producing countries (e.g. the invasion of Ukraine by Russia and conflicts in the Middle East, including the recent escalation involving Iran, and recent U.S. intervention in Venezuela) have resulted in increased volatility in the financial markets and the markets for certain commodities including oil, which may significantly impact the manufacturers that we rely on.

Additionally, the conflict in the Middle East between Israel and the government of Hamas in Gaza, Hezbollah in Lebanon, as well as groups in Syria and Iran, have caused disruptions in shipping lanes in the Red Sea where some major cargo lines have opted to route their vessels away from the region which has increased the time required to reach their destinations as well as increased time for vessels to return to their port of origin with empty containers. Continued shipping line disruptions and delays may impact the availability and cost of shipping containers during peak shipping season.

While we have not experienced any direct impact from the conflicts in and around Ukraine, the Middle East and elsewhere, the extent and duration of the military action, sanctions and resulting market and shipping lane disruptions are impossible to predict but could be substantial and could adversely affect our operating results as they impact the global economy in the future.

***High inflation and unfavorable economic conditions could negatively affect our business, financial condition and results of operations.***

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Unfavorable global or regional economic conditions may be triggered by numerous developments beyond our control, including inflation, geopolitical events, health crises such as the COVID-19 pandemic, and other events that trigger economic volatility on a global or regional basis. In particular, a significant deterioration in economic conditions, including economic slowdowns or recessions, increased unemployment levels, inflationary pressures or disruptions to credit and capital markets, could lead to decreased consumer confidence and consumer spending more generally, thus reducing consumer demand for our services. Such heightened inflationary levels and economic conditions may negatively impact consumer disposable income and discretionary spending, negatively impacting our business, financial condition and results of operations.

***We are exposed to the credit risk of customers who are experiencing financial difficulties and if these customers are unable to pay us, our revenue and results of operations will be adversely impacted.***

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We sell our services primarily to large, fast-moving consumer goods companies. Deterioration in the financial condition of our customers could result in these customers not being able to pay us for our services. This would have a negative impact on our revenue and results of operations.

***We may have trouble hiring additional qualified personnel.***

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As we expand our technology development, service offerings and marketing activities, we will need to hire additional personnel and could experience difficulties attracting and retaining qualified employees. Competition for qualified personnel could be intense due to the limited number of individuals who possess the skills and experience required by such an industry. We may not be able to afford, attract and retain quality personnel on favorable terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that such personnel have been improperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their technology or service ideas. Any of these events could have a material adverse effect on our business, financial condition and results of operations.

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***The industries in which we operate are subject to international, federal, state and local laws, compliance with which is both complex and costly.***

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We are subject to the U.S. Foreign Corrupt Practices Act (the "FCPA") and other anti-corruption laws of the countries in which we do business. The FCPA and other anti-corruption laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We and our commercial partners operate in several jurisdictions that pose a high risk of potential FCPA violations and we participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under the FCPA or local anti-corruption laws.

We are also subject to other laws and regulations governing our international operations, including regulations administered in the U.S. and in the EU, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations. We cannot predict the nature, scope, or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition, and results of operations.

We can provide no assurance that we will be in full compliance with all applicable anticorruption laws, including the FCPA or other legal requirements. Any investigation of potential violations of the FCPA or other laws and regulations by the United States, the European Union or other authorities could have an adverse impact on our reputation, our business, results of operations and financial condition. Furthermore, should we be found not to be in compliance with the FCPA or other laws and regulations, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, as well as the accompanying legal expenses, any of which could have a material adverse effect on our business, financial condition and results of operations.

***We could be a party to litigation that could adversely affect us by diverting management attention, increasing our expenses and subjecting us to significant monetary damages and other remedies.***

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We are subject to various claims and legal actions arising in the ordinary course of our business. Such claims may be expensive to defend against and may divert resources away from our operations, regardless of whether they are valid or whether we are ultimately found liable. In the event we are found liable for any such claims, we could be required to pay substantial damages. With respect to insured claims, a judgment for monetary damages in excess of any insurance coverage that we have could result in us being required to pay substantial damages. Any adverse publicity resulting from these claims may also adversely affect our reputation, regardless of whether we are found liable. Any payments of damages or adverse publicity could have a material adverse effect on our business, financial condition and results of operations.

***Our certificate of incorporation provides limitations on director liability and indemnification of directors and officers and employees.***

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Our certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:

● breach of their duty of loyalty to us or our stockholders;

● act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

● unlawful payment of dividends or unlawful stock repurchases, or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

● transaction from which the directors derived an improper personal benefit.

These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission.

Our certificate of incorporation and bylaws provide that we will indemnify our officers and directors to the fullest extent permitted by law and that we will advance expenses incurred by any such persons in advance of the final disposition of any action or proceeding. We believe that these provisions are necessary to attract and retain qualified persons as officers and directors.

The limitation of liability in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duties. It may also reduce the likelihood of derivative litigation being brought against our officers and directors even though an action, if successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards pursuant to these indemnification provisions.

***Our insurance may not provide adequate levels of coverage against claims.***

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We currently maintain insurance that we believe is appropriate for a business of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure against. Such losses could have a material adverse effect on our business and results of operations. Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in materially different amounts of expense under these programs, which could have a material adverse effect on our business, financial condition and results of operations.

***Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.***

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There has been a marked increase in the use of social media platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. Many of our competitors are expanding their use of social media and new social medial platforms are rapidly being developed, potentially making more traditional social media platforms obsolete. As a result, we need to continuously innovate and develop our social media strategies in order to maintain broad appeal with customers and brand relevance.

Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted on such platforms may be inaccurate or adverse to our interests, and we may have little or no opportunity to redress or correct the information. The dissemination of such information online, regardless of its accuracy, could harm our business, reputation and brands.

Other risks associated with the use of social media include improper disclosure of proprietary information, personal identifiable information and out-of-date information, as well as fraud, by our customers, employees, franchisees and business partners. The inappropriate use of social media by our customers, employees, franchisees or business partners could increase our costs, lead to litigation or result in negative publicity that could damage our business, reputation and brands.

***An impairment in the carrying value of our fixed assets, intangible assets or goodwill could adversely affect our financial condition and results of operations.***

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We evaluate the useful lives of our fixed assets and intangible assets to determine if they are definite- or indefinite-lived assets. Reaching a determination on useful life requires significant judgments and assumptions regarding the expected life, future effects of obsolescence, demand, competition, the level of required maintenance expenditures and the expected lives of other related groups of assets, as well as other economic factors, such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels. We cannot accurately predict the amount and timing of any impairment of assets. Should the value of fixed assets or intangible assets become impaired, we will have to recognize an impairment charge for the related asset. In the event we recognize any impairment charges in the future, such charges may have a material adverse effect on our business, financial condition and results of operations.

In addition, we may be required to record goodwill in the event we acquire additional assets or businesses in the future. Goodwill represents the excess of cost over the fair value of identified net assets of business acquired. We review any goodwill for impairment annually, or whenever circumstances change in a way which could indicate that impairment may have occurred. Goodwill is tested at the reporting unit level. We identify potential goodwill impairments by comparing the fair value of the reporting unit to its carrying amount, which includes goodwill and other intangible assets. If the carrying amount of the reporting unit exceeds the fair value, this is an indication that impairment may exist. We calculate the amount of the impairment by comparing the fair value of the assets and liabilities to the fair value of the reporting unit. The fair value of the reporting unit in excess of the value of the assets and liabilities is the implied fair value of the goodwill. If this amount is less than the carrying amount of goodwill, impairment is recognized for the difference. A significant amount of judgment is involved in determining if an indication of impairment exists. Factors may include, among others:

● a significant decline in our expected future cash flows;

● a sustained, significant decline in our stock price and market capitalization

● a significant adverse change in legal factors or in the business climate;

● unanticipated competition;

● the testing for recoverability of a significant asset group within a reporting unit; and

● slower growth rates.

We will be required to record a non-cash impairment charge if the testing performed indicates that goodwill has been impaired.

***We are subject to risks related to the sale of our Singing Machine business.***

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On August 1, 2025, we entered into an asset purchase agreement with SMC and Stingray USA pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with our Singing Machine business. The transaction closed on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business line. In connection with the transaction, we also entered into a transitional services agreement with Stingray USA to provide certain limited services following the closing. The performance of these services by us and other related conditions outside of our control could adversely affect our operations and future financial results.

As a result of the sale of our Singing Machine business, we became a smaller, less diversified company than we were prior to the transaction, which could make us more vulnerable to factors impacting our performance, such as changing market conditions and market volatility. In addition, while it is intended that the transaction be tax-free to our stockholders for U.S. federal income tax purposes, there is no assurance that the transaction will qualify for this treatment. If the sale is ultimately determined to be taxable, we or our stockholders could incur income tax liabilities that could be significant. Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows, and the price of our common stock.

***Significant adverse weather conditions and other disasters could negatively impact our results of operations.***

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Our business could be negatively affected by adverse weather conditions and acts of God, such as regional winter storms, fires, floods, hurricanes, tropical storms and earthquakes, and other disasters, such as pandemics, oil spills and nuclear meltdowns. The occurrence of any such events in the future could cause substantial damage to our business and subject us to substantial repair costs that could have a material adverse effect on our business, financial condition and results of operations.

**Risks Related to the Streeterville Transaction**

***The sale of a substantial number of our securities in the public market by Streeterville and/or by our existing security holders could cause the price of our common stock to fall.***

On August 21, 2025, we completed the Streeterville Transaction. As of March 27, 2026, we had completed Pre-Paid Purchases for the aggregate amount of $21,285,000 and had repaid Pre-Paid Purchases in the aggregate amount of $9,845,000 as a result of Streeterville electing to exercise its right to purchase a total of 11,303,264 shares of our common stock under the First Pre-Paid Purchase, Second Pre-Paid Purchase and Third Pre-Paid Purchase. The Second Pre-Paid Purchase and Third Pre-Paid Purchase have been paid off in full. However, we have principal in the amount of approximately $1,085,000 and $10,355,000 outstanding under the First Pre-Paid Purchase and Fourth Pre-Paid Purchase, respectively. In the event Streeterville elects to exercise its right to purchase additional shares of our common stock under the First Pre-Paid Purchase or Fourth Pre-Paid Purchase, we may be required to issue a substantial number of additional shares of our common stock to Streeterville. The sale of a substantial number of our shares of common stock in the public market by Streeterville and/or by our other existing security holders, or the perception that those sales might occur, could result in a significant decline in the public trading price of our common stock.

***Shares of our common stock purchased by Streeterville may be issued at a price significantly below the prevailing market price of our common stock, resulting in substantial dilution of existing stockholders and a decrease in the price of our common stock*.**

Following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from us that number of shares of common stock up to the lesser of: (i) a number of shares of common stock equal in value to the outstanding balance of the funded amount, and (ii) that number of shares of common stock such that Streeterville will not beneficially own greater than 9.99% of our outstanding shares of common stock. The price per share used to calculate the number of shares to be issued to Streeterville is equal to 90% of the lowest daily volume-weighted average price of our common stock during the ten (10) trading days immediately preceding the applicable purchase date, but not less than the floor price, which is the greater of: (i) 20% of the Minimum Price prior to the applicable closing of the Pre-Paid Purchase, and (ii) $0.10. If Streeterville exercises its right to purchase additional shares of our common stock under Pre-Paid Purchases, the shares may be sold by us to Streeterville at a price significantly below the prevailing market price. This could lead to substantial dilution of existing stockholders. This dilution, combined with the potential for downward pressure on our share price if Streeterville promptly sells the shares in the open market, could reduce the market value of our common stock significantly.

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***We may be required to make substantial cash payments to Streeterville, which could reduce the amount of cash available to fund our operations.***

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If Streeterville chooses to not exercise its right to purchase shares of common stock from us, we will be required to repay any outstanding Pre-Paid Purchases in cash. We may not have sufficient cash on hand or available resources to meet such a repayment obligation, which could force us to seek emergency financing or other arrangements which may not be available or, if available, may be on unfavorable terms. In the event we do have sufficient funds available, the cash payment obligations, if triggered, could significantly reduce the cash we have available to fund our operations or make necessary investments. This would adversely affect our financial condition, limit our ability to pursue growth opportunities, and adversely affect our business prospects.

In addition, the occurrence of an event of default under the Pre-Paid Purchases or certain change-of-control or other fundamental transactions may accelerate repayment or suspend Streeterville's funding obligations to us. If an event of default occurs under a Pre-Paid Purchase, the outstanding balance will become immediately due and payable. At any time thereafter, upon written notice given by Streeterville, the outstanding balance will increase by seven-and-a half percent and interest will begin accruing at a rate of the lesser of 18% per annum or the maximum rate permitted under applicable law. If we are involved in a change-of-control or other fundamental transaction, we may be required to repay the Pre-Paid Purchases in cash. We may not have sufficient cash on hand or available resources to meet such a repayment obligation, which could force us to seek emergency financing or other arrangements which may not be available or, if available, may be on unfavorable terms. In the event we do have sufficient funds available, the cash payment obligations, if triggered, could significantly reduce the cash we have available to fund our operations or make necessary investments. This would adversely affect our financial condition, limit our ability to pursue growth opportunities, and adversely affect our business prospects.

**Risks Related to Ownership of Our Securities**

***We may raise additional funds in the future through the issuance of equity securities or debt, which funding may be dilutive to stockholders or impose operational restrictions on us.***

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On December 6, 2024, we completed a public offering of an aggregate of 21,000 shares of our common stock, pre-funded warrants to purchase up to 258,412 shares of common stock, Series A warrants to purchase up to 279,412 shares of common stock, and Series B warrants to purchase up to 279,412 shares of common stock. Immediately prior to the completion of the offering, we had 71,076 shares of our common stock outstanding. Additionally, due to price adjustment provisions contained in the Series A and Series B warrants, the Series A warrants became exercisable into 1,133,652 shares of common stock and the Series B warrants became exercisable into 1,910,975 shares of our common stock. All of the pre-funded warrants and Class B warrants were exercised in their entirety.

On August 21, 2025, we completed the Streeterville Transaction. As of March 27, 2026, we had completed Pre-Paid Purchases for the aggregate amount of $21,285,000 and had repaid Pre-Paid Purchases in the aggregate amount of $9,845,000 as a result of Streeterville electing to exercise its right to purchase a total of 11,303,264 shares of our common stock under the First Pre-Paid Purchase, Second Pre-Paid Purchase and Third Pre-Paid Purchase.

Shareholders who owned shares of our common stock immediately prior to the completion of the December 6, 2024 securities offering experienced immediate and substantial dilution as a result of the issuance of the shares of common stock on December 6, 2024 and the subsequent exercise of the pre-funded warrants and Class B warrants. Additionally, shareholders who owned shares of our common stock immediately prior to the dates Streeterville elected to purchase 11,303,264 shares of our common stock under the First Pre-Paid Purchase, the Second Pre-Paid Purchase and the Third Pre-Paid Purchase experienced immediate and substantial dilution.

We may need to raise additional capital through the sale of equity securities or the issuance of short- and long-term debt during the next 12 months to fund our operations and growth. If we raise additional funds by issuing shares of our common stock, our stockholders will experience dilution. If we raise additional funds by issuing securities exercisable or convertible into shares of our common stock, our stockholders will experience dilution in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity securities or debt that we issue may have rights, preferences and privileges senior to those of the securities held by our stockholders.

***The market price of our common stock is likely to be highly volatile and subject to wide fluctuations.***

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The market price of our common stock may fluctuate significantly in response to a number of factors, many of which we cannot control, including:

● fluctuations in our annual or quarterly operating results;

● changes in capital market conditions or other adverse economic conditions;

● upgrades or downgrades by securities analysts following our stock;

● changes in estimates of our future financial results by securities analysts following our stock;

● our achievement, or our failure to achieve, projected financial results;

● future sales of our stock by our officers, directors or significant stockholders;

● investors' perceptions of our business and prospects relative to other investment alternatives;

● acquisitions, joint ventures, capital commitments or other significant transactions by us or our competitors;

● global economic, legal and regulatory factors unrelated to our performance; and

● the other risks and uncertainties set forth herein.

The stock market experiences significant price and volume fluctuations that affect the market price of the stock of many companies and that are often unrelated or disproportionate to the operating performance of these companies. Market fluctuations such as these may seriously harm the price of our common stock. Further, securities Series Action suits have been filed against companies following periods of market volatility in the price of their securities. If such an action is instituted against us, we may incur substantial costs and a diversion of management attention and resources, which would seriously harm our business, financial condition and results of operations. In addition, the initiation of any such action could cause the price of our common stock to decline

***Our quarterly and annual operating results may fluctuate due to increases and decreases in sales and other factors.***

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Our quarterly and annual operating results may fluctuate significantly because of a variety of factors, including:

● increases or decreases in sales of our services;

● our ability to operate effectively in new markets;

● labor availability and costs for management and other personnel;

● changes in consumer preferences and competitive conditions;

● negative publicity relating to us, our vendors or the services we sell;

● disruptions in the availability of trucks needed to complete shipments;

● changes consumer confidence and fluctuations in discretionary spending;

● changes in labor costs or other variable costs and expenses;

● potential distractions or unusual expenses associated with our expansion plans;

● the impact of inclement weather, natural disasters, and other calamities; and

● economic conditions in the jurisdictions in which we operate and nationally.

As a result of the factors discussed above, as well as the other factors set forth herein, our operating results for one fiscal quarter or year are not necessarily indicative of results to be expected for any other fiscal quarter or year. These fluctuations may cause future operating results to fall below our estimates or the expectations of our stockholders or the investment community in general. If our results of operations do not meet the expectations of our stockholders or the investment community, the price of our common stock may decline.

***Our common stock may be affected by price fluctuations, which could adversely impact the value of our common stock.***

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Our common stock has experienced, and is likely to experience, significant price and volume fluctuations in the future which could adversely affect the market prices of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the market price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time.

***FINRA sales practice requirements may limit a stockholder's ability to buy and sell our securities.***

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Effective June 30, 2020, the SEC implemented Regulation Best Interest requiring that "A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer..." This is a significantly higher standard for broker-dealers to recommend securities to retail customers than before under prior suitability rules of the Financial Industry Regulatory Authority, Inc. ("FINRA"). FINRA suitability rules do still apply to institutional investors and require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending securities to their customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information, and, for retail customers, determine that the investment is in the customer's "best interest," and meet other SEC requirements. Both SEC Regulation Best Interest and FINRA's suitability requirements may make it more difficult for broker-dealers to recommend that their customers buy speculative, low-priced securities and may have the effect of reducing the level of trading activity in our securities. As a result, fewer broker-dealers may be willing to make a market in our common stock.

***An investment in our securities is speculative, and there can be no assurance of any return on any such investment.***

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Investors are cautioned that an investment in our securities is highly speculative and involves a significant degree of risk. The success of our business and the ability to achieve our business goals and objectives, as outlined in this report, are subject to numerous uncertainties, contingencies and risks. As such, there is no assurance that investors will realize a return on their investment or that they will not lose their entire investment. Potential investors should carefully consider whether such a speculative investment is suitable for their financial situation and investment objectives before purchasing securities.

***We identified material weaknesses in our internal control over financial reporting during the assessment of our internal control that we performed in connection with the preparation of our audited consolidated financial statements included herein.***

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Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require management to complete an annual assessment of our internal control over financial reporting. During the preparation of our audited consolidated financial statements for the year ended December 31, 2025, we identified several control deficiencies that have been classified as material weaknesses in our internal control over financial reporting. A material weakness is a control deficiency that results in a more than remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis by our employees in the normal course of their assigned functions. Based on the material weaknesses identified, management concluded that our internal control over financial reporting was not effective as of December 31, 2025.

Our management, in consultation with our independent registered public accounting firm, concluded that the following material weaknesses existed in the following areas as of December 31, 2025:

● We lack sufficient resources in our accounting department restricting our ability to review and approve certain material journal entries which increases the likelihood that a material misstatement of interim or annual financial statements might not be prevented. Management evaluated our current process of review and approval of certain material journal entries and concluded this deficiency represented a material weakness.

● We lack sufficient resources in our accounting department, which restricts our ability to review certain material reconciliations related to financial reporting in a timely manner. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. Management evaluated the impact of our failure to have proper segregation between the preparation, review and approval of account reconciliations and concluded that this control deficiency represented a material weakness.

● Due to resource restrictions, we have not established a three-way match of documents or other controls precise enough to detect a material misstatement in revenue. Management evaluated our current process of determining the occurrence of revenue and concluded this deficiency represented a material weakness.

The standards that must be met for management to assess internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We may encounter problems or delays in completing the activities necessary to make future assessments of our internal control over financial reporting and completing the implementation of any necessary improvements. Future assessments may require us to incur substantial costs and may require a significant amount of time and attention of management, which could seriously harm our business, financial condition and results of operations.

***If we are unable to establish and maintain an effective system of internal control, we may not be able to accurately report our financial results on a timely basis or prevent fraud.***

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Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports on a timely basis or prevent fraud, we may not be able to manage our business as effectively as we would if an effective internal control environment existed, and our business and reputation with investors may be harmed. We have not performed an in-depth analysis to determine if undiscovered failures of internal controls exist and may in the future discover areas of our internal control environment that need improvement. If we are unable to establish and maintain an effective system of internal control, we may not be able to report our financial results in an accurate and timely manner or prevent fraud.

We are working on improving and simplifying our internal processes and implement enhanced controls to address the material weaknesses in our internal control over financial reporting discussed above and to remedy the ineffectiveness of our disclosure controls and procedures. We are addressing our accounting resource requirements to help remediate the segregation of duties and plan to implement a concise "three-way" document matching procedure. These material weaknesses will not be considered as remediated until the applicable remediated controls are operating for a sufficient period and management has concluded, through testing, that these controls are operating effectively.

***The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members.***

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We are a public company and subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act of 2002. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. Compliance with the Sarbanes-Oxley Act may divert internal resources and will take a significant amount of time and effort to achieve. If we fail to maintain compliance with the Sarbanes-Oxley Act, we could be subject to sanctions or investigations by the Nasdaq, the SEC, or other regulatory authorities. Furthermore, investor perceptions of us may decline as a result.

Any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement necessary changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal controls from our independent auditors. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company, particularly if we become fully subject to the Sarbanes-Oxley Act and its auditor attestation requirements, which will increase costs. Our management team and other personnel will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company, which may divert attention from other business concerns and have a material adverse effect on our business, financial condition and results of operations.

***If we are not able to comply with the applicable continued listing requirements of the Nasdaq, it could delist us, which may adversely affect the market price and liquidity of our common stock.***

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Our common stock currently trades on the Nasdaq under the symbol "RIME". For our common stock to continue trading on the Nasdaq, we must meet continued listing standards mandated by the Nasdaq. These continued listing standards include specifically enumerated criteria, including maintaining a $1.00 minimum closing bid price and maintaining stockholder's equity of at least $2,500,000. If we fail to meet any of the continued listing standards of the Nasdaq, our common stock could be delisted.

On August 26, 2024, we received a letter from the Nasdaq advising us that we did not meet the minimum $1.00 per share bid price requirement for continued inclusion on the Nasdaq pursuant to Nasdaq Marketplace Listing Rule 5550(a)(2). To demonstrate compliance with this requirement, the closing bid price of our common stock needed to be at least $1.00 per share for a minimum of 10 consecutive business days before February 24, 2025.

On August 26, 2024, we received an additional letter from the Nasdaq indicating that our stockholders' equity as reported in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company's stockholders' equity be at least $2,500,000. We reported a stockholders' deficit of approximately $872,000 on June 30, 2024 in that quarterly report. Pursuant to the listing rule and instructions from Nasdaq, we submitted a plan to regain compliance with the listing rule and were given an extension until November 14, 2024 to evidence compliance through a public filing.

On November 19, 2024, we filed our Quarterly Report on Form 10-Q for our fiscal quarter ended September 30, 2024 with the SEC. Therein, we reported stockholders' equity of approximately $2,700,000. That same day we filed a Form 8-K with the SEC stating that we believed we had regained compliance with the stockholders' equity requirement. On November 22, 2024, we received a letter from the Nasdaq indicating that, based on the Form 10-Q that we filed on November 19, 2024, the Nasdaq had determined that we were in compliance with the stockholders' equity rule. The Nasdaq advised us that it would continue to monitor our ongoing compliance with the stockholders' equity requirement and, if at the time of our next periodic report, we fail to comply with the requirement, we may be subject to delisting.

On December 30, 2024, we received notice from the Nasdaq indicating that the bid price for our common stock had closed below $0.10 per share for the 13-consecutive trading day period ended December 27, 2024 and, accordingly, we would be subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) and our securities would be subject to delisting from Nasdaq unless we timely request a hearing before the Nasdaq hearings panel. On February 10, 2025, we implemented a 200-for-1 reverse stock split. On that day, the closing price of our common stock was $2.98 per share and the closing bid of our common stock remained above $1.00 for the next 10 consecutive business days.

On March 25, 2025, we received a letter from the Nasdaq stating that we had regained compliance with the minimum bid price requirement of $1.00 per share for continued listing on the Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2). We will be subject to a mandatory panel monitor for a period of one year from March 25, 2025. If, within that one-year monitoring period, the Nasdaq finds that we are again out of compliance with the minimum bid price requirement, notwithstanding Nasdaq Listing Rule 5810(c)(2), then the Nasdaq will issue a delist determination letter and we will have an opportunity to request a new hearing with the initial Nasdaq hearing panel or a newly convened hearing panel if the initial panel is unavailable.

On November 28, 2025, we received an additional letter from the Nasdaq indicating that our stockholders' equity as reported in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company's stockholders' equity be at least $2,500,000. We reported a stockholders' equity of approximately $100,000 on September 30, 2025 in that quarterly report. Pursuant to the listing rule and instructions from Nasdaq, we submitted a plan to regain compliance with the listing rule and were given an extension until May 27, 2026 to evidence compliance through a public filing.

If we were unable to meet the continued listing of the Nasdaq, our common stock could be subject to delisting. If our common stock were to be delisted from the Nasdaq, trading of our common stock most likely will be conducted in the over-the-counter market on an electronic bulletin board established for unlisted securities such as the OTC Markets or in the "pink sheets." Such a downgrade in our listing market may limit our ability to make a market in our common stock and which may adversely affect the market price and liquidity of our common stock.

***New laws, regulations, and standards relating to corporate governance and public disclosure may create uncertainty for public companies, increase legal and financial compliance costs and make some activities more time consuming.***

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These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, may evolve over time as new guidance is provided by the courts and applicable government agencies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

***As a "smaller reporting company" under applicable law, we are subject to lessened disclosure requirements, which could leave our stockholders without information or rights available to stockholders of more mature companies.***

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We are a "smaller reporting company" as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are permitted to comply with reduced disclosure obligations in our SEC filings compared to larger public companies. This includes, but is not limited to, simplified executive compensation disclosures, reduced financial statement requirements, and less stringent narrative disclosure obligations. While these scaled disclosure requirements may reduce the burden on us and provide some cost savings, investors should be aware that they may also receive less information about us than they would from a larger public reporting company. The designation as a smaller reporting company and the accompanying reduced disclosure requirements could make it more difficult for investors to fully assess the value and risks of an investment in our securities. Consequently, the designation as a smaller reporting company under the SEC rules increases the risk to investors, as it may limit the amount of publicly available information to assess our performance, prospects, and financial health. Potential investors should consider the implications of these reduced disclosure requirements when making an investment decision.

***Applicable SEC rules governing the trading of "penny stocks" may limit the trading and liquidity of our common stock, which may affect the trading price of our common stock.***

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Our common stock is a "penny stock" as defined under Rule 3a51-1 of the Exchange Act and is accordingly subject to SEC rules and regulations that impose limitations upon the manner in which our common stock can be publicly traded. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain brokers who recommend penny stocks to persons other than established customers or certain accredited investors must make a special written suitability determination regarding the purchaser and receive the purchaser's written agreement to participate in the transaction prior to sale. These regulations may have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock.

***We have never paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future.***

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We have never paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future. We intend to use any cash generated from our operations for reinvestment in the growth of our business. Any determination to pay dividends in the future will be made by our board of directors and will depend upon our results of operations, financial condition, contractual restrictions and growth plan, restrictions imposed by applicable law, and other factors deemed relevant by our board of directors. Accordingly, the realization of a gain on stockholders' investments in our common stock will depend on the appreciation of the price of our common stock. We can provide no assurance that our common stock will appreciate in value or even maintain the price at which stockholders purchased their shares.

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**Item 1B. Unresolved Staff Comments.**

None.

**Item 1C. Cybersecurity.**

**Risk Management and Strategy**

We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We primarily rely on expert third-party managed IT service providers to protect our IT systems from cybersecurity threats.

**Managing Material Risks & Integrated Overall Risk Management**

As one of the critical elements of our overall risk management program, our cybersecurity program is focused on the following key areas:

 

● *Technical Safeguards*: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, anti-malware software, and monitoring software agents that are installed on our devices.

● *Third-Party Management*: Our financial data and primary operational systems are hosted off-site in virtual cloud environments which get periodically backed up and can be restored in the event of a cybersecurity incident. We do not store sensitive customer credit card data within our IT systems.

● *Risk Management*: We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management team works closely with our third-party IT service provider to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.

**Oversight of Third-Party Risk**

 

We conduct annual assessments of the SOC reports of our providers because we are aware of the risks associated with third-party service providers. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties.

**Risks from Cybersecurity Threats**

 

As of the date of this report, there have been no cybersecurity incidents that have materially affected our results of operations or financial condition.

**Item 2. Properties.**

We lease office space in Fort Lauderdale, Florida for our corporate headquarters and lease office space in Bangalore, India for our India operations. We believe these locations are adequate to support our operations for the next 12 months. We also believe that these facilities are not unique and could be replaced, if necessary, at the end of the term of the existing leases.

**Item 3. Legal Proceedings.**

On February 11, 2025, Blue Yonder, Inc. ("Blue Yonder") filed a civil action in the Superior Court of the State of Arizona against us for breach of contract and to enforce a stipulated judgment entered against SemiCab, Inc. in connection with the liabilities related to Blue Yonder that we assumed when it acquired SemiCab, Inc.'s business. Blue Yonder alleges that, because we assumed these liabilities, Blue Yonder can enforce the judgment against us. The judgment was in the amount of $509,119. On August 1, 2025, we filed an answer to the complaint and counterclaims against Blue Yonder for breach of contract. On January 30, 3026, the court granted Blue Yonder's motion for judgment on the pleadings. The outcome of this matter is uncertain.

 

**Item 4. Mine Safety Disclosures.**

Not applicable.

**PART II** 

**Item 5. Market For Registrant's Common Equity And Related Stockholder Matters And Issuer Purchases Of Equity Securities.**

**Market Information**

Our common stock is listed on the Nasdaq under the trading symbol "RIME."

**Record Holders** 

As of March 27, 2026, based upon information received from our transfer agent, there were 36 record holders of our outstanding common stock. This number does not include: (i) any beneficial owners of common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries, or (ii) broker-dealers or other participants who hold or clear shares directly or indirectly through the Depository Trust Company or its nominee, Cede & Co.

**Dividends**

We have not paid any dividends on our common stock to date, nor do we intend to pay any dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to finance the growth of our business. Future dividend policy will depend upon our earnings, financial condition, contractual restrictions and other factors considered relevant by our board of directors and will be subject to limitations imposed under Delaware law.

**Recent Sales of Unregistered Securities**

None.

**Equity Compensation Information**

The information required by this item regarding equity compensation plans is incorporated by reference to the information set forth in *Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters* of this report.

**Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

None.

**Item 6. [Reserved].**

**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

This *Management's Discussion and Analysis of Financial Condition and Results of Operations* and other parts of this report contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this report are based on information available to us on the date hereof, and, except as required by law, we assume no obligation to update any such forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth herein under *Item 1A. Risk Factors* and elsewhere in this report. See also *"Disclosure Regarding Forward-Looking Statements"* beginning on page 1 of this report. The following should be read in conjunction with our consolidated financial statements beginning on page F-1 of this report.

**Overview**

We are an AI technology company focused on the growth and development of SemiCab. SemiCab is an AI-enabled software logistics and distribution business that utilizes our SemiCab technology platform to enable retailers, brands and transportation providers to address common supply chain problems globally. We operate our SemiCab business through our subsidiary, SemiCab Holdings.

Prior to August 1, 2025, we had a second business, which was Singing Machine. Singing Machine was a home karaoke consumer products business that designed and distributed karaoke products to retailers and ecommerce partners globally through our subsidiary, The Singing Machine Company, Inc. We sold our Singing Machine business on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business.

 

*SemiCab* 

SemiCab is an AI-enabled, cloud-based collaborative transportation platform built to achieve the scalability required to predict and optimize loads and the use 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 techniques and advanced predictive optimization models.

Since 2020, SemiCab has enabled major retailers, brands and transportation providers to address their transportation needs. 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 that our SemiCab technology has the capability of reducing costs through optimization. Additionally, our SemiCab technology has the potential to play a key role in the improved sustainability model. Based on our proven ability to improve truck utilization rates, this could result in a dramatic reduction in the carbon footprint of the industry. The optimization of existing truck utilization can add 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 reduce carbon emissions attributable to road freight.

*Singing Machine*

Through Singing Machine, we engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings. We were 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 were among the most widely available karaoke products internationally. We sold our Singing Machine business on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business line.

**Strategy**

We intend to invest in our SemiCab AI logistics and distribution business to develop and grow it into a significant revenue producer for us. This will involve investments in the continued research and development of our technology, the hiring of additional qualified employees, marketing and advertising initiatives, and back-office support. While this is a nascent business, it has already acquired several large, fast-moving consumer products companies as customers. We believe that as existing customers experience the benefits of our SemiCab logistics and distribution solutions, they will begin to increase their use of our services. We also believe that our ability to improve truck utilization rates and improve trucking capacity without adding more trucks, drivers or driven miles will be of substantial interest to additional companies that can benefit from our service.

We acquired the United States component of our SemiCab business on July 3, 2024 and acquired the India component of our SemiCab business on May 2, 2025. We may make additional investments in companies operating in the AI distribution and logistics space that we believe are complementary to our business. Our investments could involve an acquisition of the assets or equity of complementary companies or businesses or could involve a strategic partnership or joint venture with complementary companies or businesses or digital asset treasury strategies. We believe that additional investments could provide us with new AI logistics and distribution technologies, services and resources that we can implement across our entire business or could help us to more quickly expand our footprint into other parts of the world. We are actively evaluating additional opportunities to expand our SemiCab business through investments in complementary AI logistics and distribution businesses and companies.

**Financial Results**

We generated net sales of $4,391,000 for the year ended December 31, 2025, compared to $297,000 for the year ended December 31, 2024. The increase in revenue was due primarily to the addition of net sales generated by our SemiCab business resulting from our acquisition of SMCB on May 2, 2025. Cost of sales was $5,706,000 for the year ended December 31, 2025, compared to $491,000 for the year ended December 31, 2024. The increase in cost of sales was due primarily to the addition of freight, handling and servicing costs incurred by SMCB resulting from our acquisition of SMCB on May 2, 2025.

Our operating expenses were $6,629,000 for the year ended December 31, 2025, compared to $8,248,000 for the year ended December 31, 2024. The decrease in operating expenses was due primarily to a decrease of $3,592,000 related to the impairment of goodwill recorded in connection with the acquisition of SemiCab, Inc's business during the year ended December 31, 2024, partially offset by the increase in general and administrative expenses incurred in the growth and development of the SemiCab business during the year ended December 31, 2025. We incurred a net loss from continuing operations of $15,210,000 for the year ended December 31, 2025, compared to $18,884,000 for the year ended December 31, 2024. The most significant contributors to the decrease in the net loss from continuing operations were decreases in non-cash charges of $3,592,000 for impairment of goodwill and $8,889,000 for loss on the issuance of warrants. This decrease was partially offset by an increase of $6,468,000 for non-cash charges for changes in the fair value of warrants liability and increases in general and administrative expenses incurred in the growth and development of the SemiCab business.

We generated net loss from continuing operations of $15,210,000, or $5.86 per share of common stock, for the year ended December 31, 2025, compared to $18,884,000, or $270.44 per share of common stock, for the year ended December 31, 2024. The decrease was due primarily to an increase of $4,094,000 for net sales and a decrease of $3,592,000 for impairment of goodwill. This was partially offset by an increase of $5,215,000 for cost of sales. We had total assets of $12,724,000 and $18,302,000 at December 31, 2025, and 2024, respectively. Net cash used by operating activities attributable to continuing operations was $7,309,000 for the year ended December 31, 2025, compared to $3,985,000 for the year ended December 31, 2024.

**Outlook**

We expect net sales to increase substantially over the next 12 months as we generate more business through our growing customer base in India and as we begin to generate business in the United States and Europe. We expect costs of sales to increase over the next 12 months in connection with the increase in net sales that we expect to generate from our SemiCab business. We expect operating expenses and net loss available to common stockholders to increase over the next 12 months as we continue to fund the growth and development of our SemiCab business.

Notwithstanding the foregoing, in the event we complete additional acquisitions of controlling or non-controlling financial interests in other complementary businesses or companies through mergers, acquisitions, joint ventures or other strategic initiatives, such as the acquisition of the United States component of our SemiCab business on July 3, 2024 and the acquisition of the India component of our SemiCab business on May 2, 2025, our financial results will include and reflect the financial results of the target entities. Accordingly, the completion of any such transactions in the future may have a substantial beneficial or negative impact on our business, financial condition and results of operations.

**Critical Accounting Estimates**

This *Management's Discussion and Analysis of Financial Condition and Results of Operations* is based upon our audited consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors, that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our consolidated financial statements because they inherently involve significant judgments and uncertainties. For a more complete discussion of our accounting policies and procedures, see our consolidated financial statements beginning on page F-1 of this report.

*Revenue Recognition* 

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. All revenue is generated from contracts with customers. We recognize revenue when services are performed for the customer in an amount, referred to as the transaction price, that reflects the consideration to which we are expected to be entitled in exchange for those services. We determine revenue recognition utilizing the following five steps: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract (promised services that are distinct); (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as, we transfer control of the service for each performance obligation.

Our performance obligations are established when a customer submits a purchase order notification and we accept the order. We identify performance obligations as the delivery of the requested service at the location specified in the customer's contract and/or purchase order. Revenue from sales of services is recognized at the point in time when we transfer control to the customer, typically at the time when the services are performed in full, at which time there are no further performance obligations remaining.

Our contracts with customers consist of one performance obligation, which is the performance of services. Our contracts have no financing elements. Payment terms are generally less than 90 days and have no further contract asset or liability obligations once control of the service is transferred to the customer. Revenue is recorded in the amount of consideration we expect to receive for the sale of the service.

We utilize independent contractors and third-party carriers to perform transportation services in connection with our SemiCab business. In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, we evaluate the terms of agreements with customers and vendors to determine whether we act as principal or agent in each arrangement.

This assessment focuses on whether control of the transportation service is obtained prior to transferring the service to the customer. Based on this evaluation of the control model, we concluded that it acts as the principal and, accordingly we recognize revenue on a gross basis. In the event we act as an agent, such revenue will be recognized net of the cost of purchased transportation.

All revenue earned from contracts are presented net of discounts, allowances, and applicable taxes

*Warrant Liability*

We classify the Series A and B warrants issued in our December 2024 public offering as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statement of operations. The fair value of these warrants requires significate estimates by management derived from unobservable inputs. Deviations from these estimates could have a significant affect on our financial results.

**Recent Accounting Pronouncements**

In May 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-03, *Business Combinations (Topic 805) and Consolidation (Topic 810).* This ASU provides that a reporting entity involved in a business combination effected primarily by the exchange of equity interests must consider the factors in Accounting Standards Codification ("ASC") 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer regardless of whether the legal acquiree is a Variable Interest Entity ("VIE"). The amendments in ASU 2025-03 must be applied prospectively to any business combination that occurs after the initial adoption date. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU 2025-04, *Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)*, which clarifies the guidance in both ASC 718 and ASC 606 on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer. The ASU is intended to reduce diversity in practice and improve existing guidance, primarily by revising the definition of a "performance condition" and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. In addition, the ASU clarifies that the guidance in ASC 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer "regardless of whether an award's grant date has occurred" (as determined under ASC 718). ASU 2025-04 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, *Financial Instruments — Credit Losses (Topic 326),* which provides a practical expedient for measuring expected credit losses on current receivables and contract assets arising under Topic 606, *Revenue from Contracts with Customers*. The ASU allows entities to assume that the macroeconomic conditions existing at the balance sheet date will remain unchanged over the remaining life of those assets. The amendments are effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In August 2025, the FASB issued ASU 2025-06, *Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40).* This ASU simplifies the accounting for costs incurred in the development of internal-use software by removing the concept of multiple project stages. Under the new guidance, capitalization begins when management authorizes and commits funding to the project and it is probable that the project will be completed and the software placed into service. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those years. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-07, *Derivatives and Hedging (Topic 815).* This ASU clarifies the scope of derivative accounting for certain contracts and provides guidance on share-based, non-cash consideration received from a customer under Topic 606. The amendments expand a scope exception for contracts whose underlying is based on an entity's own operations or activities, reducing the number of arrangements that qualify as derivatives. The ASU also clarifies the accounting for share-based consideration received from a customer. The amendments are effective for fiscal years beginning after December 15, 2026, including interim periods within those years. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, *Interim Reporting (Topic 270): Narrow-Scope Improvements ("ASU 2025-11)*. The purpose of this ASU is to improve the guidance of Topic 270, Interim Reporting, by providing clarity on the current interim reporting requirements. This amendment also provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in this ASU also add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the reporting entity. The amendments in this ASU are effective for all public companies for interim reporting periods within annual reporting periods beginning after December 31, 2027. Early adoption is permitted. The amendments in this ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

We reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to our operations or that no material effect is expected on our consolidated financial statements as a result of future adoption.

**Comparison of the Years Ended December 31, 2025 and 2024**

 

*Net Sales*

Net sales consist of sales generated by our SemiCab business. Net sales increased $4,094,000 to $4,391,000 for the year ended December 31, 2025, compared to $297,000 for the year ended December 31, 2024. The increase in net sales was due primarily to the addition of net sales generated by SMCB, which we acquired on May 2, 2025. We expect net sales to increase over the next 12 months as we generate more business through our growing customer base in India and as we begin to generate business in the United States and Europe.

*Cost of Sales*

Cost of sales consists primarily of freight, handling and servicing costs that we incur in connection with our SemiCab business. Cost of sales increased $5,215,000 to $5,706,000 for the year ended December 31, 2025, compared to $491,000 for the year ended December 31, 2024. The increase in cost of sales was due primarily to the addition of freight, handling and servicing costs incurred by SMCB, which we acquired on May 2, 2025. We expect costs of sales to increase over the next 12 months in connection with the increase in net sales that we expect to generate from our SemiCab business.

*Operating Expenses*

 

Operating expenses consist of selling expenses, general and administrative expenses, and impairment of goodwill.

Selling Expenses

Selling expenses consist primarily of marketing and advertising activities that we engage in from time to time in connection with our SemiCab business. Selling expenses were $4,000 for the year ended December 31, 2025. We did not incur any selling expenses for the year ended December 31, 2024. We expect selling expenses to increase substantially over the next 12 months as we being to devote more resources to marketing and advertising activities to support the growth of our SemiCab business in India, the United States and Europe.

 

General and Administrative Expenses

General and administrative expenses consist primarily of payroll expenses, legal and accounting expenses, and other corporate expenses. General and administrative expenses increased $1,973,000 to $6,629,000 for the year ended December 31, 2025, compared to $4,656,000 for the year ended December 31, 2024. The increase was due primarily to increases in expenses incurred in connection with the operation of our SemiCab. We expect general and administrative expenses to increase over the next 12 months as we continue to invest in the growth and development of our SemiCab business.

Impairment of Goodwill

Impairment of goodwill consists of the expense that we incurred from the write down of the goodwill that we recorded in connection with the acquisition of substantially all of the assets of SemiCab, Inc. on July 3, 2024. We recorded impairment of goodwill of $3,592,000 for the year ended December 31, 2024. We did not record any impairment of goodwill for the year ended December 31, 2025. We do not expect to incur any write down of goodwill over the next 12 months.

 

*Other Expenses*

Other expenses consists primarily of loss on the issuance of warrants that we incurred in connection with the public offering of securities that we completed on December 6, 2024, and interest expense that we incurred in connection with shares of common stock that we issued to investors in our October 2024 notes offering and other financing transactions. We incurred only a minimal amount of other expenses in connection with our SemiCab business. Other expenses decreased $3,227,000 to $7,215,000 for the year ended December 31, 2025, compared to $10,442,000 for the year ended December 31, 2024. The decrease was due primarily to decreases of $2,087,000 for the loss that we incurred in connection with the issuance and change in fair value of the Series A and Series B warrants that we sold in the public offering of securities that we completed on December 6, 2024, and $1,588,000 for non-cash interest expense that we incurred in connection with shares of common stock that we issued to investors in our various financing transactions during 2024. We expect other expenses to decrease substantially over the next 12 months.

 

*Net Loss Attributable to Non-Controlling Interest*

Net loss attributable to non-controlling interest consists of the loss allocated to SemiCab, Inc., which owned a 20% of the outstanding membership interests of SemiCab Holdings until May 2, 2025, and Ajesh Kapoor and Vivek Sehgal, who collectively owned 20% of the outstanding membership interests of SemiCab Holdings beginning May 2, 2025. SemiCab Holdings owns our SemiCab business. We acquired our SemiCab business from SemiCab, Inc. on July 3, 2024, and, as part of the transaction, granted SemiCab, Inc. a 20% membership interest in SemiCab Holdings. The net loss attributable to non-controlling interest of $701,000 for the year ended December 31, 2025 represents the amount of loss incurred by SemiCab Holdings that was allocated to SemiCab Inc. between January 1, 2025 and May 2, 2025, and to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest in SemiCab Holdings between May 2, 2025 and December 31, 2025. The net loss attributable to non-controlling interest of $1,110,000 for the year ended December 31, 2024 represents the amount of loss incurred by SemiCab Holdings that was allocated to SemiCab, Inc. through its 20% membership interest in SemiCab Holdings between July 3, 2024 and December 31, 2024. We expect net loss attributable to non-controlling interest to increase over the next 12 months as we continue to invest in the development and growth of our SemiCab business.

**Liquidity And Capital Resources** 

Since our inception, we have funded our operations primarily through cash generated by our operations, private sales of equity securities and the use of short- and long-term debt. As of March 25, 2026, our cash and restricted cash balance was approximately $10,939,000.

Net cash used in operating activities attributable to continuing operations was $7,309,000 during the year ended December 31, 2025, compared to $3,985,000 during the year ended December 31, 2024. The increase of $3,324,000 was due primarily to an increase of $2,087,000 for the loss that we incurred in connection with the issuance and change in fair value of the Series A and Series B warrants that we sold in the public offering of securities that we completed on December 6, 2024, and to an increase of $3,592,000 related to the impairment of goodwill from the purchase of SemiCab, Inc recorded during the year ended December 31, 2024. This was partially offset by a decrease of $3,674,000 for loss from continuing operations.

Net cash used in investing activities attributable to continuing operations was $1,770,000 during the year ended December 31, 2025, compared to $2,175,000 during the year ended December 31, 2024. The decrease of $405,000 was due primarily to decreases of $605,000 for advances to SMCB under our loan agreement with them, $593,000 for cash received in connection with our acquisition of SMCB on May 2, 2025, and $415,000 for pre-acquisition advances to SemiCab. This was partially offset by increases of $758,000 for repurchases of shares of our common stock and $419,000 for the capitalization of internal use software costs.

Net cash provided by financing activities attributable to continuing operations was $9,686,000 during the year ended December 31, 2025, compared to $11,648,000 during the year ended December 31, 2024. The decrease of $1,962,000 was due primarily to decreases of $12,932,000 for proceeds from the sale of common stock and warrants and $2,000,000 for proceeds from the issuance of senior secured notes, net of discounts. This was partially offset by an increase of $10,213,000 for proceeds from the issuance of promissory notes and a decrease of $2,578,000 for payments of senior secured notes and debt issuance costs.

Our limited cash resources along with our recent history of recurring operating losses and decreases in working capital create substantial doubt about our ability to continue as a going concern. To date, our capital needs have been met through cash generated by our operations, sales of our equity securities and the use of short- and long-term debt to fund our operations. We have used these sources of capital to pay virtually all of the costs and expenses that we have incurred to date. These costs and expenses have been comprised primarily of the professional fees, employee compensation expenses, and general and administrative expenses discussed above. We intend to continue to rely upon each of these sources to fund our operations and expansion efforts, including additional acquisitions of controlling or non-controlling financial interests in other complementary businesses and companies during the next 12 months.

We can provide no assurance that these sources of capital will be adequate to fund our operations and expansion efforts during the next 12 months. If these sources of capital are not adequate, we will need to obtain additional capital through alternative sources of financing. We may attempt to obtain additional capital through the sale of equity securities or the issuance of short- and long-term debt. If we raise additional funds by issuing shares of our common stock, our stockholders will experience dilution. If we raise additional funds by issuing securities exercisable or convertible into shares of our common stock, our stockholders will experience dilution in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity securities or debt that we issue may have rights, preferences and privileges senior to those of the shares of common stock held by our stockholders.

We have not made arrangements to obtain additional capital and can provide no assurance that additional financing will be available in an amount or on terms acceptable to us, if at all. Our ability to obtain additional capital will be subject to a number of factors, including market conditions and our operating performance. These factors may make the timing, amount, terms and conditions of any proposed future financing transactions unattractive to us. If we cannot raise additional capital when needed, or if such capital cannot be obtained on acceptable terms, we may not be able to pay our costs and expenses as they are incurred, take advantage of future acquisition opportunities, respond to competitive pressures or unanticipated events, or otherwise execute upon our business plan. This may adversely affect our business, financial condition and results of operations and, in the extreme case, cause us to discontinue our operations.

**Nasdaq Compliance**

On August 26, 2024, we received a letter from the Nasdaq advising us that we did not meet the minimum $1.00 per share bid price requirement for continued inclusion on the Nasdaq pursuant to Nasdaq Marketplace Listing Rule 5550(a)(2). To demonstrate compliance with this requirement, the closing bid price of our common stock needed to be at least $1.00 per share for a minimum of 10 consecutive business days before February 24, 2025.

On August 26, 2024, we received an additional letter from the Nasdaq indicating that our stockholders' equity as reported in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company's stockholders' equity be at least $2,500,000. We reported a stockholders' deficit of approximately $872,000 on June 30, 2024 in that quarterly report. Pursuant to the listing rule and instructions from Nasdaq, we submitted a plan to regain compliance with the listing rule and were given an extension until November 14, 2024 to evidence compliance through a public filing.

On November 19, 2024, we filed our Quarterly Report on Form 10-Q for our fiscal quarter ended September 30, 2024 with the SEC. Therein, we reported stockholders' equity of approximately $2,700,000. That same day we filed a Form 8-K with the SEC stating that we believed we had regained compliance with the stockholders' equity requirement. On November 22, 2024, we received a letter from the Nasdaq indicating that, based on the Form 10-Q that we filed on November 19, 2024, the Nasdaq had determined that we were in compliance with the stockholders' equity rule. The Nasdaq advised us that it would continue to monitor our ongoing compliance with the stockholders' equity requirement and, if at the time of our next periodic report, we fail to comply with the requirement, we may be subject to delisting.

On December 30, 2024, we received notice from the Nasdaq indicating that the bid price for our common stock had closed below $0.10 per share for the 13-consecutive trading day period ended December 27, 2024 and, accordingly, we would be subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) and our securities would be subject to delisting from Nasdaq unless we timely request a hearing before the Nasdaq hearings panel. On February 10, 2025, we implemented a 200-for-1 reverse stock split. On that day, the closing price of our common stock was $2.98 per share and the closing bid of our common stock remained above $1.00 for the next 10 consecutive business days.

On March 25, 2025, we received a letter from the Nasdaq stating that we had regained compliance with the minimum bid price requirement of $1.00 per share for continued listing on the Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2). We will be subject to a mandatory panel monitor for a period of one year from March 25, 2025. If, within that one-year monitoring period, the Nasdaq finds that we are again out of compliance with the minimum bid price requirement, notwithstanding Nasdaq Listing Rule 5810(c)(2), then the Nasdaq will issue a delist determination letter and we will have an opportunity to request a new hearing with the initial Nasdaq hearing panel or a newly convened hearing panel if the initial panel is unavailable.

On November 28, 2025, we received an additional letter from the Nasdaq indicating that our stockholders' equity as reported in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company's stockholders' equity be at least $2,500,000. We reported a stockholders' equity of approximately $100,000 on September 30, 2025 in that quarterly report. Pursuant to the listing rule and instructions from Nasdaq, we submitted a plan to regain compliance with the listing rule and were given an extension until May 27, 2026 to evidence compliance through a public filing.

**Off-Balance Sheet Arrangements**

As of December 31, 2025, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

**Item 7A. Quantitative and Qualitative Disclosures About Market Risk.**

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

**Item 8. Financial Statements and Supplementary Data.** 

Our audited consolidated financial statements at and for the years ended December 31, 2025 and 2024, respectively, begin on page F-1 of this report located immediately after the signature page hereto. As a smaller reporting company, we are not required to provide supplementary financial information.

**Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.** 

None.

**Item 9A. Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet management's objectives.

As of December 31, 2025, we carried out an evaluation of the effectiveness of our disclosure controls and procedures as defined by Rule 13a-15(e) under the Exchange Act under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

**Management's Report on Internal Control over Financial Reporting**

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes policies and procedures that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design safeguards to reduce, though not eliminate, this risk.

Our management used the framework set forth in the report entitled *Internal Control – Integrated Framework (2013)* published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, our management concluded that our internal control over financial reporting was not effective at December 31, 2025, due to the existence of material weaknesses in our internal controls.

A material weakness is a control deficiency, or a combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Our management, in consultation with our independent registered public accounting firm, concluded that the following material weaknesses existed in the following areas as of December 31, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. We lacked sufficient resources in our accounting department restricting our ability to review and approve certain material journal entries which increases the likelihood that a material misstatement of interim or annual financial statements might not be prevented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.* We lacked sufficient resources in our accounting department, which resulted in our ability to have proper segregation of duties between the preparation, review and approval certain material reconciliations related to financial reporting in a timely manner.

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Due to our lack of sufficient resource restrictions in our accounting department, we have not established a three-way match of documents or other controls precise enough to detect a material misstatement in revenue.

To remediate these material weaknesses, we intend to conduct a thorough review of the accounting department to ensure that the staff has the appropriate training and experience. We may hire one or more accounting persons to assist us with our accounting and financial reporting function. We also intend to implement more comprehensive written policies and procedures that address separation of duties and proper accounting and financial reporting.

Notwithstanding the existence of these material weaknesses in our internal controls, we believe that our consolidated financial statements fairly present, in all material respects, our balance sheets at December 31, 2025 and 2024, and our statements of operations, stockholders' deficit and cash flows for the years ended December 31, 2025 and 2024.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only our management's report in this annual report.

**Changes in Internal Control Over Financial Reporting**

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**Item 9B. Other Information.**

**Rule 10b5-1 Trading Arrangements**

During the three-month period ended December 31, 2025, none of our officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

**Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.**

Not applicable.

**PART III**

**Item 10. Directors, Executive Officers and Corporate Governance.** 

The following chart sets forth certain information about each of our directors and executive officers.

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| | | |
|:---|:---|:---|
| Name | Age | Positions Held |
| Gary Atkinson | 43 | Chief Executive Officer, Secretary and Chairman of the Board of Directors |
| Alex Andre | 51 | Chief Financial Officer and General Counsel |
| Bernardo Melo | 49 | Director |
| Harvey Judkowitz | 81 | Director |
| Ajesh Kapoor | 59 | Director |
| Scott Thorn | 46 | Director |
| Kapil Gupta | 58 | Director |

---

**Board of Directors**

We believe that our board of directors should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe that experience, qualifications or skills in the following areas are most important: (i) organizational leadership and vision; (ii) strategic, financial and operational planning; (iii) AI technology and freight, logistics and distribution industry experience; (iv) corporate restructuring and performance enhancement; (v) corporate finance; and (vi) experience as a board member of other corporations. These areas are in addition to the personal qualifications described in this section. We believe that our current board members possess the professional and personal qualifications necessary for board service and have highlighted particularly noteworthy attributes for these board members below.

The principal occupations and business experience of our current directors are as follows:

*Gary Atkinson* has served as our Chief Executive Officer since May 2012, as our Secretary since January 2008, and as a member of our board of directors since August 2022. Prior to that, Mr. Atkinson served as our Interim Chief Executive Officer from November 2009 to May 2012 and as our General Counsel from January 2008 to November 2009. Mr. Atkinson is a licensed attorney in Florida and Georgia. He graduated from the University of Rochester with a bachelor's degree in economics and received a Juris Doctorate and Masters in Business Administration from Case Western Reserve University School of Law and Weatherhead School of Management.

We believe that Mr. Atkinson is qualified to serve on our board of directors because of his strong leadership, business acumen and analytical skills along with his extensive experience with capital markets.

*Bernardo Melo* has served as a member of our board of directors since July 2022. He has also served as our Chief Revenue Officer from April 2022 to August 2025 and as our Vice President of Global Sales and Marketing from 2008 to April 2022. He has also served as a member of our board of directors since July 2022. Prior to that, Mr. Melo held dual roles with us managing the operations, licensing and sales of the music division while concentrating on hardware sales for the Latin America and Canadian market as well as key U.S. accounts such as Walmart.

We believe that Mr. Melo is qualified to serve as a member of our board of directors because of his substantial sales and marketing expertise.

*Harvey Judkowitz* has served as a member of our board of directors since March 2004 and serves as the Chairman of our Audit Committee. He is licensed as a certified professional accountant in New York and Florida and has owned his own accounting firm since 1988. He also served as the Chief Executive Officer and Chairman of our board of directors of UniPro Financial Services, a diversified financial services company, up until the company was sold in September 2005. Prior to that he served as the President and Chief Operating Officer of Photovoltaic Solar Cells, Inc., a producer of photovoltaic solar cells.

We believe that Mr. Judkowitz is qualified to serve as a member of our board of directors because of his organizational leadership and management skills and his accounting expertise.

*Ajesh Kapoor* has served as the Chief Executive Officer of SemiCab Holdings, a subsidiary of ours that owns and operates our SemiCab AI logistics and distribution business, since July 2024 and is the Founder and Chief Executive Officer of SemiCab, Inc., a company that he founded in July 2018 that previously owned our SemiCab AI logistics and distribution business. He has also served as a member of our board of directors since May 2025. From April 2015 to July 2018, Mr. Kapoor served as the Vice President of Product Management of GT Nexus, a division of Infor, the world's largest cloud-based B2B multi-enterprise network and execution platform for global trade and supply chain management, and from April 2012 to March 2015, served as a Senior Director of GT Nexus. Earlier in his career, Mr. Kapoor served as Global Head of Supply Chain Advisory Services of the Retail, CPG and Transportation Industry segments of Wipro Technologies, a multi-national technology company that provides information technology, consulting and business process services. He was also the Co-Founder and Chief Technology Officer of GEOCOMtms, a division of Blue Yonder Group, Inc. that provides optimization software to manage multiple-stop daily delivery fleet routing and scheduling. Mr. Kapoor received a BE in Mechanical Engineering from the Indian Institute of Technology, Roorkee, an MBA from Panjab University, and an MS in Operations Research from the Georgia Institute of Technology.

We believe that Mr. Kapoor is qualified to serve a member of our board of directors because of his extensive logistics and supply chain technology innovation and leadership experience.

*Scott Thorn* has served as a member of our board of directors since October 2025. Mr. Thorn has served as the President and Chief Operating Officer of InvitedHome, a leading luxury hospitality and real estate services company operating in premier U.S. ski destinations, since October 2024. Prior to that, he served as the Co-Founder and Chief Strategy Officer of Open Book Extracts, a cGMP-certified manufacturer of premium federally legal hemp-derived cannabinoid ingredients and wellness products, from February 2019 to October 2024. Earlier in his career, Scott served as a Managing Director of Douglas Wilson Companies, a leading provider of specialized business, receivership, and real estate services.

We believe that Mr. Thorn is qualified to serve as a member of our board of directors because of his substantial experience as a strategic thought leader executing aggressive business and revenue growth strategies for early-stage, high-growth companies.

*Kapil Gupta* has served as a member of our board of directors since October 2025. Mr. Gupta is a seasoned global technology and business leader with more than 20 years of experience driving innovation, operational excellence, and large-scale digital transformation across the public and private sectors. He has served as the Service Line Leader for Application Operations – Public Markets (US) at IBM, a global technology innovator, since April 2025. He has also served as a Project Executive for California's Medicaid Program since May 2017. Earlier in his career, Mr. Gupta held senior leadership roles at Cambridge Solutions, a leading provider of software solutions for supply chain, purchasing, and performance management, and Talisma Corporation, a leading provider of a digital customer engagement platform, and served as a Manager at KPMG LLP, a leading global provider of audit, tax, and advisory services.

We believe that Mr. Gupta is qualified to serve as a member of our board of directors because of his extensive experience as a global technology leader offering deep technical expertise and strategic business acumen.

**Nomination of Directors**

Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things: (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors, (ii) recommending to the Board the approval of nominees for director, (iii) developing and recommending to our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.

When evaluating potential candidates for director, the Nominating Committee considers the entirety of each candidate's credentials. Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of our board of directors. However, at a minimum, candidates for director must possess:

● high personal and professional ethics and integrity;

● the ability to exercise sound judgment;

● the ability to make independent analytical inquiries;

● the willingness and ability to devote adequate time and resources to diligently perform board of directors and committee duties; and

● the appropriate and relevant business experience and acumen.

In addition to these minimum qualifications, the Nominating Committee also takes into account when considering whether to nominate a potential director candidate the following factors

● whether the person possesses specific industry expertise and familiarity with general issues affecting our business;

● whether the person's nomination and election would enable the Board to have a member that qualifies as an "audit committee financial expert" as such term is defined by the Securities and Exchange Commission (the "SEC") in Item 401 of Regulation S-K;

● whether the person would qualify as an "independent director", as such term is defined in the Nasdaq's stock market rules;

● the importance of continuity of the existing composition of our board of directors to provide long term stability and experienced oversight; and

● the importance of diversification among our board of directors, in terms of both the individuals involved and their various experiences and areas of expertise.

**Committees of the Board of Directors**

Our Board has established an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Each of these committees operates pursuant to a formal written charter. The charters for these committees, which have been adopted by our Board, contain a detailed description of the respective committee's duties and responsibilities and are available on our website at https://algoholdings.com/governance.

Below is a description of each committee of the Board. Each of the committees has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. The Board has determined that each member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee meet the independence requirements under the Nasdaq's current listing standards and each member is free of any relationship that would interfere with his individual exercise of independent judgment.

 

*Audit Committee*

The members of our Audit Committee are Messrs. Judkowitz, Thorn, and Gupta. Mr. Judkowitz serves as the Chairman of our Audit Committee. Each of Messrs. Judkowitz, Thorn, and Gupta is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq applicable to audit committee members. Our board of directors has determined that Mr. Judkowitz qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the Nasdaq.

Our Audit Committee has the responsibility for, among other things: (i) selecting, retaining and overseeing our independent registered public accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm's internal quality control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the integrity of our financial statements, (v) reviewing and discussing with our independent auditors any other matters required to be discussed by PCAOB Auditing Standard No. 1301, (vi) reviewing, approving and overseeing any transaction between us and any related person and any other potential conflict of interest situations, (vii) overseeing our internal audit department, (viii) reviewing, approving and overseeing related party transactions, and (ix) establishing and overseeing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. The Audit Committee charter can be found online at https://algoholdings.com/governance.

 

*Compensation Committee*

The members of our Compensation Committee are Messrs. Judkowitz, Thorn and Gupta. Mr. Judkowitz serves as the Chairman of our Compensation Committee. Each of Messrs. Judkowitz, Thorn and Gupta is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq applicable to compensation committee members. Our Compensation Committee has the responsibility for, among other things: (i) reviewing and approving the chief executive officer's compensation based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing and discussing with management compensation information and related information to be included in this report and proxy statements, and (v) reviewing and recommending to the board of directors for approval procedures relating to say on pay votes. The Compensation Committee charter can be found online at https://algoholdings.com/governance.

*Nominating and Corporate Governance Committee* 

The members of our Nominating and Corporate Governance Committee are Messrs. Judkowitz, Gupta and Thorn. Mr. Thorn serves as the Chairman of our Nominating and Corporate Governance Committee. Each of Messrs. Judkowitz, Gupta and Thorn is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq applicable to nominating committee members. Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things: (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors, (ii) recommending to the Board the approval of nominees for director, (iii) developing and recommending to our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director. The Nominating and Corporate Governance Committee charter can be found online at https://algoholdings.com/governance.

**Executive Officers**

*Gary Atkinson* has served as our Chief Executive Officer since May 2012, as our Secretary since January 2008, and as a member of our board of directors since August 2022. His background appears above under "*– Board of Directors"*.

Alex Andre has served as our Chief Financial Officer and General Counsel since February 2025. Mr. Andre brings us nearly 25 years of executive management, financial, legal and operational experience. He most recently served as the Chief Financial Officer of Lemnature AquaFarms Corporation, a plant-based ingredients manufacturer for the food, beverage and nutrition markets, from October 2022 to September 2023. Prior to that, Mr. Andre served as the Chief Financial Officer and General Counsel of M.H. Enterprises, Inc., the owner and franchisor of the Teriyaki Madness<sup>®</sup> restaurant brand, from March 2021 to September 2022. Before that, he served as the Chief Financial Officer of ARC Group, Inc., a national, multi-brand, multi-unit restaurant holding company, from July 2019 to March 2021, and as its General Counsel from October 2019 to March 2021. Earlier in his career, Mr. Andre served as an accountant for KPMG LLP before serving as a corporate & securities attorney for regional and international law firms.

**No Family Relationships**

There is no family relationship between any director and executive officer or among any directors or executive officers.

**Involvement in Certain Legal Proceedings**

None of our directors and executive officers have been involved in any of the following events during the past ten years that we consider to be material to an evaluation of their respective abilities or integrity:

● any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

● being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;

● being found by a court of competent jurisdiction in a civil action, the SEC or the CFTC to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

● being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

● being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

**Code of Ethics**

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Ethics is designed to deter wrongdoing and promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications that we make; (iii) compliance with applicable governmental laws, rules and regulations; (iv) prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (v) accountability for adherence to the code. Our Code of Ethics is available on our website at https://algoholdings.com/governance.

**Section 16(a) Beneficial Ownership Reporting Compliance**

Section 16(a) of the Exchange Act requires our officers and directors, and persons who beneficially own more than 10% of the outstanding shares of our common stock, to file reports of ownership and changes in ownership concerning their shares of our common stock with the SEC and to furnish us with copies of all Section 16(a) forms they file. We are required to disclose delinquent filings of reports by such persons.

Based solely upon a review of Forms 3, Forms 4, and Forms 5 furnished to us pursuant to Rule 16a-3 under the Exchange Act, we believe that all such forms required to be filed pursuant to Section 16(a) of the Exchange Act during the year ended December 31, 2024 were timely filed by the officers, directors, and security holders required to file such forms, with the exception of the following: (i) Harvey Judkowitz failed to file a Form 4 for the receipt of a stock option for 19,532 shares of our common stock and a restricted stock award for 19,532 shares of our common stock on November 20, 2025; (ii) Bernardo Melo failed to file a Form 4 for the receipt of a stock option for 39,063 shares of our common stock and a restricted stock award for 19,532 shares of our common stock on November 20, 2025; (iii) Scott Thorn failed to file a Form 4 for the receipt of a stock option for 39,063 shares of our common stock and a restricted stock award for 19,532 shares of our common stock on November 20, 2025, and (iv) Kapil Gupta failed to file a Form 4 for the receipt of a stock option for 39,063 shares of our common stock and a restricted stock award for 19,532 shares of our common stock on November 20, 2025. Messrs. Judkowitz, Melo and Thorn each subsequently filed a Form 4 to disclose these transactions.

**Insider Trading Policy and Procedures**

We have adopted an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by us and our officers, directors and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and all listing standards applicable to us. Each of our executive officers, directors and employees is required to read and sign our insider trading policy. A copy of our insider trading policy is attached hereto as Exhibit 19.1.

Under the policy, directors, executive officers, employees and other related persons may not: (i) buy, sell or engage in other transactions in our shares of common stock while they are aware of material non-public information; (ii) buy or sell securities of other companies while aware of material non-public information about those companies that they became aware of as a result of business dealings between us and those companies; or (iii) disclose material non-public information to any unauthorized persons outside of us. The policy restricts trading and other transactions for a limited group of our employees (including executives and directors) to defined window periods that follow our quarterly and annual earnings releases. Additionally, our executive management will also issue notices of black-out trading periods if they are aware of material transactions that they anticipate closing in the near future.

**Item 11. Executive Compensation.**

**Summary Compensation Table** 

The following table provides information regarding the compensation earned by or paid to our named executive officers during our fiscal years ended December 31, 2025 and 2024.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Name and Principal Position | Year / Period | Salary <br> ($) | Bonus <br> ($) | Stock<br> Awards<br> ($) <sup>(1)</sup> | Option<br> Awards<br> ($) <sup>(1)</sup> | All Other<br> Compensation<br> ($) <sup>(2)</sup> | Total <br> ($) |
| Gary Atkison | 2025 | 215000 | 132500 | -0- | -0- | 5800 | 353300 |
| *Chief Executive Officer* | 2024 | 215000 | 32250 | -0- | -0- | 6285 | 253535 |
| Alex Andre <sup>(3)</sup> | 2025 | 244000 | -0- | 66000 | 66000 | 6200 | 382200 |
| *Chief Financial Officer & General Counsel* |  |  |  |  |  |  |  |
| Richard Perez <sup>(4)</sup> | 2025 | 27000 | 44000 | -0- | -0- | -0- | 71000 |
| *Chief Financial Officer* | 2024 | 174596 | -0- | -0- | -0- | -0- | 174596 |
| Bernardo Melo <sup>(5)</sup> | 2025 | 124000 | 221000 | -0- | -0- | 5800 | 350800 |
| *Chief Revenue Officer* | 2024 | 215000 | 57552 | -0- | -0- | 10902 | 283454 |

---

 

<sup>(1)</sup> Represents the grant date fair value of the awards calculated in accordance with ASC Topic 718, *Compensation – Stock Compensation*. A summary of the assumptions made in the valuation of these awards is provided in our consolidated financial statements beginning on page F-1 of this report.

<sup>(2)</sup> Consists of 401(k) matching contributions that we made during the respective years.

<sup>(3)</sup> Mr. Andre was appointed as our Chief Financial Officer and General Counsel on February 13, 2025.

<sup>(4)</sup> Mr. Perez was appointed as our Chief Financial Officer on January 3, 2024 and was terminated as our Chief Financial Officer on February 13, 2025.

<sup>(5)</sup> Mr. Melo was terminated as our Chief Revenue Officer effective August 1, 2025.

**Outstanding Option and Stock Awards**

The following table sets forth information with respect to outstanding grants of options to purchase our common stock under stock option awards issued to the named executive officers as of December 31, 2025:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Number of Securities Underlying Unexercised Options (#) Exercisable** | **Number of Securities Underlying Unexercised Options (#) Unexercisable** | **Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)** | **Option Exercise Price ($)** | **Option Expiration Date** | **Number of Shares or Units of Stock That Have Not Vested (#)** | **Market Value of Shares or Units of Stock That Have Not Vested ($)** | **Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)** | **Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)** |
| Gary Atkinson | 8 | -0- | N/A | 1440 | 3/31/26 | N/A | N/A | N/A | N/A |
|  | 17 | -0- | N/A | 2820 | 5/3/27 | N/A | N/A | N/A | N/A |
|  | 67 | -0- | N/A | 800 | 5/24/32 | N/A | N/A | N/A | N/A |
|  | 8 | -0- | N/A | 1730 | 8/16/32 | N/A | N/A | N/A | N/A |
| Alex Andre | 23818 | -0- | N/A | $2.78 | 2/13/35 | 23818 | N/A | N/A | $24056 |
| Lionel Marquis | 3 | -0- | N/A | 1440 | 3/31/26 | N/A | N/A | N/A | N/A |
|  | 8 | -0- | N/A | 2820 | 5/3/27 | N/A | N/A | N/A | N/A |
|  | 50 | -0- | N/A | 800 | 5/24/32 | N/A | N/A | N/A | N/A |
|  | 5 | -0- | N/A | 1730 | 8/16/32 | N/A | N/A | N/A | N/A |
| Bernardo Melo | 4 | -0- | N/A | 1020 | 6/30/25 | N/A | N/A | N/A | N/A |
|  | 17 | -0- | N/A | 1920 | 8/10/26 | N/A | N/A | N/A | N/A |
|  | 33 | -0- | N/A | 2820 | 5/3/27 | N/A | N/A | N/A | N/A |
|  | 8 | -0- | N/A | 1320 | 12/25/31 | N/A | N/A | N/A | N/A |
|  | 50 | -0- | N/A | 800 | 5/24/32 | N/A | N/A | N/A | N/A |
|  | 5 | -0- | N/A | 1730 | 8/16/32 | N/A | N/A | N/A | N/A |

---

**Employment Agreements**

Effective April 22, 2022, we entered into employment agreements with Gary Atkinson to serve as our Chief Executive Officer and Bernardo Melo to serve as our Chief Revenue Officer. The agreements are for a term of three years with automatic renewals for successive one-year terms, unless either party provides notice of its intention not to extend. As compensation for their service as executives, the executives will each receive: (i) a base salary per annum of $215,000 that automatically increases to $225,000 on the first anniversary of the effective date; (ii) eligibility to earn an annual bonus; and (iii) eligibility to participate in our 2022 Equity Incentive Plan, or any successor plan.

In the event the employment of the executives is terminated by us without "Cause" or by the executives for "Good Reason" (as each such defined in the employment agreements), Messrs. Atkinson and Melo will receive severance in a lump sum payment equal to two times the sum of the executive's base salary and annual bonus for the year in which the termination occurs. The employment agreements also provide for payments to the executive of certain amounts in the event of the executive's death or disability (as defined in the employment agreements).

Mr. Melo was terminated as our Chief Revenue Officer effective August 1, 2025.

Effective February 13, 2025, we entered into an employment agreement with Alex Andre to serve as our Chief Financial Officer and General Counsel. The agreement is for a term of three years with automatic renewals for successive one-year terms, unless either party provides at least 90 days' notice of its intention not to extend.

Under the terms of the agreement, we agreed to pay Mr. Andre an annual base salary of $275,000 which automatically increases to $300,000 on the six-month anniversary of the effective date. Mr. Andre is eligible to receive an annual bonus of up to 30% of his annual base salary. Mr. Andre received a non-qualified stock option to purchase 23,818 shares of our common stock and a restricted stock award for 23,818 shares of our common stock on February 13, 2025. The option has a ten-year term, subject to any earlier termination following cessation of Mr. Andre's service with us, and an exercise price per share equal to the closing price of our common stock as reported by the Nasdaq on February 13, 2025. The restricted stock award and option vest over four years as follows: (a) 25% of the shares underlying the restricted stock award and option shall vest on the first anniversary of the grant date; and (b) six and one-quarter percent (6.25%) of the shares underlying the restricted stock award and option shall vest each quarter thereafter, subject to Mr. Andre's continued service with us through each applicable vesting date.

On February 23, 2026, we entered into an amended and restated employment agreement with Gary Atkinson to continue serving as our Chief Executive Officer. The agreement supersedes and replaces the employment agreement that we entered into with Mr. Atkinson on April 22, 2022. The agreement is for a term of three years with automatic renewals for successive one-year terms, unless either party provides at least 90 days' notice of its intention not to extend.

Under the terms of the agreement, we agreed to pay Mr. Atkinson an annual a base salary of $360,000 per year. Mr. Atkinson has the right to earn an annual bonus of up to 50% of the base salary, of which amount 50% will be subject to his continued employment with us and the remaining 50% will be subject to the satisfaction of certain performance objectives. Mr. Atkinson also has the right to receive a bonus if, and each time, a change of control occurs during the term of his employment in a lump sum payment equal to his base salary and annual bonus for the year in which the change of control occurs.

Pursuant to the terms of the Agreement, on February 23, 2026, we granted Mr. Atkinson a stock option to purchase 740,597 shares of our common stock under the 2022 Plan. The stock option has an exercise price per share of $1.84 and vests in equal quarterly installments over a period of four years commencing on February 23, 2026.

**Executive Bonus Plan**

On April 22, 2022, our Board of Directors approved a bonus plan for our executive officers. Under the plan, our executive officers are eligible to receive a cash bonus, stock options, and stock grants based on our earnings before interest, taxes, depreciation and amortization ("EBITDA") for the applicable fiscal year. The value of the cash bonus and number of shares of stock underlying stock options and stock grants increases as the ratio of EBITDA to net sales increases.

**Director Compensation** 

The following table sets forth all compensation earned or paid to our directors who served during all or a portion of the year ended December 31, 2025.

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| | | | | |
|:---|:---|:---|:---|:---|
| Name | Fees Earned <br> or Paid in <br> Cash ($) | Stock <br> Awards ($) <sup>(1)</sup> | Option <br> Awards ($) <sup>(1)</sup> | Total ($) |
| Harvey Judkowitz | 34250 | 21000 | 25000 | 80250 |
| Gary Atkinson | -0- | -0- | -0- | 0 |
| Ajesh Kapoor <sup>(2)</sup> | -0- | -0- | -0- | 0 |
| Bernardo Melo | -0- | 42000 | 25000 | 67000 |
| Scott Thorn <sup>(3)</sup> | 9750 | 42000 | 25000 | 76750 |
| Kapil Gupta <sup>(3)</sup> | 9250 | 42000 | 25000 | 76250 |
| Mathieu Peloquin <sup>(3)</sup> | 19000 | -0- | -0- | 19000 |
| Jay Foreman <sup>(4)</sup> | 20500 | -0- | -0- | 20500 |
| Joe Kling <sup>(5)</sup> | 19500 | -0- | -0- | 19500 |

---

(1) Represents the grant date fair value of the awards calculated in accordance with ASC Topic 718, *Compensation – Stock Compensation*. A summary of the assumptions made in the valuation of these awards is provided in our consolidated financial statements beginning on page F-1 of this report.

<sup>(2)</sup> Mr. Kapoor was appointed to our board of directors on May 19, 2025.

<sup>(3)</sup> Messrs. Thorn and Gupta were appointed to our board of directors on October 6, 2025, and Mr. Peloquin resigned from our board of directors on October 6, 2025.

<sup>(4)</sup> Mr. Foreman resigned from our board of directors on November 14, 2025.

<sup>(5)</sup> Mr. Kling resigned from our board of directors on August 21, 2025.

Prior to May 28, 2025, we compensated the non-employee members of our board of directors as follows:

● An annual cash payment of $15,000 for each completed full year of service or prorated for a partial year.

● An annual stock grant of stock equivalent in value to $10,000 for each completed full year of service or prorated for a partial year. The stock price at grant will be determined at the closing price on the day of the annual stockholder meeting.

● A $1,000 fee for each board meeting and annual meeting attended. Committee meetings and telephone board meetings will be compensated for with a $500 fee.

● All expenses are reimbursed for attending board, committee and annual meetings or when their presence at a location away from home is requested.

On May 28, 2025, our board of directors approved a new director compensation policy pursuant to which we compensate the non-employee members of our board of directors as follows:

● An annual cash retainer of $25,000, payable in quarterly installments on the first day of each quarter in advance of service for such quarter.

● An annual grant of a restricted stock award with a value at the time of issuance of $25,000.

● An annual grant of a stock option with a value at the time of issuance of $25,000.

● An annual cash retainer of $5,000 for each committee of the board of directors upon which the board member serves, payable in quarterly installments on the first day of each quarter in advance of service for such quarter.

● An initial grant of a stock option with a value at the time of issuance of $25,000 for each individual who becomes a non-employee director due to either: (i) the initial appointment or election to the board of directors, or (ii) a change in status that the board of directors determines results in a previously ineligible director qualifying as a non-employee director.

● All expenses are reimbursed for attending board, committee and annual meetings or when their presence at a location away from home is requested.

On February 23, 2026, our board of directors amended the director compensation policy to provide that, with respect to the annual grants of a restricted stock award and a stock option each having a value at the time of issuance of $25,000, non-employee directors would instead be given an annual grant of equity having a value at the time of issuance of $50,000 and that they would have the right to choose what amount, if any, they would like to receive in the form of a restricted stock award and/or a stock option.

**401(k) Plan** 

Effective January 1, 2001, we adopted a voluntary 401(k) plan. All employees with at least 90 days of service are eligible to participate in our 401(k) plan. We make a matching contribution of 100% of the first three percent of salary deferral contributions, plus 50% of the next two percent of salary deferral contributions, for each payroll period. The matching contributions that we make are vested in full immediately.

**Clawback Policy**

Our Board has adopted a clawback policy relating to recovery of erroneously awarded compensation that complies with the Nasdaq clawback rules which are required by SEC Rule 10D-1. Under this policy, in the event that we are required to prepare an accounting restatement of our financial statements due to our material noncompliance with any financial reporting requirement under the securities laws, the policy requires that the administrator of the policy, to the extent legally permitted and pursuant to the terms of the policy, recover from current and former Section 16 officers any incentive-based compensation, as defined in Nasdaq's clawback rules, received by such officers that exceeds the amount of incentive-based compensation that otherwise would have been received had such incentive based compensation been determined according to the applicable accounting restatement. A copy of our clawback policy is attached hereto as Exhibit 97.

**Policies and Practices related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information** 

We have a strict policy of not granting securities to our executive officers, directors and employees when material nonpublic information is known or a material transaction is anticipated to occur.

The timing of equity award grants is determined with consideration to a variety of factors, including but not limited to, the achievement of pre-established performance targets, market conditions and internal milestones. We do not follow a predetermined schedule for the granting of equity awards. Instead, each grant is considered on a case-by-case basis to align with our strategic objectives and to ensure the competitiveness of our compensation packages.

In determining the timing and terms of an equity award, our board of directors and compensation committee consider material nonpublic information to ensure that such grants are made in compliance with applicable laws and regulations. Procedures utilized by our board of directors and compensation committee to prevent the improper use of material nonpublic information in connection with the granting of equity awards include consultation with legal counsel and, where appropriate, the delay of the grant of applicable equity awards until the public disclosure of such material nonpublic information has been completed.

We are committed to maintaining transparency in our executive compensation practices and to making equity awards in a manner that is not influenced by the timing of the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. We regularly review our policies and practices related to equity awards to ensure that they meet the evolving standards of corporate governance and continue to serve the best interests of us and our stockholders.

During the year ended December 31, 2025, no securities were granted to our named executive officers within four business days prior to, or one business day following, the filing or furnishing of a periodic or current report by us that disclosed material nonpublic information.

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.**

The following table and the notes thereto set forth, as of March 27, 2026, certain information with respect to the beneficial ownership of: (i) each of our named executive officers, (ii) each of our directors, (iii) each of our named executive officers and directors as a group, and (iv) each person or group that is known to us to be the beneficial owner of more than five percent of our common stock. This table is based upon information supplied by our officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Where information regarding stockholders is based on Schedules 13D and 13G, the number of shares owned is as of the date for which information was provided in such schedules.

The beneficial owners and number of securities beneficially owned have been determined in accordance with Rule 13d-3 under the Exchange Act and, in accordance therewith, includes all shares of our common stock that may be acquired by such beneficial owners within 60 days of March 27, 2026 upon the exercise or conversion of any options, warrants or other convertible securities. Unless otherwise indicated and subject to community property laws where applicable, we believe that each person or entity named below has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by that person or entity, subject to the matters set forth in the footnotes to the table below, and has an address of c/o Algorhythm Holdings, Inc., 6301 NW 5<sup>th</sup> Way, Suite 2900, Fort Lauderdale, FL 33309.

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| | | |
|:---|:---|:---|
| <br>Name and Address of Beneficial Owner | <br>Amount and Nature<br> of Beneficial<br> Ownership <sup>(1)</sup> | <br>Percentage<br> of Class |
| Gary Atkinson <sup>(2)</sup> | 46447 | \* |
| Alex Andre <sup>(3)</sup> | 45873 | \* |
| Bernardo Melo <sup>(4)</sup> | 29635 | \* |
| Harvey Judkowitz <sup>(5)</sup> | 31156 | \* |
| Ajesh Kapoor | 128762 | \* |
| Scott Thorn <sup>(6)</sup> | 29298 | \* |
| Kapil Gupta <sup>(7)</sup> | 29298 | \* |
| All officers and directors as a group (7 persons) | 340469 | 2.3% |

---

\* Less than one percent.

<sup>(1)</sup> This table has been prepared based on 14,651,665 shares of our common stock outstanding on March 27, 2026.

<sup>(2)</sup> Includes 46,388 shares of common stock underlying stock options issued under the 2022 Plan.

<sup>(3)</sup> Includes a restricted stock award for 23,818 shares of common stock for which Mr. Andre holds the voting rights and 22,055 shares of common stock underlying stock options, all of which were issued under the 2022 Plan.

<sup>(4)</sup> Includes a restricted stock award for 9,766 shares of common stock for which Mr. Melo holds the voting rights and 19,768 shares of common stock underlying stock options, all of which were issued under the 2022 Plan.

<sup>(5)</sup> Includes a restricted stock award for 9,766 shares of common stock for which Mr. Judkowitz holds the voting rights and 9,795 shares of common stock underlying stock options, all of which were issued under the 2022 Plan.

<sup>(6)</sup> Includes a restricted stock award for 9,766 shares of common stock for which Mr. Thorn holds the voting rights and 19,532 shares of common stock underlying stock options, all of which were issued under the 2022 Plan.

<sup>(7)</sup> Includes a restricted stock award for 9,766 shares of common stock for which Mr. Gupta holds the voting rights and 19,532 shares of common stock underlying stock options, all of which were issued under the 2022 Plan.

**2022 Equity Incentive Plan**

On April 12, 2022, our board of directors approved The Singing Machine Company, Inc. 2022 Equity Incentive Plan. The plan provides for the issuance of equity incentive awards, such as stock options, stock appreciation rights, stock awards, restricted stock, stock units, performance awards and other stock or cash-based awards, to our employees, officers, directors, consultants, agents, advisors, and independent contractors.

The number of shares of common stock that was initially available for issuance under the plan was 1,167 shares of common stock. On the first day of each of our fiscal years thereafter, this number is increased by the lesser of: (i) five percent of the number of shares of our common stock that were outstanding on the last day of our immediately preceding fiscal year, calculated on a fully diluted, (ii) 167 shares, and (iii) such lesser number as our board of directors may determine. Any shares of common stock underlying awards that lapse, terminate, expire prior to exercise, are canceled or are forfeited are added to the number of shares of commons stock available for issuance under the plan.

On November 20, 2025, the plan was amended to provide that the number of shares of common stock available for issuance under the plan is 5,000,000 and that, commencing January 1, 2025, on the first day of each of our fiscal years thereafter, this number will be increased by the lesser of: (i) 15% of the outstanding common stock on a fully diluted basis as of the end of our immediately preceding fiscal year, or (ii) an amount determined by the board of directors, provided that any shares from any such increases in previous years that are not actually issued shall continue to be available for issuance under the plan.

Accordingly, as of December 31, 2025, there were 5,000,000 shares of common stock authorized for issuance under the plan. Of this amount, awards representing 283,666 shares of common stock were outstanding as of December 31, 2025 and 4,716,334 shares remained available for issuance as of December 31, 2025. On January 1, 2026, the number of shares available for issuance under the plan increased to 5,750,000 in accordance with the terms of the plan.

The following table summarizes our equity compensation plan information as of December 31, 2025.

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| | | | |
|:---|:---|:---|:---|
| Plan Category | Number of<br> securities to be<br> issued upon<br> exercise of<br> outstanding<br> options, warrants<br> and rights <br>(a) | Weighted- <br>average exercise<br> price of<br> outstanding<br> options, warrants<br> and rights <br>(b) | Number of <br>securities <br>remaining <br>available for <br>future issuance <br>under equity<br> compensation <br>plans (excluding securities reflected in column <br> (a)) (c) |
| Equity compensation plans approved by security holders: | 1319229 | $10 | 4716334 |
| Equity compensation plans not approved by security holders: | N/A | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Total | 1319229 | $10 | 4716334 |

---

**Item 13. Certain Relationships and Related Transactions, and Director Independence.**

A transaction may be a related person transaction if any of our directors, executive officers, owners of more than five percent of our common stock, or their immediate family were involved in a transaction in which we were or are to be a participant, and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at the end of our last two completed fiscal years. We engaged in the following related persons transactions since the beginning of our last fiscal year.

**Regalia Ventures Stock Transactions**

On November 20, 2023, we entered into a stock purchase agreement with Regalia Ventures pursuant to which we sold 5,495 shares of our common stock to Regalia Ventures at a purchase price of $182 per share. Net proceeds from the transaction were approximately $950,000, net of transaction fees of approximately $50,000. On November 1, 2024, we entered into a stock repurchase agreement with Regalia Ventures pursuant to which we agreed to repurchase the 5,495 shares for $472,527. On February 18, 2025, the date of the closing of the transaction, we issued a promissory note to Regalia Ventures in the amount of $472,527. On February 27, 2025, we paid off the note in full. Regalia Ventures is owned and controlled by Jay B. Foreman, who served as a member of our board of directors until November 14, 2025.

**Stingray Group Stock Transactions**

On November 20, 2023, we entered into a stock purchase agreement with Stingray Group pursuant to which we sold 5,495 shares of our common stock to Stingray Group at a purchase price of $182 per share. Net proceeds from the transaction were approximately $950,000, net of transaction fees of approximately $50,000. On December 3, 2024, we entered into a stock repurchase agreement with Stingray Group pursuant to which we agreed to repurchase the 5,495 shares for $285,714. We agreed to issue a promissory note to Stingray Group in the principal amount of the purchase price of the shares at the closing of the transaction. On February 18, 2025, the date of the closing of the transaction, we issued a promissory note to Stingray Group in the amount of $285,714. On April 3, 2025, we paid off the note in full. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of our board of directors until October 6, 2025.

**Stingray Holdings Music Subscription Agreement**

We have a music subscription sharing agreement with Stingray Group under which we generated music subscription revenue of $64,000 and $780,000 during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, we had $0 and $212,000, respectively, due from Stingray Group for music subscription reimbursement. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of our board of directors until October 6, 2025. This revenue was included in net loss from discontinued operations on our consolidated statements of operations for the years ended December 31, 2025 and 2024, and the accounts receivable was included in current assets of discontinued operations in our consolidated balance sheets as of December 31, 2024.

**SMCB**

*VIE Analysis*

We determined that SMCB, which was a subsidiary of SemiCab, Inc. until SemiCab Holdings acquired it on May 2, 2025, was a VIE as we provided financial support to SMCB. While not contractually obligated, SMCB relied on our reimbursement of certain costs under a intercompany services agreement ("MSA") whereby SMCB agreed to provide IT software development services to us. In exchange, under the MSA, we granted intellectual property rights to SMCB to use the software platform in India. Compensation for services is invoiced and paid on a monthly or quarterly basis as agreed by both parties, with rates subject to periodic review and revision. The agreement is for a term of two years ending on April 1, 2025 and automatically renews for additional 12-month periods unless prior notice is given by the terminating party. The agreement automatically renewed for an additional 12-month period on April 1, 2025. As a result of this relationship and the financial support provided by us under the loan agreement described below, SMCB has been determined to be a VIE prior to May 2, 2025.

We further determined that were are not the primary beneficiary of SMCB because we did not have the power to direct or control SMCB's significant activities related to its business prior to May 2, 2025. Accordingly, we have not consolidated SMCB's results of operations and financial position prior to May 2, 2025 in our consolidated financial statements.

Pursuant to the terms of the asset purchase agreement that we entered into on June 11, 2024, we entered into an option agreement that granted SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB for 1,605 shares of our common stock. We did not exercise this right and the option agreement expired on August 31, 2024.

*Loan Agreement*

We are a party to a loan agreement with SMCB dated March 22, 2024. Under the loan agreement, we agreed to loan up to $2,500,000 to SMCB. The loans are anticipated to be made in tranches. Disbursements of any tranches are fully at our discretion. Each tranche has a repayment period of five years. The loans can be repaid at any time prior to the five- year maturity date without penalty. Interest on the loans accrues at a rate of six percent per year and is payable quarterly.

At December 31, 2024, a total of $1,140,000 was outstanding under the loan agreement. During the period beginning January 1, 2025 and ending May 2, 2025, the date we acquired 99.99% of the equity shares of SMCB, we made advances to SMCB in the amount of $1,172,000. During the same period, SMCB charged $304,000 for services to us that were performed under the MSA, which charges offset amounts due under the loan with SMCB. As a result, as of May 2, 2025, a total of $2,008,000 of loans were outstanding under the loan agreement, and a total of $492,000 remained available for future borrowings under the loan agreement as of May 2, 2025. As of May 2, 2025, SMCB had not made any interest payments due under the loan agreement. As a result, the loans were in default as of May 2, 2025.

On May 2, 2025, the loan payable of $2,008,000 of SMCB and our loan receivable of $2,008,000 were eliminated in consolidation. As a result, no such loans payable and loans receivable were outstanding on our condensed consolidated balance sheet at June 30, 2025. Also on May 2, 2025, revenue generated by SMCB for services performed by SMCB under the MSA of $304,000 and expenses for us for services performed by SMCB under the MSA of $304,000 during the period commencing January 1, 2025 and ending May 2, 2025 were eliminated in consolidation on May 2, 2025. As a result, no such revenue and expenses were reflected on our consolidated statements of operations for the years ended December 31, 2025 and 2024.

**Sale of Singing Machine to Stingray USA**

On August 1, 2025, we entered into an asset purchase agreement with Stingray USA, a related party and subsidiary of the Stingray Group, pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with our Singing Machine business for $500,000. The transaction closed on August 1, 2025. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of our board of directors until October 6, 2025. The gain on sale that we recognized in connection with the completion of this transaction was included in net gain (loss) from discontinued operations on our consolidated statements of operations for the years ended December 31, 2025 and 2024.

**Review, Approval or Ratification of Transactions With Related Persons**

We believe that the terms of all of our transactions with related parties are commercially reasonable and no less favorable to us than we could have obtained from an unaffiliated third party. Our audit committee is charged with the responsibility to review, approve and oversee any transaction between us and any related parties and to develop policies and procedures for the audit committee's approval of related-party transactions. While we do not maintain a formal written policy with respect to related-party transactions, our audit committee and board of directors routinely review potential transactions that we have identified as related parties prior to the consummation of the transaction to ensure that the transaction is commercially reasonable and reflects market terms. Each transaction is reviewed to determine that a related party transaction is entered into by us with the related party pursuant to normal competitive negotiation and on terms no more favorable than with an unrelated third party. We also generally require, unless prohibited by law, that all related parties recuse themselves from negotiating and voting on behalf of us in connection with proposed transactions to which they would be a party.

**Item 14. Principal Accountant Fees and Services.**

**Fees and Services**

M&K CPAs PLLC has served as our independent registered public accounting firm since October 6, 2025. Berkowitz Pollack Brant, Advisors + CPAs served as our independent registered public accounting firm for the period commencing June 2, 2025, and ending October 6, 2025. CBIZ CPAs P.C. served as our independent registered public accounting firm for the period commencing April 25, 2025, and ending June 2, 2025. Marcum LLP served as our independent registered public accounting firm for the year ended December 31, 2024 and continuing through April 25, 2025. We paid audit fees of $32,000 to M&K CPAS PLLC for services performed during the year ended December 31, 2025. We paid audit fees of $25,000 to Berkowitz Pollack Brant, Advisors + CPAs for services performed during the year ended December 31, 2025. We paid audit fees of $37,000 to CBIZ CPAs P.C. for services performed during the year ended December 31, 2025. We paid audit fees of $50,000 and $483,000 to Marcum LLP for services performed during the years ended December 31, 2025 and 2024, respectively.

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| | | |
|:---|:---|:---|
| Fees | 2025 | 2024 |
| Audit fees | $144000 | $483000 |
| Audit-related fees | -0- | -0- |
| Tax fees | -0- | -0- |
| All other fees | -0- | -0- |
| Total fees | $144000 | $483000 |

---

Audit fees consist of fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual consolidated financial statements, the review of our interim consolidated financial statements included in our quarterly reports, the review of our registration statements and services that are normally provided by our principal accountant in connection with statutory and regulatory filings or engagements.

**Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors** 

Our Audit Committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the auditors in accordance with this pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

**PART IV**

**Item 15. Exhibits, Financial Statement Schedules.**

**Financial Statements**

The following consolidated financial statements and reports of our independent registered public accounting firms are filed as part of this report and incorporated by reference in *Item 8. Financial Statements and Supplementary Data* of this report:

● [Report of Independent Registered Public Accounting Firm](#fin_001) (PCAOB ID: 2738).

● [Report of Independent Registered Public Accounting Firm](#fin_002) (PCAOB ID: 688).

● [Consolidated Balance Sheets at December 31, 2025 and 2024.](#fin_003)

● [Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024.](#fin_004)

● [Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 2025 and 2024.](#fin_005)

● [Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024.](#Y-001)

● [Notes to Consolidated Financial Statements.](#Y-002)

**Financial Statement Schedules**

All financial statement schedules have been omitted because the required information is either not applicable or has been presented in the consolidated financial statements.

**Exhibits**

The documents set forth below are filed as exhibits to this report. Where so indicated, exhibits that were previously filed with the SEC are incorporated by reference herein.

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| | |
|:---|:---|
| Exhibit No. | Description |
| 2.1 | [Asset Purchase Agreement, dated June 11, 2024, by and among Algorhythm Holdings, Inc., SemiCab, Inc. and SemiCab Holdings, LLC (incorporated by reference to Exhibit 2.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 12, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224023543/ex2-1.htm) |
| 2.2 | [Amendment No. 1 to Asset Purchase Agreement dated July 1, 2024, by and among Algorhythm Holdings, Inc., SemiCab, Inc. and SemiCab Holdings LLC (incorporated by reference to Exhibit 2.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on July 5, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224026286/ex2-2.htm) |
| 3.1 | [Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on February 15, 1994 and amendments through April 14, 1999 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.'s Registration Statement on Form SB-2 filed with the SEC on March 7, 2000).](https://www.sec.gov/Archives/edgar/data/923601/000095011600000456/0000950116-00-000456.txt) |
| 3.2 | [Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on September 29, 2000 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.'s Quarterly Report on Form 10-QSB for the period ended September 30, 1999 filed with the SEC on November 14, 2000).](https://www.sec.gov/Archives/edgar/data/923601/000111650200500092/0001116502-00-500092-0002.txt) |
| 3.3 | [Corrected Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on March 27, 2001 (incorporated by reference to Exhibit 3.13 in Algorhythm Holdings, Inc.'s Registration Statement on Form SB-2 filed with the SEC on April 11, 2001).](https://www.sec.gov/Archives/edgar/data/923601/000111650201500229/ex3-13.txt) |
| 3.4 | [Corrected Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on April 4, 2001 (incorporated by referenced to Exhibit 3.12 in Algorhythm Holdings, Inc.'s Registration Statement on Form SB-2 filed with the SEC on April 11, 2001).](https://www.sec.gov/Archives/edgar/data/923601/000111650201500229/ex3-12.txt) |
| 3.5 | [Certificate of Correction to Corrected Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on April 20, 2001 (incorporated by reference to Algorhythm Holdings, Inc.'s Transition Report on Form 10-KT filed with the SEC on July 14, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222019311/ex3-5.htm) |
| 3.6 | [Certificate of Amendment to the Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on January 27, 2006 (incorporated by reference to Algorhythm Holdings, Inc.'s Transition Report on Form 10-KT filed with the SEC on July 14, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222019311/ex3-6.htm) |
| 3.7 | [Certificate for Renewal and Revival of Charter of Algorhythm Holdings, Inc. filed with Delaware Secretary of State on September 25, 2012 (incorporated by reference to Algorhythm Holdings, Inc.'s Transition Report on Form 10-KT filed with the SEC on July 14, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222019311/ex3-7.htm) |
| 3.8 | [Certificate of Amendment of Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on May 19, 2022 (incorporated by reference to Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 25, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222015079/ex3-1.htm) |
| 3.9 | [Amended By-Laws of Algorhythm Holdings, Inc. (incorporated by reference to Exhibit 3.14 in Algorhythm Holdings, Inc.'s Transition Report on Form 10-KTSB for the year ended March 31, 2001 filed with the SEC on June 29, 2001).](https://www.sec.gov/Archives/edgar/data/923601/000111650201500685/ex3-14.txt) |

---

---

| | |
|:---|:---|
| 3.10 | [Certificate of Amendment of Certificate of Incorporation of Algorhythm Holdings, Inc. dated August 27, 2024 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on September 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224035205/ex3-1.htm) |
| 3.11 | [Amendment No. 1 to Amended By-laws of Algorhythm Holdings, Inc., effective October 18, 2024 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on October 21, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224041797/ex3-1.htm) |
| 3.12 | [Certificate of Amendment to the Certificate of Incorporation of Algorhythm Holdings, Inc. filed with the Delaware Secretary of State on January 14, 2025 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on January 17, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225002838/ex3-1.htm) |
| 4.1 | [Description of Securities (incorporated by reference to Algorhythm Holdings, Inc.'s Transition Report on Form 10-KT filed with the SEC on July 14, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222019311/ex4-1.htm) |
| 10.1 | [Lease, dated July 31, 2011, by and between Algorhythm Holdings, Inc. and Lakeside IV, LLC (incorporated by reference to Algorhythm Holdings, Inc.'s Current Report on Form 10-KT filed with the SEC on June 29, 2011).](https://www.sec.gov/Archives/edgar/data/923601/000149315219009954/ex10-8.htm) |
| 10.2+ | [The Singing Machine 2022 Equity Incentive Plan (incorporated by reference to Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on April 18, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222010244/ex10-1.htm) |
| 10.3 | [Form of Indemnification Agreement to be entered into with Algorhythm Holdings, Inc. and each of its officers and directors (incorporated by reference to Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 27, 2022).](https://www.sec.gov/Archives/edgar/data/923601/000149315222015375/ex10-1.htm) |

---

10.4 [Loan Agreement, dated March 28, 2024, by and between Algorhythm Holdings, Inc. and Oxford Commercial Finance (incorporated by reference to Exhibit 10.1 in the Company's Current Report on Form 8-K filed with the SEC on April 3, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224013045/ex10-1.htm)

10.5 [Revolving Credit Note, dated March 28, 2024, issued by Algorhythm Holdings, Inc. in favor of Oxford Commercial Finance (incorporated by reference to Exhibit 10.2 in the Company's Current Report on Form 8-K filed with the SEC on April 3, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224013045/ex10-2.htm)

10.6 [Security Agreement, dated March 28, 2024, by and between Algorhythm Holdings, Inc. and Oxford Commercial Finance (incorporated by reference to Exhibit 10.3 in the Company's Current Report on Form 8-K filed with the SEC on April 3, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224013045/ex10-3.htm)

10.7 [Operating Agreement, dated July 3, 2024, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC and SemiCab, Inc. (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 12, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224023543/ex10-1.htm)

10.8 [At-The-Market Issuance Sales Agreement, dated June 26, 2024, by and between Algorhythm Holdings, Inc. and Ascendiant Capital Markets, LLC (incorporated by reference to Exhibit 1.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 27, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224025467/ex1-1.htm)

10.9 [Amendment to At-The-Market Issuance Sales Agreement, dated July 8, 2024, by and between Algorhythm Holdings, Inc. and Ascendiant Capital Markets, LLC (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on July 9, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224026548/ex10-1.htm)

10.10 [Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 in the Company's Form 8-K filed with the SEC on October 24, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224042405/ex10-1.htm)

10.11 [Form of Original Issue Discount Senior Secured Note (incorporated by reference to Exhibit 10.2 in the Company's Form 8-K filed with the SEC on October 24, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224042405/ex10-2.htm)

---

| | |
|:---|:---|
| 10.12 | [Form of Guarantee (incorporated by reference to Exhibit 10.3 in the Company's Form 8-K filed with the SEC on October 24, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224042405/ex10-3.htm) |
| 10.13 | [Stock Repurchase Agreement, dated November 1, 2024, by and between Algorhythm Holdings, Inc. and Regalia Ventures, LLC (incorporated by reference to Exhibit 10.1 in the Company's Form 8-K filed with the SEC on November 7, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224044039/ex10-1.htm) |
| 10.14 | [Stock Repurchase Agreement, dated December 3, 2024, by and between Algorhythm Holdings, Inc. and Stingray Group, Inc. (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224049091/ex10-3.htm) |
| 10.15 | [Form of Series A Warrant, dated December 4, 2024 (incorporated by reference to Exhibit 4.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224049091/ex4-1.htm) |
| 10.16 | [Form of Series B Warrant, dated December 4, 2024 (incorporated by reference to Exhibit 4.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224049091/ex4-2.htm) |
| 10.17 | [Form of Pre-Funded Warrant, dated December 4, 2024 (incorporated by reference to Exhibit 4.3 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224049091/ex4-3.htm) |
| 10.18 | [Form of Securities Purchase Agreement, dated December 4, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224049091/ex10-1.htm) |
| 10.19 | [Placement Agency Agreement, dated December 4, 2024, between Algorhythm Holdings, Inc. and Univest Securities, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 6, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224049091/ex10-2.htm) |
| 10.20 | [Form of Securities Purchase Agreement dated December 17, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 18, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224050633/ex10-1.htm) |
| 10.21 | [Placement Agency Agreement, dated December 17, 2024, between Algorhythm Holdings, Inc. and Univest Securities, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 18, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224050633/ex10-2.htm) |
| 10.22+ | [Employment Agreement, dated February 12, 2025, between Algorhythm Holdings, Inc. and Alex Andre (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 18, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225007217/ex10-1.htm) |
| 10.23 | [Stock Option, dated February 13, 2025, issued by Algorhythm Holdings, Inc. to Alex Andre (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 18, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225007217/ex10-2.htm) |
| 10.24 | [Restricted Stock Award, dated February 13, 2025, issued by Algorhythm Holdings, Inc. to Alex Andre (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 18, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225007217/ex10-3.htm) |
| 10.25 | [Equity Purchase Agreement, dated May 2, 2025, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC and SemiCab, Inc. (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 8, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225009278/ex10-1.htm) |
| 10.26 | [Promissory Note, dated May 2, 2025, issued by Algorhythm Holdings, Inc. in favor of SemiCab, Inc. (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 8, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225009278/ex10-2.htm) |
| 10.27 | [Amended and Restated Limited Liability Company Agreement of SemiCab Holdings, LLC, dated May 2, 2025, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC, Ajesh Kapoor and Vivek Sehgal (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 8, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225009278/ex10-3.htm) |
| 10.28‡ | [Asset Purchase Agreement, dated August 1, 2025, by and among Algorhythm Holdings, Inc., The Singing Machine Company, Inc. and Stingray Music USA, Inc. (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on August 7, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225022621/ex10-1.htm) |
| 10.29 | [Securities Purchase Agreement, dated August 21, 2025, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on August 27, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-1.htm) |

---

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| | |
|:---|:---|
| 10.30 | [Secured Pre-Paid Purchase #1, dated August 21, 2025, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on August 27, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-2.htm) |
| 10.31 | [Security Agreement, dated August 21, 2025, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on August 27, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-3.htm) |
| 10.32 | [Guaranty, dated August 21, 2025, by and among SemiCab Holdings, LLC, SMCB Solutions Private Limited, and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.4 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on August 27, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-4.htm) |
| 10.33 | [Secured Pre-Paid Purchase #2, dated November 13, 2025, by and between Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.6 in Algorhythm Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on November 19, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225024305/ex10-6.htm) |
| 10.34 | [Deposit Account Control Agreement, dated November 13, 2025, by and among RIME Holdings, LLC, Lakeside Bank and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.7 in Algorhythm Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on November 19, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225024305/ex10-7.htm) |
| 10.35 | [Guaranty, dated November 13, 2025, issued by RIME Holdings, LLC for the benefit of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.8 in Algorhythm Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on November 19, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225024305/ex10-8.htm) |
| 10.36+ | [Amendment to the Algorhythm Holdings, Inc. 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on November 26, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225025167/ex10-1.htm) |
| 10.37 | [Secured Pre-Paid Purchase #3, dated December 19, 2025, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on December 29, 2025).](https://www.sec.gov/Archives/edgar/data/923601/000149315225029389/ex10-2.htm) |
| 10.38 | [Secured Pre-Paid Purchase #4, dated February 17, 2026, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 23, 2026).](https://www.sec.gov/Archives/edgar/data/923601/000149315226007763/ex10-2.htm) |
| 10.39 | [Guaranty, dated February 17, 2026, issued by RIME Holdings, LLC for the benefit of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.4 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 23, 2026).](https://www.sec.gov/Archives/edgar/data/923601/000149315226007763/ex10-4.htm) |
| 10.40+ | [Amended and Restated Employment Agreement, dated February 23, 2026, by and between Algorhythm Holdings, Inc. and Gary Atkinson (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 27, 2026).](https://www.sec.gov/Archives/edgar/data/923601/000149315226008357/ex10-1.htm) |
| 10.41 | [Stock Option, dated February 23, 2026, by and between Algorhythm Holdings, Inc. and Gary Atkinson (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on February 27, 2026).](https://www.sec.gov/Archives/edgar/data/923601/000149315226008357/ex10-2.htm) |
| 19.1\* | [Algorhythm Holdings, Inc. Insider Trading Policy](ex19-1.htm) |
| 21.1\* | [List of subsidiaries of Algorhythm Holdings, Inc.](ex21-1.htm) |
| 23.1\* | [Consent of M&K CPAS PLLC](ex23-1.htm)<br>|
| 23.2\* | [Consent of M&K CPAS PLLC](ex23-2.htm) |
| 23.3\* | [Consent of M&K CPAS PLLC](ex23-3.htm) |
| 23.4\* | [Consent of Marcum LLP](ex23-4.htm) |
| 31.1\* | [Certification of Gary Atkinson, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.](ex31-1.htm) |
| 31.2\* | [Certification of Alex Andre, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.](ex31-2.htm) |
| 32.1\*\* | [Certifying Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.](ex32-1.htm) |
| 32.2\*\* | [Certifying Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.](ex32-2.htm)<br>|
| 97 | [Algorhythm Holdings, Inc. Clawback Policy (incorporated by reference to Exhibit 97 in Algorhythm Holdings, Inc.'s Transition Report on Form 10-KT filed with the SEC on April 15, 2024).](https://www.sec.gov/Archives/edgar/data/923601/000149315224014674/ex97.htm)<br>|
| 101.INS | Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

\* Filed herewith

\*\* Furnished herewith

+ Compensatory plan or arrangement

‡ The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

**Item 16. Form 10-K Summary.**

None.

**SIGNATURES** 

In accordance with the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, Algorhythm Holdings, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

**ALGORHYTHM HOLDINGS, INC.**

---

| | | |
|:---|:---|:---|
| Date: April 1, 2026 | By: | */s/ Gary Atkinson* |
|  |  | Gary Atkinson |
|  |  | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
| Date: April 1, 2026 | By: | */s/ Alex Andre* |
|  |  | Alex Andre |
|  |  | Chief Financial Officer & General Counsel |
|  |  | (Principal Financial and Accounting Officer) |

---

In accordance with the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Algorhythm Holdings, Inc. and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| Signature | Title | Date |
| */s/ Gary Atkinson*  | Chief Executive Officer and Director  | April 1, 2026 |
| Gary Atkinson | (Principal Executive Officer) |  |
| */s/ Alex Andre* <br>| Chief Financial Officer and General Counsel | April 1, 2026 |
| Alex Andre | (Principal Financial Officer) |  |
| */s/ Harvey Judkowitz* <br>| Director | April 1, 2026 |
| Harvey Judkowitz |  |  |
| */s/ Bernardo Melo* <br>| Director | April 1, 2026 |
| Bernardo Melo |  |  |
| */s/ Ajesh Kapoor* <br>| Director | April 1, 2026 |
| Ajesh Kapoor |  |  |
| */s/ Scott Thorn* <br>| Director | April 1, 2026 |
| Scott Thorn |  |  |
| */s/ Kapil Gupta* <br>| Director | April 1, 2026 |
| Kapil Gupta |  |  |

---

**Algorhythm Holdings, Inc.**

**Index to Financial Statements**

---

| | |
|:---|:---|
|  | Page |
| [Report of Independent Registered Public Accounting Firm](#fin_001) (PCAOB ID: 2738) | F-2 |
| [Report of Independent Registered Public Accounting Firm](#fin_002) (PCAOB ID: 688) | F-3 |
| [Consolidated Balance Sheets at December 31, 2025 and 2024](#fin_003) | F-4 |
| [Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024](#fin_004) | F-5 |
| [Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2025 and 2024](#fin_005) | F-6 |
| [Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 2025 and 2024](#fin_006) | F-7 |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024](#Y-001) | F-8 |
| [Notes to Consolidated Financial Statements](#Y-002) | F-9 |

---

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Stockholders of Algorhythm Holdings, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of Algorhythm Holdings, Inc. (the Company) as of December 31, 2025, and the related consolidated statements of operations, comprehensive loss, shareholders' deficit, and cash flows for the year ended December 31, 2025 and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements of Algorhythm Holdings, Inc. as of December 31, 2024 were audited by other auditors whose report dated April 15, 2025 expressed an unqualified opinion on those statements.

We also have audited the adjustments to the 2024 consolidated financial statements to retrospectively apply the discontinued operations reclassifications related to the disposition of the Singing Machine business, as described in Notes 19, and the retrospective adjustments to share and per share data as a result of the reverse stock split, as described in Note 11 as well as the change to the segment information described in Note 15 as a result of the discontinued operations. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 consolidated financial statements taken as a whole.

**Going Concern**

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company suffered a net loss from operations and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audit provides a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated, or required to be communicated, to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Going Concern*

 

Due to the net loss for the year, the Company evaluated the need for a going concern.

Auditing management's evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.

As discussed in Note 3, the Company suffered a net loss from operations and has an accumulated deficit for the year ended December 31, 2025.

To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management's plans to mitigate the going concern and management's disclosure on going concern.

/s/M&K CPAS, PLLC

We have served as the Company's auditor since 2025

The Woodlands, TX

April 1, 2026

**Report of Independent Registered Public Accounting Firm**

To the Shareholders and Board of Directors of

Algorhythm Holdings, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of Algorhythm Holdings, Inc. (the "Company") as of December 31, 2024, the related consolidated statements of operations, shareholders' deficit, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements, before the effects of the adjustments to retrospectively adjust share and per share amounts for the reverse split as described in Note 1, and to reclassify the operations of the sold Singing Machine business as discontinued operations as described in Notes 2 and 19 and segment information as described in Note 15, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively adjust share and per share amounts for the reverse split as described in Note 1, and to reclassify the operations of the sold Singing Machine business as discontinued operations as described in Notes 2 and 19 and segment information as described in Note 15, and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by M&K CPAs, PLLC.

**Explanatory Paragraph – Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum llp

We have served as the Company's auditor from 2023 through April 2025.

Philadelphia, Pennsylvania

April 15, 2025

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2024** |
| **<u>Assets</u>** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $1632000 | $7233000 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 4514000 |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $113,000 and $127,000, respectively | 1061000 | 121000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, related party |  | 701000 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 729000 | 59000 |
| &nbsp;&nbsp;&nbsp;Current assets of discontinued operations | - | 8649000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets** | 7936000 | 16763000 |
| **Property and equipment, net** | 22000 | 2000 |
| **Other non-current assets** | 79000 |  |
| **Intangible assets, net** | 2005000 | 345000 |
| **Goodwill** | 2682000 | 786000 |
| **Non-current assets of discontinued operations** | - | 406000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $12724000 | $18302000 |
| **<u>Liabilities and Shareholders' Equity</u>** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $1413000 | $387000 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 1556000 | 1746000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 69000 |  |
| &nbsp;&nbsp;&nbsp;Warrant liability |  | 16603000 |
| &nbsp;&nbsp;&nbsp;Promissory notes payable, net | 9102000 | 50000 |
| &nbsp;&nbsp;&nbsp;Current portion of notes payable to related parties | 2300000 | 265000 |
| &nbsp;&nbsp;&nbsp;Current liabilities of discontinued operations | - | 9387000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities** | 14440000 | 28438000 |
| **Long-term provision for employee benefits** | 144000 |  |
| **Notes payable to related parties, net of current portion** | - | 385000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | 14584000 | 28823000 |
| **Commitments and Contingencies** |  |  |
| **Shareholders' Equity (Deficit)** |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding at December 31, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.01 par value; 800,000,000 and 100,000,000 shares authorized; 3,414,542 and 470,825 shares issued and outstanding at December 31, 2025 and December 31, 2024 | 35000 | 5000 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 65674000 | 39682000 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (25000) |  |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (65043000) | (49172000) |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | (1743000) | (1036000) |
| &nbsp;&nbsp;&nbsp;Treasury stock, 10,990 and -0- shares reserved at December 31, 2025 and December 31, 2024 | (758000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Shareholders' Deficit** | (1860000) | (10521000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Shareholders' Deficit** | $12724000 | $18302000 |

---

***See notes to the consolidated financial statements***

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| **Net Sales** | $4391000 | $297000 |
| **Cost of Sales** | 5706000 | 491000 |
| **Gross Loss** | (1315000) | (194000) |
| **Operating Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 4000 |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 6629000 | 4656000 |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill | - | 3592000 |
| **Total Operating Expenses** | 6633000 | 8248000 |
| **Loss From Operations** | (7948000) | (8442000) |
| **Other Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | (6468000) | 334000 |
| &nbsp;&nbsp;&nbsp;Loss on issuance of warrants |  | (8889000) |
| &nbsp;&nbsp;&nbsp;Interest expense, net | (747000) | (1887000) |
| **Total Other Expenses** | (7215000) | (10442000) |
| **Loss From Continuing Operations Before Income Tax** | (15163000) | (18884000) |
| Income tax loss attributable to continuing operations | (47000) | - |
| **Net Loss From Continuing Operations** | (15210000) | (18884000) |
| Net loss from discontinued operations | (1362000) | (5483000) |
| **Net Loss** | (16572000) | (24367000) |
| Net loss attributable to non-controlling interest | 701000 | 1110000 |
| **Net Loss Available to Common Shareholders** | $(15871000) | $(23257000) |
| **Loss Per Common Share** |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted from continuing operations | $(5.86) | $(270.44) |
| &nbsp;&nbsp;&nbsp;Basic and diluted from discontinued operations | (0.55) | (83.43) |
| &nbsp;&nbsp;&nbsp;Basic and diluted | $(6.41) | $(353.87) |
| **Weighted Average Common and Common** |  |  |
| **Equivalent Shares:** |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | 2475293 | 65722 |

---

***See notes to the consolidated financial statements***

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| **Net Loss** | $(16572000) | $(24367000) |
| Other comprehensive loss |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (31000) | - |
| **Total Comprehensive Loss** | (16603000) | (24367000) |
| Total comprehensive loss attributable to non-controlling interest | 707000 | - |
| **Total Comprehensive Loss Available to Common Shareholders** | $(15896000) | $(24367000) |

---

***See notes to the consolidated financial statements***

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT**

**For the Year Ended December 31, 2025 and 2024**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | | |
|  | **Shares** | **Amount** | **Additional<br>Paid-in**<br> **Capital** | **Treasury**<br>**Stock** | **Accumulated Other Comprehensive**<br> **Loss** | **Accumulated**<br>**Deficit** | **Non-Controlling**<br>**Interest** |<br>**Total** |
| **Balance at December 31, 2023** | **32090** | $**-** | $**&nbsp;&nbsp;&nbsp;&nbsp;33493000** | $- | $- | $**(25915000)** | $- | $**7578000** |
| Net loss |  |  |  |  |  | (23257000) | (1110000) | (24367000) |
| Sale of common stock and pre-funded warrants, net of offering costs | 418927 | 4000 | 4881000 |  |  |  |  | 4885000 |
| Stock based compensation | 5099 |  | 630000 |  |  |  |  | 630000 |
| Common stock issued for purchase of SemiCab, Inc. | 3209 |  | 494000 |  |  |  |  | 494000 |
| Subsidiary interests issued for purchase of SemiCab, Inc. |  |  |  |  |  |  | 74000 | 74000 |
| Repurchase of common stock - related parties |  |  | (758000) |  |  |  |  | (758000) |
| Issuance of common stock with debt | 11500 | 1000 | 942000 | - | - | - | - | 943000 |
| **Balance at December 31, 2024** | **470825** | $**5000** | $**39682000** | $**-** | $**-** | $**(49172000)** | $**(1036000)** | $**(10521000)** |
| Net loss |  |  |  |  |  | (15871000) | (701000) | (16572000) |
| Foreign currency translation adjustment |  |  |  |  | (25000) |  | (6000) | (31000) |
| Exercise of Series B warrants | 1910975 | 19000 | 15195000 |  |  |  |  | 15214000 |
| Stock-based compensation | 186701 | 3000 | 431000 |  |  |  |  | 434000 |
| Reclassification of Series A warrants to equity |  |  | 7857000 |  |  |  |  | 7857000 |
| Capital contribution |  |  | 439000 |  |  |  |  | 439000 |
| Common stock issued for acquisition of SMCB | 119742 | 1000 | 315000 |  |  |  |  | 316000 |
| Repurchase of common stock from related parties | (10990) |  | 758000 | (758000) |  |  |  |  |
| Common stock issued as commitment fee | 95694 | 1000 | 190000 |  |  |  |  | 191000 |
| Common stock issued upon settlement of prepaid purchases | 505671 | 5000 | 670000 |  |  |  |  | 675000 |
| Conversion of promissory note payable into common stock | 135723 | 1000 | 137000 |  |  |  |  | 138000 |
| Other | 201 | - | - | - | - | - | - | - |
| **Balance at December 31, 2025** | **3414542** | $**35000** | $**65674000** | $**(758000)** | $**(25000)** | $**(65043000)** | $**(1743000)** | $**(1860000)** |

---

***See notes to the consolidated financial statements***

 ****

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss from continuing operations | $(15210000) | $(18884000) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net foreign currency translation adjustment | (31000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization of property and equipment and intangible assets | 249000 | 30000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount and issuance cost | 212000 | 1520000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reduction in SMCB loan in exchange for services | 304000 | 637000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on allowance for credit loss |  | 439000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill from purchase of SemiCab,Inc. |  | 3592000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | 6468000 | (334000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on issuance of warrants |  | 8889000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 434000 | 630000 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (621000) | 72000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (293000) | (46000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | 49000 | 14000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 654000 | (345000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 263000 | (199000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 69000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for employee benefits | 144000 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities attributable to continuing operations | (7309000) | (3985000) |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (14000) |  |
| &nbsp;&nbsp;&nbsp;Capitalization of internal use software costs | (419000) |  |
| &nbsp;&nbsp;&nbsp;Repurchase of shares of common stock | (758000) |  |
| &nbsp;&nbsp;&nbsp;Pre-acquistion advances to SemiCab, Inc. |  | (415000) |
| &nbsp;&nbsp;&nbsp;Cash received from acquisition of SemiCab, Inc. assets |  | 17000 |
| &nbsp;&nbsp;&nbsp;Cash received from acquisition of SMCB | 593000 |  |
| &nbsp;&nbsp;&nbsp;Advances to SMCB | (1172000) | (1777000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities attributable to continuing operations | (1770000) | (2175000) |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of common stock and warrants, net of offering costs |  | 12932000 |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of senior secured notes, net of discounts |  | 2000000 |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of promissory notes, net of offering costs and discounts | 10213000 |  |
| &nbsp;&nbsp;&nbsp;Payment of senior secured notes and debt issuance costs |  | (2578000) |
| &nbsp;&nbsp;&nbsp;Payment of promissory notes | (427000) |  |
| &nbsp;&nbsp;&nbsp;Payment of promissory notes, related parties | (100000) |  |
| &nbsp;&nbsp;&nbsp;Payments on merchant cash advances payable |  | (631000) |
| &nbsp;&nbsp;&nbsp;Other | - | (75000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities attributable to continuing operations | 9686000 | 11648000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities attributable to discontinued operations | (2539000) | (5080000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities attributable to discontinued operations | 845000 | 122000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities attributable to discontinued operations | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash used in discontinued operations | (1694000) | (4958000) |
| **Net change in cash** | (1087000) | 530000 |
| **Cash and restricted cash at beginning of period** | 7233000 | 6703000 |
| **Cash and restricted cash at end of period** | $6146000 | $7233000 |
| **Supplemental disclosures of cash flow information:** |  |  |
| Cash paid for interest | $246000 | $591000 |
| **Non-Cash investing and financing cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;Reclassification of Series A warrants to equity | $7857000 | $- |
| &nbsp;&nbsp;&nbsp;Common stock issued for exercise of Series B warrants | $15214000 | $- |
| &nbsp;&nbsp;&nbsp;Issuance of common stock with debt | $- | 943000 |
| &nbsp;&nbsp;&nbsp;Repurchase of common shares- related parties | $- | 758000 |
| &nbsp;&nbsp;&nbsp;Effect of extinguishment of advances to SemiCab, Inc. | $- | 415000 |
| &nbsp;&nbsp;&nbsp;Common stock issued for acquisition of SemiCab, Inc assets | $- | 568000 |
| &nbsp;&nbsp;&nbsp;Common stock issued for acquisition of SMCB | $316000 | $- |
| &nbsp;&nbsp;&nbsp;Promissory note issued for acquisition of SMCB | $1750000 | $- |
| &nbsp;&nbsp;&nbsp;Common stock issued as commitment fee | $191000 | $- |
| &nbsp;&nbsp;&nbsp;Common stock issued upon settlement of prepaid purchases | $675000 | $- |
| &nbsp;&nbsp;&nbsp;Conversion of promissory note payable into common stock | $138000 | $- |

---

**See notes to the consolidated financial statements**

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 1 – Nature of Business**

Algorhythm Holdings, Inc. (f/k/a The Singing Machine Company, Inc.) (the "Company") is an artificial intelligence ("AI") technology company focused on the growth and development of SemiCab. SemiCab is an AI-enabled software logistics and distribution business that utilizes the Company's SemiCab technology platform to enable retailers, brands and transportation providers to address common supply chain problems globally. The Company operates its SemiCab business through its subsidiary, SemiCab Holdings, LLC.

Prior to August 1, 2025, the Company had a second business, which was Singing Machine. Singing Machine was a home karaoke consumer products business that designed and distributed karaoke products to retailers and ecommerce partners globally through its subsidiary, The Singing Machine Company, Inc. The Company sold its Singing Machine business on August 1, 2025. Accordingly, the Company no longer owns or operates the Singing Machine business. The results of operations, cash flows, and related assets and liabilities of the Singing Machine business have been classified as discontinued operations in the Company's consolidated financial statements for all periods presented.

The Company's operations include its 80%-owned subsidiaries, SemiCab Holdings, LLC, a Nevada limited liability company ("SemiCab Holdings"), and SMCB Solutions Private Limited, an Indian company ("SMCB"), and its wholly-owned subsidiaries, SMC Logistics, Inc., a California corporation ("SMCL"), SMC-Music, Inc., a Florida corporation ("SMCM"), SMC (HK) Limited, a Hong Kong company ("SMH"), The Singing Machine Company, Inc., a Delaware corporation ("SMC"), and RIME Holdings, LLC ("Rime").

Effective September 5, 2024, the Company's Certificate of Incorporation was amended to change the name of the Company from "The Singing Machine Company, Inc." to "Algorhythm Holdings, Inc."

On January 13, 2025, the Company's stockholders voted to authorize the Company's board of directors to effect a reverse stock split of the Company's outstanding shares of common stock at a specific ratio within a range of 1-for-10 to a maximum of 1-for-250 and to amend the Company's certificate of incorporation to increase the number of authorized common stock from 100,000,000 to 800,000,000 shares. On January 14, 2025, the Company's board of directors approved a reverse stock split of 1-for-200 ratio and approved the filing of a certificate of amendment to the Company's certificate of incorporation to effect the reverse stock split and to increase the Company's authorized shares of common stock from 100,000,000 to 800,000,000. The reverse stock split took effect on February 10, 2025. All current and prior year balances have been adjusted to reflect the reverse stock split.

**Note 2 – Sale of Singing Machine Business**

On August 1, 2025, the Company entered into an asset purchase agreement with SMC and Stingray Music USA, Inc. ("Stingray USA") pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with the Company's Singing Machine business for $500,000. The transaction closed on August 1, 2025. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of the Company's board of directors until October 6, 2025.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The Company determined that the sale of the Singing Machine business met the criteria under Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements – Discontinued Operations ("ASC 205-20"), to be classified as a discontinued operation as the sale represented a strategic shift that will have a significant effect on the Company's operations and financial results. Accordingly, the Company accounted for the Singing Machine business as a discontinued operation in this Annual Report on Form 10-K. All amounts and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted. Additional information is presented in *Note 19 – Discontinued Operations*.

**Note 3 – Liquidity, Going Concern and Management Plans**

As of December 31, 2025, the Company's cash and restricted cash balance was $6,146,000. This will not be sufficient to fund its planned operations for at least one year after the date the consolidated financial statements are issued. The Company has a recent history of recurring operating losses and decreases in working capital. These factors create substantial doubt about the Company's ability to continue as a going concern for at least one year after the date that the Company's audited consolidated financial statements are issued.

The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern and that the realization of assets and satisfaction of liabilities and commitments will continue in the ordinary course of business.

The Company plans to finance its operations by obtaining additional capital through external sources of financing. It may attempt to obtain additional capital through the sale of equity securities or the issuance of debt securities. The Company has not made any arrangements to obtain additional capital and can provide no assurance that additional financing will be available in an amount or on terms acceptable to the Company, if at all.

In making this assessment, management performed a comprehensive analysis of the Company's current circumstances, including its financial position, cash flow forecasts, and obligations and debts. Although management has a recent history of successful capital raises, the analysis used to determine the Company's ability to continue as a going concern does not include cash resources outside the Company's direct control that management expects to be available within the next 12 months.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 4 – Summary of Significant Accounting Policies**

**Basis of Presentation**

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP").

**Principles of Consolidation**

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries SMCL, SMCM, SMH, SMC, Rime and its eighty percent (80%)-owned subsidiaries, SemiCab Holdings and SMCB. All intercompany accounts and transactions have been eliminated in consolidation for all periods presented.

The Company evaluates its business relationships with related parties to identify potential Variable Interest Entities ("VIEs") under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, *Consolidation*. The Company will consolidate any VIE in which it is deemed to be the primary beneficiary of the VIE. The Company will be deemed to be the primary beneficiary of the VIE if the Company has a controlling financial interest in the VIE. A controlling financial interest has the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both characteristics are met and, then the Company will consolidate that VIE into its consolidated financial statements.

As prescribed by ASC 810, if the Company holds a variable interest in an entity that is a VIE, but the Company is not the entity's primary beneficiary, then the Company must disclose the methodology (e.g., significant judgments and assumptions made) that it used to determine that it is not the primary beneficiary of the VIE. Additional information required includes information about the types of involvement considered significant, and those considered in the determination of whether the reporting entity is the primary beneficiary.

Furthermore, if the Company provides or intends to provide financial or other support, whether explicitly or implicitly, to the VIE when not contractually required to, the Company must disclose the type and amount of the support along with the primary reasons for providing the support. Both qualitative and quantitative information about the Company's involvement with the VIE must be disclosed, including the nature, purpose, size, and activities of the VIE and how the VIE is financed.

The Company determined that SMCB was a VIE because the Company provided financial support to SMCB in the form of a loan agreement to fund SMCB's operations. The Company further determined that it was not the primary beneficiary of SMCB because the Company did not have the power to direct or control's significant activities related to its business. Accordingly, the Company did not consolidate SMCB's results of operations and financial position in its consolidated financial statements prior to May 2, 2025.

On May 2, 2025, SemiCab Holdings acquired 99.99% of the equity shares of SMCB from SemiCab, Inc. As a result, on May 2, 2025, the Company consolidated SMCB's results of operations and financial position in its consolidated financial statements. A discussion of this transaction is set forth herein in *Note 18 – Acquisition of SMCB*.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Reclassification of Prior Periods Presentation**

Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

**Use of Estimates**

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ materially from these estimates. Estimates are assessed each period and updated to reflect current information. Significant estimates include allowance for credit losses, accruals relating to litigation, goodwill, share-based compensation expense and warrant liability.

**Segment Reporting**

Pursuant to ASC Topic 280, Segment Reporting ("ASC 280"), the Company's Chief Executive Officer serves as the Company's Chief Operating Decision Maker ("CODM").

Prior to August 1, 2025, the CODM determined that the Company operated in two reportable segments: (i) the SemiCab business, and (ii) the Singing Machine business. On August 1, 2025, the Company completed the sale of its Singing Machine business. Upon the completion of this transaction, the Company began operating as a single reportable segment consisting of its SemiCab business.

The CODM evaluates and manages the Company's operations using net loss as the primary measure to allocate resources, make operating decisions, and assess financial performance. In addition, the CODM considers non-financial information and other qualitative factors when evaluating performance, establishing compensation, monitoring budget-to-actual results, and making capital allocation decisions.

Additional information is presented in *Note 15 – Segment Information and Revenue Disaggregation*.

**Cash and Restricted Cash**

The Company considers cash to include cash in banks and deposits with financial institutions that can be liquidated without prior notice or penalty. Cash is maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits.

The Company classifies all cash whose use is limited by contractual provisions as restricted cash. Restricted cash as of December 31, 2025, consists of cash required under the Streeterville Capital Transaction as detailed in *Note 12 – Securities Transactions*.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Accounts Receivable and Allowances for Expected Credit Losses**

The Company recognizes credit losses in accordance with Accounting Standards Update ("ASU") 2016-13,*Financial Instruments – Credit Losses (Topic 326)*. The Company recognizes an allowance for credit losses at the time a receivable is recorded based on its estimate of expected credit losses and adjusts this estimate over the life of the receivable as needed. The Company evaluates specific identified risks and the aggregation and risk characteristics of a receivable pool and develops loss rates that reflect historical collections, current forecasts of future economic conditions over the time horizon the Company is exposed to credit risk, and payment terms or conditions that may materially affect future forecasts. As needed, amounts are written-off when determined to be uncollectible.

**Property and Equipment, Net**

Property and equipment are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using straight-line methods.

**Intangible Assets- Internal Use Software**

The Company capitalized costs related to the development of internal-use software in accordance with ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software. Capitalized costs primarily consist of personnel and third-party fees incurred during the application development stage for software that support the Company's Software as a Service ("SaaS") operations. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. The capitalized internal-use software is amortized on a straight-line basis over its estimated useful life, which is 5 years, beginning when the software is ready for its intended use.

**Goodwill**

The Company evaluates its goodwill for impairment in accordance with ASU 350, *Intangibles – Goodwill and Other*. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. The Company tests the recorded amount of goodwill for impairment on an annual basis on December 31 or more frequently if there are indicators that the carrying amount of goodwill exceeds its carried value.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Long Lived and Intangible Assets**

The Company reviews long-lived assets and intangible assets for impairment in accordance with ASC Topic 360, *Property, Plant and Equipment* ("ASC 360"). The Company reviews long-lived assets and intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset or intangible asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying value. An impairment loss is recognized when the estimated undiscounted future cash flows expected to result from the use of the asset is less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows*.*

The Company had no impairment loss related to long-lived assets or intangible assets for the year ended December 31, 2025 or December 31, 2024.

**Business Combinations**

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC Topic 805, *Business Combinations.* The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions at the acquisition date with respect to intangible assets. The allocation of the consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Direct transaction costs associated with the business combination are expensed as incurred. The Company includes the results of operations of the business that it has acquired in its consolidated results prospectively from the date of acquisition.

**Fair Value Measurements**

In accordance with ASC 820, *Fair Value Measurements and Disclosures*, fair value is defined as the exit price, or the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs include those that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors that market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

● Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or model-derived valuations. All significant inputs used in the Company's valuations are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include quoted prices that were adjusted for security-specific restrictions which are compared to output from internally developed models such as a discounted cash flow model.

● Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of financial instruments carried at cost, including cash, accounts receivables and accounts receivable – related party, trade payables advances and notes payables and notes payable – related party approximate their fair value due to the short-term maturities of such instruments.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

**Warrants**

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own ordinary shares and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. Finally, the Company determines if the warrants meet the definition of a derivative based on their contractual terms. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, as of each subsequent quarterly period end date while the warrants are outstanding and at interim dates if circumstances warrant such analysis.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and at each balance sheet date thereafter. Changes in the estimated fair value of the liability classified warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The Company also evaluates if changes in contractual terms or other considerations would result in the reclassification of outstanding warrants from liabilities to stockholders' equity (or vice versa).

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Revenue Recognition** 

The Company recognizes revenue in accordance with ASC 606*, Revenue from Contracts with Customers*. All revenue is generated from contracts with customers. The Company recognizes revenue when services are performed for the customer in an amount, referred to as the transaction price, that reflects the consideration to which the Company is expected to be entitled in exchange for those services. The Company determines revenue recognition utilizing the following five steps: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract (promised services that are distinct); (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as, the Company transfers control of the service for each performance obligation.

The Company's performance obligations are established when a customer submits a purchase order notification and the Company accepts the order. The Company identifies performance obligations as the delivery of the requested service at the location specified in the customer's contract and/or purchase order. Revenue from sales of services is recognized at the point in time when the Company transfers control to the customer, typically at the time when the services are performed in full, at which time there are no further performance obligations remaining.

The Company's contracts with customers consist of one performance obligation, which is the performance of services. The Company's contracts have no financing elements. Payment terms are generally less than 90 days and have no further contract asset or liability obligations once control of the service is transferred to the customer. Revenue is recorded in the amount of consideration the Company expects to receive for the sale of the service.

The Company utilizes independent contractors and third-party carriers to perform transportation services in connection with its SemiCab business. In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, management evaluates the terms of agreements with customers and vendors to determine whether it acts as principal or agent in each arrangement.

This assessment focuses on whether control of the transportation service is obtained prior to transferring the service to the customer. Based on this evaluation of the control model, management has concluded that it acts as the principal and, accordingly recognizes revenue on a gross basis. In the event the Company acts as an agent, such revenue will be recognized net of the cost of purchased transportation.

All revenue earned from contracts are presented net of discounts, allowances, and applicable taxes

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Share-Based Compensation**

The Company has granted stock options, warrants, restricted stock awards and restricted stock units to employees, non-employee consultants and non-employee members of its board of directors. The Company also has an equity incentive plan that provides for the issuance of equity incentive awards, such as stock options, warrants, stock appreciation rights, stock awards, restricted stock, stock units, performance awards and other stock or cash-based awards to the Company's employees, officers, directors, consultants, agents, advisors and independent contractors.

The Company measures the compensation cost associated with all share-based payments based on grant date fair values. The fair value of each stock option and stock purchase right is estimated on the date of grant using an option pricing model that meets certain requirements. The Company generally uses the Black-Scholes option pricing model to estimate the fair value of its stock options and stock purchase rights. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the Company's stock price and several assumptions, including expected volatility, expected term, risk-free interest rate and expected dividends.

For grants of stock options, the Company uses a blend of historical and implied volatility for traded options on its stock to estimate the expected volatility assumption required in the Black-Scholes model. The Company's use of blended volatility estimates in computing the expected volatility assumption for stock options is based on its belief that while the implied volatility is representative of expected future volatility, the historical volatility over the expected term of the award is also an indicator of expected future volatility. The Company utilizes a blended volatility estimate that consists of implied volatility and historical volatility in order to estimate the expected volatility assumption of the Black-Scholes model.

The expected term of stock options granted is estimated using historical experience. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the Company's stock options and stock purchase rights. The dividend yield assumption is based on the Company's history and expectation of no dividend payouts. The Company estimates forfeitures at the time of grant and revises these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates its forfeiture rate assumption for all types of share-based compensation awards based on historical forfeiture rates related to each category of award.

Compensation costs associated with grants of restricted stock awards and restricted stock units are measured at fair value, which has historically been the closing price of the Company's common stock on the date of grant.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The Company recognizes share-based compensation expense over the requisite service period of each individual award, which generally equals the vesting period, using the straight-line method for awards that contain only service conditions. For awards that contain performance conditions, the Company recognizes the share-based compensation expense on a straight-line basis for each vesting tranche, when achievement of that tranche is considered probable.

The Company evaluates the assumptions used to value stock awards on the grant date. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense.

**Income Taxes**

The Company follows the provisions of FASB ASC 740, *A ccounting for Income Taxes* ("ASC 740"). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized.

The Company recognizes a liability for uncertain tax positions. An uncertain tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law and that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

As of December 31, 2025 and 2024, there were no uncertain tax positions that resulted in any adjustment to the Company's provision for income taxes. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company currently has no liabilities recorded for accrued interest or penalties related to uncertain tax provisions.

In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The standard requires, among other things, enhanced rate reconciliation disclosures, disaggregation of income taxes paid by jurisdiction, and disaggregation of income (loss) from continuing operations before income tax expense (benefit) between domestic and foreign jurisdictions. The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. The adoption of this standard did not have an impact on the Company's consolidated financial statements but resulted in expanded income tax disclosures in the accompanying notes.

**Net Loss Per Common Share**

 ****

Net loss available to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares that were outstanding during the period. Diluted net loss available to common stockholders reflects the potential dilution that could occur if securities or other contracts to acquire common stock were exercised or converted into common stock. Potentially dilutive securities are excluded from the diluted net loss available to common stockholders computation in loss periods as their effect would be anti-dilutive.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Foreign Currency Translation**

The functional currency of the Company and its subsidiaries is the U.S. dollar, except for SMCB, whose functional currency is the Indian rupee.

The financial statements of SMCB are translated into U.S. dollars for consolidation purposes. Assets and liabilities are translated at the exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates during the reporting period. Equity transactions are translated using historical exchange rates. Resulting translation adjustments are recorded in accumulated other comprehensive income (loss) within shareholders' equity.

**Recent Accounting Pronouncements**

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810). This ASU provides that a reporting entity involved in a business combination effected primarily by the exchange of equity interests must consider the factors in ASC 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer regardless of whether the legal acquiree is a Variable Interest Entity ("VIE"). The amendments in ASU 2025-03 must be applied prospectively to any business combination that occurs after the initial adoption date. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU 2025-04, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606), which clarifies the guidance in both ASC 718 and ASC 606 on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer. The ASU is intended to reduce diversity in practice and improve existing guidance, primarily by revising the definition of a "performance condition" and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. In addition, the ASU clarifies that the guidance in ASC 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer "regardless of whether an award's grant date has occurred" (as determined under ASC 718). ASU 2025-04 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326), which provides a practical expedient for measuring expected credit losses on current receivables and contract assets arising under Topic 606, Revenue from Contracts with Customers. The ASU allows entities to assume that the macroeconomic conditions existing at the balance sheet date will remain unchanged over the remaining life of those assets. The amendments are effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In August 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40). This ASU simplifies the accounting for costs incurred in the development of internal-use software by removing the concept of multiple project stages. Under the new guidance, capitalization begins when management authorizes and commits funding to the project and it is probable that the project will be completed and the software placed into service. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815). This ASU clarifies the scope of derivative accounting for certain contracts and provides guidance on share-based, non-cash consideration received from a customer under Topic 606. The amendments expand a scope exception for contracts whose underlying is based on an entity's own operations or activities, reducing the number of arrangements that qualify as derivatives. The ASU also clarifies the accounting for share-based consideration received from a customer. The amendments are effective for fiscal years beginning after December 15, 2026, including interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements ("ASU 2025-11). The purpose of this ASU is to improve the guidance of Topic 270, Interim Reporting, by providing clarity on the current interim reporting requirements. This amendment also provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in this ASU also add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the reporting entity. The amendments in this ASU are effective for all public companies for interim reporting periods within annual reporting periods beginning after December 31, 2027. Early adoption is permitted. The amendments in this ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

The Company reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on its consolidated financial statements as a result of future adoption.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 5 – Acquisition of SemiCab, Inc.'s Assets**

On June 11, 2024, the Company, its wholly-owned subsidiary, SemiCab Holdings, SemiCab, Inc., Ajesh Kapoor and Vivek Sehgal entered into an asset purchase agreement pursuant to which the Company agreed to purchase substantially all of the assets, and assume certain specified liabilities, of SemiCab, Inc. On July 3, 2024 (the "Acquisition Date"), the parties completed the acquisition and, on that date, the Company issued 3,209 shares of the Company's common stock and a 20% membership interest in SemiCab Holdings to SemiCab, Inc. The Company acquired SemiCab, Inc.'s business to diversify the Company's business.

Pursuant to the terms of the asset purchase agreement that the Company entered into on June 11, 2024, the Company entered into an option agreement that granted SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB, which is a subsidiary of SemiCab, Inc., for 1,605 shares of the Company's common stock. The Company did not exercise this right and the option agreement expired unexercised on August 31, 2024.

In connection with the asset purchase agreement, effective July 3, 2024, SemiCab Holdings entered into employment agreements with Ajesh Kapoor and Vivek Sehgal. Mr. Kapoor's agreement is for a term of three years with an annual base salary of $140,000 for 2024, $240,000 for 2025, and $300,000 for 2026. Mr. Sehgal's agreement is for a term of three years with an annual base salary of $105,000 for 2024, $210,000 for 2025, and $240,000 for 2026. Both executives' salaries are subject to annual review by the board of managers of SemiCab Holdings.

The value of the consideration paid by the Company to SemiCab, Inc. for the SemiCab business was $983,000. The 3,209 shares issued to SemiCab, Inc. were valued at $494,000 on the Acquisition Date based on the trading price of the Company's common stock on the Acquisition Date discounted for a lack of marketability. The Company recognized a non-controlling interest at fair value as of the Acquisition Date in the amount of $74,000, representing the value of the 20% membership interest in SemiCab Holdings that was issued to SemiCab, Inc. in the transaction. The 20% membership interest was valued at the Acquisition Date based on the fair value of the implied value of SemiCab Holdings based on the value of the Company's common stock issued on the Acquisition Date. The Company recorded a measurement period adjustment during the fourth quarter of 2024 that reduced the value of finite lived intangible assets acquired in the transaction by $1,050,000. This had the effect of increasing goodwill by $1,050,000.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The following table presents the allocation of the consideration transferred to the assets acquired and liabilities assumed based on their fair values:

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

---

| | |
|:---|:---|
| **Consideration:** |  |
| Equity consideration | $494000 |
| Fair value of non-controling interest | 74000 |
| Total equity consideration | 568000 |
| Effective extinguishment of advances to SemiCab, Inc. | 415000 |
| **Total consideration** | $**983000** |
| **Identifiable net assets acquired:** |  |
| Cash | $17000 |
| Accounts receivable | 193000 |
| Prepaid expenses and other current assets | 13000 |
| Property and equipment, net | 3000 |
| Other non-current assets | 14000 |
| Customer relationships (nine year estimated useful life) | 25000 |
| Trade name (nine year estimated useful life) | 25000 |
| Developed technology (six year estimated useful life) | 325000 |
| Accounts payable and accrued expenses | (2679000) |
| Merchant cash advances payable | (631000) |
| Notes payable to related parties | (650000) |
| Other current liabilities | (50000) |
| Net assets acquired | $(3395000) |
| **Goodwill** | $**4378000** |

---

**Note 6 – Property and Equipment, Intangible Assets and Goodwill**

A summary of the Company's property and equipment at December 31, 2025 and 2024 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | December 31,<br>2025 | December 31,<br>2024 |
| Computer and office equipment | 3-5 years | $64000 | $8000 |
| Less: accumulated depreciation |  | (42000) | (6000) |
|  |  | $22000 | $2000 |

---

Depreciation expense was $8,000 and $0 for the year ended December 2025 and December 31, 2024, respectively.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

A summary of the Company's intangible assets at December 31, 2025 and 2024 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | December 31,<br>2025 | December 31,<br>2024 |
| Customer relationships of SemiCab, Inc. | 9 years | $25000 | $25000 |
| Trade name of SemiCab, Inc. | 9 years | 25000 | 25000 |
| Developed technology of SemiCab, Inc. | 6 years | 325000 | 325000 |
| Customer relationships of SMCB | 9 years | 1008000 |  |
| Reacquired rights of SMCB | 5 years | 294000 |  |
| Trade name of SMCB | 5 years | 180000 |  |
| Internal use software | 5 years | 419000 | - |
|  |  | 2276000 | 375000 |
| Less: accumulated amortization |  | (271000) | (30000) |
|  |  | $2005000 | $345000 |

---

Amortization expense was $241,000 and $30,000 for the years ended December 31, 2025 and 2024, respectively.

During the year ended on December 31, 2024, the Company tested the recorded amount of goodwill from the acquisition of SemiCab, Inc.'s business for impairment on December 31, 2024 to see if the carrying amount of goodwill exceeded its carried value. The Company calculated a market-based valuation utilizing inputs classified as level 3 on the fair value hierarchy by multiplying one by projected 2025 revenue for the SemiCab business. As a result of this test, the Company recorded an impairment charge of $3,592,000 during the year ended December 31, 2024 and the balance of the Company's goodwill on December 31, 2024 was $786,000.

On May 2, 2025, SemiCab Holdings acquired 99.99% of the equity shares of SMCB from SemiCab, Inc. In connection with the acquisition, the Company recorded additional goodwill in the amount of $1,896,000. As a result, the balance of the Company's goodwill was $2,682,000 on December 31, 2025.

During the year ended on December 31, 2025, the Company tested the recorded amount of goodwill from the acquisition of SemiCab, Inc.'s business and SMCB as of December 31, 2025 for impairment to see if the carrying amount of goodwill exceeded its carried value. As a result of this test, the Company determined that no impairment of goodwill was needed to be recorded as of December 31, 2025.

The following table presents the changes in the value of the goodwill recognized in connection with the acquisition of SemiCab, Inc. business:

---

| | |
|:---|:---|
| Balance at January 1, 2024 | $-0- |
| Goodwill from acquisition of SemiCab, Inc.'s business on July 3, 2024 | 4378000 |
| Impairment of goodwill | (3592000) |
| Balance at December 31, 2024 | $786000 |
| Goodwill from acquisition of SMCB on May 2, 2025 | 1896000 |
| Impairment of goodwill | -0- |
| Balance at December 31, 2025 | $2682000 |

---

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 7 – Notes Payable to Related Parties**

Notes payable to related parties consist of the following:

---

| | | |
|:---|:---|:---|
|  | December 31,<br>2025 | December 31,<br>2024 |
| Loans with related parties assumed in acquisition of SemiCab business | 550000 | 650000 |
| Promissory note issued for acquistion of SMCB | 1750000 | - |
| Total | $2300000 | $650000 |
| Less: current portion of notes payable to related parties | 2300000 | 265000 |
| Notes payable to related parties, net of current portion |  | 385000 |

---

**Loans With Related Parties Assumed in Acquisition of SemiCab Business**

SemiCab Holdings assumed several unsecured loans from Ajesh Kapoor and Vivek Sehgal in the acquisition of SemiCab business. The Company incurred interest expense on these loans of $59,000 and $36,000 for the years ended December 31, 2025, and December 31, 2024, respectively. In relation to these loans, the Company did not have any accrued interest payable as of December 31, 2025, and had accrued interest payable of $6,000 as of December 31, 2024, that was included within accrued expenses in the Company's consolidated balance sheets.

The terms of each loan and the balances as of December 31, 2025 and 2024 are summarized in the table below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Issue | Maturity | Interest | Outstanding Principal | Outstanding Principal |
| Note Holder | Date | Date | Rate | December 31, 2025 | December 31, 2024 |
| Ajesh Kapoor | 7/10/2021 | 7/10/2026 | 9% | $150000 | $150000 |
| Ajesh Kapoor | 8/27/2021 | 8/26/2026 | 9% | 235000 | 235000 |
| Vivek Sehgal | 4/17/2023 | 10/13/2023 | 10% |  | 50000 |
| Ajesh Kapoor | 5/5/2023 | 5/4/2024 | 10% |  | 50000 |
| Ajesh Kapoor | 5/17/2023 | 2/1/2026 | 10% | 165000 | 165000 |
| Total |  |  |  | $550000 | $650000 |

---

On October 8, 2025, the Company repaid the loan from Vivek Sehgal issued on April 17, 2023 for $50,000 and the loan from Ajesh Kapoor issued on May 5, 2023 for $50,000.

Mr. Kapoor serves as the Chief Executive Officer and Chief Technology Officer of SemiCab Holdings and as a member of the Company's Board of Directors, and Mr. Sehgal serves as the Chief Product Officer of SemiCab Holdings.

**Promissory Note Issued for Acquisition of SMCB**

On May 2, 2025, the Company and SemiCab Holdings acquired 99.99% of the equity shares of SMCB from SemiCab, Inc. pursuant to which, in part, the Company issued a promissory note to SemiCab, Inc. in the principal amount of $1,750,000. A discussion of this transaction and the terms of the promissory note is set forth herein in *Note 18 – Acquisition of SMCB*.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 8 – Credit Facilities and Other Financing Arrangements**

**Oxford Credit Facility**

On March 28, 2024, the Company entered into a loan agreement and related revolving credit note with Oxford Commercial Finance ("Oxford"). The agreement was for a two-year term and established a secured asset-backed revolving credit facility that was comprised of a maximum $2,000,000 revolving credit facility. Availability under the credit facility was determined monthly by a borrowing base comprised of a percentage of eligible accounts receivable of the borrowers. The Company's obligations under the credit agreement were secured by a continuing security interest in all property of each Loan Party, subject to certain excluded collateral.

On October 17, 2024, the Company terminated the loan agreement and note and paid Oxford a termination fee of $40,000. As of the date of termination, the Company had no outstanding amounts owed to Oxford. During the year ended December 31, 2024, the Company incurred interest expense of $77,000 for financing costs associated with the credit agreement.

**Agile Capital Merchant Cash Advance** 

In connection with the acquisition of SemiCab, Inc.'s business, the Company assumed a merchant cash advance that was payable to Agile Capital Funding, LLC that had been incurred under a financing agreement that SemiCab, Inc. had entered into on March 22, 2024. The initial amount borrowed was $315,000, with net proceeds to SemiCab, Inc. in the amount of $300,000. Repayment terms consisted of weekly payments in the amount of $16,200 for 28 weeks for a total repayment of $453,600. The effective interest rate for the borrowings is 15% per year. The Company incurred $105,400 of interest expense under this financing agreement during the year ended December 31, 2024. As of December 31, 2024, the merchant cash advance had been repaid in full.

**Cedar Advance Merchant Cash Advance** 

In connection with the acquisition of SemiCab, Inc.'s business, the Company assumed a merchant cash advance that was payable to Cedar Advance, LLC that had been incurred under a financing agreement that SemiCab, Inc. had entered into on May 8, 2024. The initial amount borrowed was $215,000, with net proceeds to SemiCab, Inc. in the amount of $204,300. Repayment terms consisted of weekly payments in the amount of $11,100 for 28 weeks for a total repayment of $312,000. The effective interest rate for the borrowings is 18% per year. The Company incurred $88,800 of interest expense under this financing agreement during the year ended December 31, 2024. As of December 31, 2024, the merchant cash advance had been repaid in full.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 9 – Commitments and Contingencies**

The Company is subject to claims, suits and other proceedings from time to time in the ordinary course of business that could result in fines, civil penalties, or other adverse consequences. In accordance with the provisions of ASC Topic 450,*Contingencies,* the Company records a liability when it believes that it is probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that it is probable that a loss has been incurred and the loss or range of loss can be estimated, the Company discloses the estimated amount of the loss. The Company evaluates developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters.

**Efficient Capital Labs Settlement Agreement**

On May 18, 2023, SemiCab, Inc. entered into an installment business loan agreement with Efficient Capital Labs, Inc. ("ECL") pursuant to which SemiCab, Inc. borrowed the principal amount of $1,000,000. Repayments were originally scheduled to begin in June 2023 in equal installments of $91,667 for 13 months with an effective interest rate of 17.97%. The loan had a maturity date of May 17, 2024. On May 18, 2024, SemiCab, Inc. defaulted on the loan for non-payment.

On May 18, 2024, SemiCab, Inc. entered into a settlement agreement with ECL pursuant to which SemiCab, Inc. agreed to pay ECL $946,666 as follows: (i) $25,000 on or before May 20, 2024; (ii) $75,000 on or before June 3, 2024; and (iii) $84,666 on or before the first business day of each of the following 10 calendar months starting on July 1, 2024.

In connection with the acquisition of the SemiCab, Inc.'s business, the Company assumed this settlement liability. The final payment of the settlement was made during the year ended December 31, 2025. Accordingly, there was no unpaid balance at December 31, 2025. As of December 31, 2024, the remaining unpaid balance of the settlement was $325,000 and was included as a component of accrued expenses on the Company's consolidated balance sheets.

**Derivative Litigation**

On December 21, 2023, Ault Lending, LLC ("Ault Lending"), a wholly-owned subsidiary of Ault Alliance, Inc., a former shareholder of the Company, filed a derivative shareholder action in Delaware Chancery Court against the Company, its board of directors, Stingray Group, LLC ("Stingray Group") and Regalia Ventures, LLC ("Regalia Ventures") for alleged breach of fiduciary duty in approving a recent above-market private placement equity transaction. The complaint alleged that the Company and its board of directors followed an inadequate process in evaluating the private placement transaction that the Company completed in November 2023 and that the Company and its board of directors entered into the transaction with an intent to dilute Ault's ownership stake in the Company. Ault Lending was seeking the following relief from the court: (i) declarations that the defendant directors breached their fiduciary duties; and that Stingray Group and Regalia Ventures aided and abetted those breaches; (ii) rescission of the Company's sale of shares to Stingray Group and Regalia Ventures; and (iii) damages and attorney's fees. On April 30, 2025, Ault Lending filed a motion with the court requesting that the claims be dismissed without prejudice and on that same date, the court approved the dismissal of the claims without prejudice.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**OAC Flatiron & OAC Adelphi Litigation**

On August 23, 2023, MICS NY entered into an Agreement of Lease (the "Lease Agreement") with OAC 111 Flatiron, LLC and OAC Adelphi, LLC (the "Landlord"), pursuant to which MICS NY agreed to lease approximately 10,000 square feet of ground floor retail space and a portion of the basement underneath the ground floor retail space in the property located at 111 West 24<sup>th</sup> Street, New York, New York (the "Premises").

During the year ended December 31, 2024, the Company abandoned its plans to continue use of the leased space and exercised its early termination provision of the Lease Agreement which was not accepted by the Landlord. Due to the abandonment of the lease, all assets related to the lease were impaired. Assets including security deposits, rent deposits and right of use assets of approximately $3,878,000 were written off during the year ended December 31, 2024.

On July 26, 2024, the Landlord filed a civil action in the Supreme Court of the State of New York against MICS NY and the Company ("the Defendants") for alleged breach of lease, seeking monetary damages including unpaid rent, future unpaid rent, and other expenses related to the lease. The complaint alleged the Defendants breached the lease in various material respects.

On September 25, 2024, the Company entered into a settlement agreement for a full release and dismissal of the complaint within five business days of the Company's payment of $250,000. Pursuant to the settlement agreement, the Company made the first payment of $150,000 on September 25, 2024 and a final payment of $100,000 on October 25, 2024. The remaining lease liability was written off upon settlement, resulting in a loss upon termination of the lease of $4,000, net of the write off of the related lease asset discussed above. On October 29, 2024, the Landlord filed a discontinuance with prejudice.

**Blue Yonder Litigation**

Pursuant to the asset purchase agreement with SemiCab, Inc., the Company assumed a judgement against SemiCab, Inc. regarding damages resulting from contract breach for IT subscription-based services. On March 28, 2020, SemiCab, Inc. entered into a service contract and agreement with Blue Yonder, Inc. ("Blue Yonder") for certain IT subscription-based services. The original term of the agreement was for three years, at a price of $100,000 per year, for a total of $300,000.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

On June 21, 2023, Blue Yonder filed a lawsuit claiming damages in the amount of $275,000 with the Maricopa County Superior Court in Arizona. The suit was found in favor of Blue Yonder in the amount of $509,119, subject to two separate milestone payments that would otherwise deem the entire balance due satisfied if either milestone payment is made by the Company. The first milestone payment for $175,000 and was due on July 1, 2024 and was not made. In the event this payment is made, the remaining settlement shall be deemed satisfied. If this payment is not made, the Company shall owe a total of $225,000 by October 1, 2024. In the event this payment is made, the remaining settlement shall be deemed satisfied. If neither payment is made, Blue Yonder shall be entitled to execute the full $509,119 beginning January 1, 2025. As of the date of this filing, none of the scheduled payments have been made. A liability of $506,000 has been recorded as a component of accrued expenses on the accompanying consolidated balance sheets.

On February 11, 2025, Blue Yonder filed a civil action in the Superior Court of the State of Arizona against the Company for breach of contract and to enforce a stipulated judgment entered against SemiCab, Inc. in connection with the liabilities related to Blue Yonder that the Company assumed when it acquired SemiCab, Inc.'s business. Blue Yonder alleges that, because the Company assumed these liabilities, Blue Yonder can enforce the judgment against the Company. The judgment was in the amount of $509,119. On August 1, 2025, the Company filed an answer to the complaint and counterclaims against Blue Yonder for breach of contract. On January 30, 2026, the Court granted Blue Yonder's motion for judgment on the pleadings. The outcome of this matter is uncertain.

**Note 10 – Stock Compensation Expense**

**Equity Incentive Plan**

On April 12, 2022, the Company's board of directors approved The Singing Machine Company, Inc. 2022 Equity Incentive Plan. The equity plan provides for the issuance of equity incentive awards, such as stock options, stock appreciation rights, stock awards, restricted stock, stock units, performance awards and other stock or cash-based awards to the Company's employees, officers, directors, consultants, agents, advisors and independent contractors.

The number of shares of common stock initially available for issuance under the plan was 1,167 shares of common stock and thereafter, beginning in 2023, an annual increase would occur as of the first day of the Company's applicable fiscal year equal to the lesser of: (i) five percent of the outstanding shares of common stock calculated on a fully diluted basis as of the end of the Company's immediately preceding fiscal year; (ii) 167 shares; and (iii) a lesser amount as determined by the Company's board of directors. The shares of common stock subject to stock awards granted under the equity plan that lapse, terminate, expire prior to exercise, are canceled, or are forfeited, become available for issuance again under the equity plan. Shares subject to a stock award under the equity plan do not become available for issuance or delivery again under the equity plan if such shares are: (i) shares tendered by a participant or retained by the Company as full or partial payment to the Company for the exercise or purchase price of an award; or (ii) shares used to satisfy tax withholding obligations in connection with an award.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The Company's board of directors may amend, suspend or terminate the plan or a portion of it at any time; provided, however, that to the extent required by applicable law, regulation or stock exchange rule, stockholder approval will be required for any amendment to the plan. The plan is scheduled to terminate automatically in 10 years following the earlier of: (i) the date the Company's board of directors adopted the plan; and (ii) the date the stockholders approved the plan.

On November 20, 2025, the plan was amended to provide that the number of shares of common stock available for issuance under the plan is 5,000,000 and that, commencing January 1, 2025, on the first day of each of the Company's fiscal years thereafter, this number will be increased by the lesser of: (i) 15% of the outstanding common stock on a fully diluted basis as of the end of the Company's immediately preceding fiscal year, or (ii) an amount determined by the board of directors, provided that any shares from any such increases in previous years that are not actually issued shall continue to be available for issuance under the plan. Accordingly, as of December 31, 2025, there were 5,000,000 shares of common stock authorized for issuance under the plan.

Of this amount, awards representing 283,666 shares of common stock were outstanding as of December 31, 2025 and. On January 1, 2026, the number of shares available for issuance under the plan increased to 5,750,000 in accordance with the terms of the plan.

The Company granted awards representing 283,316 shares of common stock during the year ended December 31, 2025. The Company did not grant any awards for shares of common stock during the year ended December 31, 2024. There were 33 shares forfeited during the year ended December 31, 2024. No shares of common stock were forfeited during the year ended December 31, 2025. There were 283,666 and 351 shares of common stock underlying share-based awards that were outstanding at December 31, 2025 and 2024, respectively. As of December 31, 2025, 4,716,334 shares remained available for issuance under the plan.

Share-based compensation expense includes the estimated fair value of share-based awards granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award. For the years ended December 31, 2025 and 2024, the Company recognized share-based compensation expense of $90,000 and $69,000, respectively.

As of December 31, 2025, there was an unrecognized expense of $223,000 remaining on stock options currently vesting over time with approximate weighted average of one year and eleven months remaining until these options are fully vested. The vested options as of December 31, 2025, had no intrinsic value.

As of December 31, 2025, there was an unrecognized expense of $143,000 remaining on restricted stock awards currently vesting over time with approximate weighted average of 3 years and 7 months remaining until these awards are fully vested.

**Other Equity Compensation**

During the years ended December 31, 2025 and 2024, the Company issued shares of its common stock as consideration for services rendered.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

During the year ended December 31, 2025, the Company issued an aggregate of 162,882 shares of its common stock to three vendors in a non-cash transaction as consideration for services rendered or to be rendered. The shares were valued at the closing price of the Company's common stock on the respective measurement dates, resulting in a total fair value of $344,000, which was recognized as general and administrative expenses in the accompanying consolidated statement of operations.

During the year ended December 31, 2024, the Company issued an aggregate of 3,873 shares of its common stock to three vendors as consideration for services rendered and issued 472 shares of common stock to Vivek Sehgal as bonus compensation earned under his employment agreement with SemiCab Holdings. The Company recognized $478,000 of compensation expense related to these share issuances during the year ended December 31, 2024, which was recorded as general and administrative expenses in the accompanying consolidated statement of operations.

**Note 11 – Net Loss Per Share**

The computations of basic and dilutive loss per share of commons stock outstanding for the year ended December 31, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | Year Ended<br>December 31, 2025 | Year Ended<br>December 31, 2024 |
| Net loss available to common shareholders | $(15871000) | $(23257000) |
| Basic and diluted weighted average of common stock outstanding | 2475293 | 65722 |
| Loss per common share | (6.41) | (353.87) |

---

The computations of the fully diluted weighted average number of shares of common stock outstanding for the years ended December 31, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | Year Ended<br>December 31, 2025 | Year Ended<br>December 31, 2024 |
| Basic weighted average common shares outstanding | 2475293 | 65722 |
| Effect of dilutive stock options and warrants | - | - |
| Diluted weighted average of common shares outstanding | 2475293 | 65722 |

---

Basic net loss per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share reflects the potential dilution assuming shares of common stock underlying in-the-money options and warrants have been issued upon the exercise of the options and warrants and the proceeds thereof were used to purchase shares of the Company's common stock at the average market price during the period using the treasury stock method.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

For the year ended December 31, 2025, 181,067 shares of common stock underlying stock options and 1,138,163 shares of common stock underlying warrants were excluded from the calculation of diluted net loss per share as the result would have been anti-dilutive. For the year ended December 31, 2024, 536 shares of common stock underlying stock options and 563,335 shares of common stock underlying warrants were excluded from the calculation of diluted net loss per share as the result would have been anti-dilutive.

**Note 12 – Securities Transactions**

**Regalia Ventures Stock Repurchase Transaction**

On November 1, 2024, the Company entered into a stock repurchase agreement with Regalia Ventures pursuant to which the Company agreed to repurchase the 5,495 shares from Regalia Ventures at a price per share equal to the higher of: (i) the closing price of the common stock on the last trading day immediately preceding the date of the repurchase agreement; or (ii) the highest volume weighted average price ("VWAP") of the common stock during a pricing period of 10 consecutive trading days prior to the date of the repurchase agreement. The shares of common stock to be repurchased were originally issued to Regalia Ventures on November 21, 2023, pursuant to a certain stock purchase agreement dated November 20, 2023. The Company recorded an accrued liability in the amount of the repurchase price, which was $472,000, as of December 31, 2024 as there were no further conditions that needed to be satisfied prior to the closing date other than the issuance of the promissory note and the delivery of the shares.

On February 18, 2025, the date of the closing of the transaction, the Company issued a promissory note to Regalia Ventures in the amount of $472,000, which was the principal amount of the purchase price. The note was due and payable on demand and accrued interest at the rate of 10% per year. The Company incurred $1,000 for interest expense for the year ended December 31, 2025 related to this promissory note. On February 27, 2025, the Company paid off the note in full. Regalia Ventures is owned and controlled by Jay B. Foreman, who served as a member of the Company's board of directors until November 14, 2025.

**Stingray Group Stock Repurchase Transaction**

On December 3, 2024, the Company entered into a stock repurchase agreement with Stingray Group pursuant to which the Company agreed to repurchase the 5,495 shares from Stingray Group at a price per share equal to the higher of: (i) the closing price of the common stock on the last trading day immediately preceding the date of the repurchase agreement; or (ii) the highest VWAP of the common stock during a pricing period of 10 consecutive trading days prior to the date of the repurchase agreement. The shares of common stock to be repurchased were originally issued to the Stingray Group on November 21, 2023, pursuant to a certain stock purchase agreement dated November 20, 2023. The Company recorded an accrued liability in the amount of the repurchase price, which was $286,000, as of December 31, 2024 as there were no further conditions that needed to be satisfied prior to the closing date other than the issuance of the promissory note and the delivery of the shares.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

On February 18, 2025, the date of the closing of the transaction, the Company issued a promissory note to Stingray Group in the amount of $286,000, which was the principal amount of the purchase price. The note was due and payable on demand and accrued interest at the rate of 10% per year. The Company incurred $3,000 for interest expense for the year ended December 31, 2025 related to this promissory note. On April 3, 2025, the Company paid off the note in full. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of the Company's board of directors until October 6, 2025.

**October 2024 Private Placement**

 

On October 22, 2024, the Company entered into a securities purchase agreement pursuant to which the Company agreed to issue and sell to each purchaser: (i) an original issue discount senior secured note with a principal amount equal to such purchaser's subscription amount divided by 0.85, and (ii) a number of shares of the Company's common stock equal to (x) 11,500, multiplied by (y) such purchaser's subscription amount, and divided by (z) $2,000,000. No interest would accrue on the notes unless and until an event of default occurred, upon which interest would accrue at a rate of 14% per year. The notes had a maturity date of January 22, 2025.

The Offering closed on October 24, 2024. At closing, the Company issued an aggregate of 11,500 shares of its common stock and notes in the aggregate principal amount of $2,352,941 to the purchasers for total proceeds of $2,000,000 net of original issue discount of $352,941. The Company recorded amortization of original issue discount in the amount of $352,941 during the year ended December 31, 2024, which was recorded in interest expense in other expense in the Company's statement of operations. The 11,500 shares of common stock were valued at $943,000 on the date of issuance and were recorded as a debt issuance cost, fully amortized to interest expense during the year ended December 31, 2024. The Company repaid the notes in full during the 2024 year. Univest Securities served as the placement agent in the offering and received seven percent of the gross proceeds received by the Company and reimbursement of the legal fees of its counsel.

**December 2024 Public Offering**

On December 4, 2024, the Company entered into a securities purchase agreement in connection with a public offering of an aggregate of 21,000 shares of its common stock, pre-funded warrants to purchase up to 258,412 shares of common stock, Series A warrants to purchase up to 279,412 shares of common stock, and Series B warrants to purchase up to 279,412 shares of common stock. Each share of common stock, or a pre-funded warrant in lieu thereof, was sold together with the accompanying warrants to purchase one share of common stock.

The public offering price for each share of common stock and one accompanying Series A warrant and Series B warrants was $34.00. The public offering price of each pre-funded warrant and one accompanying Series A warrant and Series B warrant was $32.00. The exercise price of each pre-funded warrant was $2.00 per share. Each Series A warrant is exercisable for one share of common stock and had an initial exercise price equal to $34.00. Each Series B warrant was exercisable for one share of common stock and had an initial exercise price equal to $68.00. The Company received aggregate gross proceeds upon the closing of the offering of approximately $9,000,000, before deducting placement agents' fees and other offering expenses.

The pre-funded warrants were immediately exercisable upon issuance and were exercisable at any time until all pre-funded warrants were exercised in full. The Series A and B warrants were exercisable only upon receipt of such shareholder approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market, LLC (the "Nasdaq") to permit the exercise of the Series A and B warrants, after which the Series A and B warrants became exercisable for a period of five years and two and one-half years, respectively. The pre-funded warrants and Series A and B warrants contain standard adjustments to the exercise price, including for stock splits, stock dividends and pro rata distributions, and customary terms regarding the treatment of the pre-funded warrants and the Series A and B warrants in the event of a fundamental transaction, including but not limited to a merger or consolidation involving the Company, a sale of all or substantially all of the assets of the Company, or a business combination resulting in any person acquiring more than 50% of the outstanding shares of common stock of the Company. Additionally, the pre-funded warrants and Series A and B warrants include restrictions on exercise in the event the purchaser's beneficial ownership of the Company's common stock would exceed 4.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise.

The Series A and B warrants include an exercise price adjustment feature upon shareholder approval, whereby the exercise price adjusted to the greater of the lowest daily volume weighted average price during the reset period or the floor price, which is $6.844 per share, with a proportional increase in the number of warrant shares. The Series A and B warrants can be settled by a cash exercise or by cashless exercise, and the Series B warrants specifically can be settled by way of an alternative cashless exercise after shareholder approval is obtained, in which the Series B warrant holders can receive the same number of shares of common stock that would be issuable under a cash exercise. Upon meeting certain stock price requirements, the Company has the right to redeem any outstanding Series A and Series B warrants for $2.00 per share, provided the holders do not elect to exercise prior to redemption.

The Company assessed the Series A and B warrants under ASC 480 and ASC 815 and determined that the Series A and B warrants needed to be classified as liabilities as they did not meet the requirements to be considered indexed to the Company's own stock, due to (a) the adjustment to the exercise price tied to shareholder approval, and (b) the potential change in the settlement amount of the Series B warrants upon an alternative cashless exercise election. Additionally, the Company concluded at issuance that it would not have sufficient authorized and available shares of common stock to settle the Series A and B warrants. See *Note 13 – Derivative Liability.*

At inception, the estimated fair value of the Series A warrants was $5,900,000 and the Series B warrants was $11,000,000, for a total estimated fair value of $16,900,000. The total fair value exceeded the proceeds received in the offering by $8,000,000, which the Company recorded as a loss upon issuance of warrants. The Company also expensed approximately $900,000 of issuance costs incurred in the offering, resulting in a total loss on issuance during the year ended December 31, 2024 of $8,889,000. The estimated fair values of the Series A and B warrants have been recorded as a derivative liability at issuance and at December 31, 2024. In the Company's consolidated statement of operations for the year ended December 31, 2024, the Company recognized a gain of $334,000 for the change in the fair value measurement of the warrant liability.

During December 2024, the 258,412 pre-funded warrants were exercised in full, resulting in the Company receiving $500,000 in cash proceeds.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

On January 13, 2025, the Company's stockholders approved the issuance of the Series A and B warrants, at which time all of the Series A and B warrants became exercisable. This approval triggered an adjustment to the exercise price of the Series A warrants to $8.38. In connection with this approval, the holders of the Series B Warrants exercised their warrants in full under the alternative cashless exercise provision, resulting in the issuance of 1,910,975 shares of common stock and no additional proceeds received by the Company. The warrant liability reflected on the Company's consolidated balance sheet at December 31, 2024 was reclassified to additional paid-in capital on the Company's consolidated balance sheet at December 31, 2025. The Company recognized a loss of $6,468,000 during the year ended December 31, 2025 for the change in the fair value measurement of the warrant liability as of the date the warrant liability was reclassified to equity.

**Registered Direct Offering** 

On December 18, 2024, the Company sold 120,337 shares of its common stock to accredited investors in a registered direct offering at a purchase price of $16.62 per share. The Company engaged Univest Securities to serve as its exclusive placement agent in connection with the offering. The Company agreed to pay Univest Securities a cash fee equal to eight percent of the aggregate gross proceeds received in the offering. It also agreed to reimburse Univest Securities for various expenses incurred in connection with the offering. The Company received net proceeds of $1,665,000 from the offering after deducting placement agent fees and other offering expenses of $335,000.

**1800 Diagonal Financing Transactions**

1800 Diagonal Loan #1

On June 17, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending, LLC ("1800 Diagonal") pursuant to which the Company issued a promissory note to 1800 Diagonal in the principal amount of $120,000. The note is subject to a one-time interest charge of 12%, or approximately $14,000, and is payable in 12 monthly installments of $11,000 commencing on July 15, 2025. The security purchase agreement has a contingent default feature that the Company has determined to be nominal and is not applicable unless an event of default occurs. The Company received net proceeds of $84,000 after deductions of $15,000 for original issue discount, $16,000 for placement agent fees and $5,000 for legal and due diligence fees.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The Company incurred and paid $10,000 of interest expense under the promissory note during the year ended December 31, 2025. The outstanding balance of this note was $63,000 as of December 31, 2025. This amount is presented in the Company's consolidated balance sheets net of unamortized issuance costs of $17,000 as of December 31, 2025.

1800 Diagonal Loan #2

On June 17, 2025, the Company entered into a second securities purchase agreement with 1800 Diagonal pursuant to which the Company issued a promissory note to 1800 Diagonal in the principal amount of $240,000. The note is subject to a one-time interest charge of 12%, or approximately $29,000. An initial payment of $134,000 was due on December 15, 2025. Thereafter, the remainder is payable in six monthly installments of $22,000 commencing on January 15, 2026. The security purchase agreement has a contingent default feature that the Company has determined to be nominal and is not applicable unless an event of default occurs. The Company received net proceeds of $189,000 after deductions of $30,000 for original issue discount, $16,000 for placement agent fees and $5,000 for legal and due diligence fees.

In December 2025, the Company and 1800 Diagonal agreed that 1800 Diagonal would convert the initial payment of $134,000 into shares of the Company's common stock rather than the Company making the payment to 1800 Diagonal in cash. Accordingly, in December 2025, the Company issued an aggregate of 135,723 shares of common stock to 1800 Diagonal in full satisfaction of the initial payment of $134,000.

The Company incurred $21,000 of interest expense under the promissory note during the year ended December 31, 2025. The outstanding balance of this note was $122,000 as of December 31, 2025. This amount is presented in the Company's consolidated balance sheets net of unamortized issuance costs of $25,000 as of December 31, 2025.

**Boot Capital Financing Transaction**

On June 17, 2025, the Company entered into a securities purchase agreement with Boot Capital, LLC ("Boot Capital") pursuant to which the Company issued a promissory note to Boot Capital in the principal amount of $120,000. The note is subject to a one-time interest charge of 12%, or approximately $14,000, and is payable in 12 monthly installments of $11,000 commencing on July 15, 2025. The security purchase agreement has a contingent default feature that the Company has determined to be nominal and is not applicable unless an event of default occurs. The Company received net proceeds of $105,000 after deductions of $15,000 for original issue discount.

The Company incurred and paid $10,000 of interest expense under the promissory note during the year ended December 31, 2025. The outstanding balance of this note was $63,000 as of December 31, 2025. This amount is presented in the Company's consolidated balance sheets net of unamortized issuance costs of $8,000 as of December 31, 2025.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Agile Capital Financing Transaction**

On July 3, 2025, the Company entered into a business loan and security agreement with Agile Capital Funding, LLC ("Agile Funding") pursuant to which it issued a promissory note to Agile Funding in the principal amount of $368,000. The note is subject to a one-time interest charge of $162,000 and is payable in 28 weekly installments of $19,000 commencing on July 14, 2025. The Company received net proceeds of $350,000 after deductions of $18,000 for administrative agent fees.

The Company incurred and paid $159,000 of interest expense under the promissory note during the year ended December 31, 2025. The outstanding balance of the note was $54,000 as of December 31, 2025. This amount is presented in the Company's consolidated balance sheets net of unamortized issuance costs of $3,000 as of December 31, 2025.

**Streeterville Capital Transaction**

On August 21, 2025, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company ("Streeterville"), pursuant to which the Company agreed to issue and sell to Streeterville shares of the Company' common stock in one or more pre-paid purchases (each, a "Pre-Paid Purchase" and collectively, the "Pre-Paid Purchases") for an aggregate purchase price of up to $20,000,000 (the "Streeterville Transaction"). The Company also agreed to issue an additional 95,694 shares of the Company's common stock to Streeterville as a commitment fee for the pre-paid purchase facility established under the securities purchase agreement (the "Commitment Shares"). The securities purchase agreement provides for a two-year commitment period during which, subject to certain specified conditions, the Company may request additional Pre-Paid Purchases from Streeterville provided that the amount requested is no less than $250,000 and the total outstanding balance of all Pre-Paid Purchases does not exceed $3,000,000. The original issue discount for each additional Pre-Paid Purchase will be nine percent of the amount set forth in the applicable request and each additional Pre-Paid Purchase will accrue interest at the rate of nine percent per annum. The Company also executed a guaranty, a security agreement, and intellectual property security agreement in favor of Streeterville as part of the Streeterville Transaction. The Streeterville Transaction closed on August 21, 2025.

Following the funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from the Company that number of shares of common stock up to the lesser of: (i) a number of shares of common stock equal in value to the outstanding balance of the funded amount, and (ii) that number of shares of common stock such that Streeterville will not beneficially own greater than 9.99% of the Company outstanding shares of common stock. The purchase price of the shares of common stock will be 90% of the lowest daily volume weighted average price during the 10 trading days immediately prior to the purchase notice date, but not less than the floor price, which is the greater of: (i) 20% of the "Minimum Price" as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid Purchase, and (ii) $0.10.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

Pursuant to the terms of the securities purchase agreement, the Company filed a registration statement on Form S-1 under the Securities Act with the SEC to register the resale of the Commitment Shares and all shares of common stock issuable pursuant to the Pre-Paid Purchases. The registration statement became effective on November 10, 2025.

Nasdaq Listing Rule 5635(d) provides that shareholder approval is required prior to the issuance of shares of the Company common stock equal or greater in number to 20% of the number of shares of the Company's common stock issued and outstanding immediately prior to the completion of the proposed issuance at a price that is less than the "Minimum Price" as such term is defined under Nasdaq Listing Rule 5635(d) in a transaction that is not a public offering. The Company obtained the requisite shareholder approval for the Streeterville Transaction on November 20, 2025.

The Company may at any time prepay all or any portion of the outstanding balance of a Pre-Paid Purchase. In the event the Company elect to do so, the Company must pay Streeterville an amount equal to 110% multiplied by the portion of the outstanding balance the Company elected to prepay. If an event of default occurs under a Pre-Paid Purchase, the outstanding balance will become immediately due and payable. At anytime thereafter, upon written notice given by Streeterville, the outstanding balance will increase by seven-and-a half percent and interest will begin accruing at a rate of the lesser of 18% per annum or the maximum rate permitted under applicable law. The Company obligations are secured by all of the Company assets pursuant to a security agreement and have been guaranteed by the Company's operating subsidiaries pursuant to a guarantee, each entered into with Streeterville on August 21, 2025.

Univest Securities, LLC served as the placement agent in the offering ("Univest"). The Company agreed to pay Univest a cash fee equal to eight percent of the aggregate gross proceeds that it receives from any Pre-Paid Purchases that it completes and reimburse Univest for legal fees in the amount of $40,000.

Pre-Paid Purchase #1

The securities purchase agreement provides for an initial Secured Pre-Paid Purchase in the principal amount of $4,390,000, before deducting an original issue discount of $360,000 and transaction expenses of $30,000 (the "First Pre-Paid Purchase"), the terms of which are set forth on secured prepaid purchase #1 ("Pre-Paid Purchase #1"). The First Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years. The Company paid Univest a cash fee equal to eight percent of the aggregate gross proceeds received by the Company from the First Pre-Paid Purchase.

During the year ended December 31, 2025, the Company recognized $147,000 of interest expense associated with the First Pre-Paid Purchase. As of December 31, 2025, the outstanding principal balance of the First Pre-Paid Purchase was $4,390,000, which is reflected in the consolidated balance sheets net of unamortized issuance costs of $734,000.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

Pre-Paid Purchase #2

On November 13, 2025, the Company entered into Secured Pre-Paid Purchase #2 with Streeterville ("Pre-Paid Purchase #2"). Pre-Paid Purchase #2 provides for a second Pre-Paid Purchase in the principal amount of $5,450,000, before deducting an original issue discount of $450,000 (the "Second Pre-Paid Purchase"). The Second Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years.

The Second Pre-Paid Purchase was similar to the First Pre-Paid Purchase, however the Second Pre-Paid Purchase is secured by cash in an amount not less than the lesser of: (i) $4,500,000, and (ii) 90% of the then-current outstanding balance of the Second Pre-Paid Purchase (the "PPP2 Minimum Balance Amount"). The secured funds are being held in a deposit account (the "DACA Account") held by RIME Holdings, LLC, a Utah limited liability company and wholly-owned subsidiary of the Company that the Company formed in connection with this transaction ("RIME Holdings"), pursuant to a Deposit Account Control Agreement, dated November 13, 2025, by and among RIME Holdings, Lakeside Bank, an Illinois banking company ("Lakeside Bank"), and Streeterville. Accordingly, of the $5,000,000 proceeds that the Company received from the Second Pre-Paid Purchase, $4,500,000 were placed in the DACA Account.

The Company has the right to use funds in the DACA Account to repay any portion of the outstanding balance of the Second Pre-Paid Purchase, but only so long as the payment does not cause the outstanding balance to drop below the PPP2 Minimum Balance Amount. As long as no event of default has occurred, the Company may withdraw from the Deposit Account any funds in excess of the PPP2 Minimum Balance Amount. RIME Holdings executed a guaranty of the obligations outstanding under the Second Pre-Paid Purchase for the benefit of Streeterville.

The Company entered into a new placement agency agreement with Univest that superseded the placement agency agreement that the Company previously entered into with them on August 21, 2025. The Company agreed to pay Univest a cash fee equal to eight percent of the aggregate gross proceeds that the Company receives from any Pre-Paid Purchases that the Company completes and reimburse Univest for legal fees in the amount of $50,000.

During the year ended December 31, 2025, the Company repaid an aggregate principal amount of $538,000 under the Second Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 421,770 shares of the Company's common stock, and recognized $61,000 of interest expense associated with the Second Pre-Paid Purchase. As of December 31, 2025, the outstanding principal balance of the Second Pre-Paid Purchase was $4,912,000, which is reflected in the consolidated balance sheets net of unamortized issuance costs of $431,000.

Pre-Paid Purchase #3

On December 19, 2025, the Company entered into Secured Pre-Paid Purchase #3 with Streeterville ("Pre-Paid Purchase #3"). Pre-Paid Purchase #3 provides for a third Pre-Paid Purchase in the principal amount of $1,090,000, before deducting an original issue discount of $90,000 (the "Third Pre-Paid Purchase"). The Third Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years. The Company paid Univest a cash fee equal to eight percent of the aggregate gross proceeds received from the Third Pre-Paid Purchase.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

During the year ended December 31, 2025, the Company repaid an aggregate principal amount of $99,000 under the Third Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 83,901 shares of the Company's common stock, and recognized $3,000 of interest expense associated with the Third Pre-Paid Purchase. As of December 31, 2025, the outstanding principal balance of the Third Pre-Paid Purchase was $991,000, which is reflected in the consolidated balance sheets net of unamortized issuance costs of $168,000.

Additional information related to the Streeterville Transaction is presented in *Note 20 – Subsequent Events*.

**Note 13 – Derivative Liability**

During the years ended December 31, 2025 and 2024, the Company had derivative warrant liabilities that were measured at fair value on a recurring basis. These fair value measurements were estimated using a Monte Carlo simulation model, with the key inputs described below. Each of these fair value measurements was considered to be a Level 3 measurement by the Company as they used significant unobservable inputs, including the probability and expected date of stockholder approval.

The key inputs for the Series A warrant liabilities were as follows:

---

| | | | |
|:---|:---|:---|:---|
| Warrant Liability – Series A Warrants | Issuance Date | December 31, 2024 | January 13, 2025 |
| Stock price on valuation date | $18.00 | $18.00 | $8.38 |
| Exercise price | $34.00 | $34.00 | $8.38 |
| Number of shares of common stock | 279412 | 279412 | 1113652 |
| Remaining term (years) | 5.00 | 4.93 | 4.88 |
| Annual equity volatility | 113.0% | 114.0% | 126.00% |
| Annual volume volatility | 377.0% | 379.0% | 377.00% |
| Risk-free interest rate | 3.95% | 4.29% | 4.32% |
| Expected stockholder approval date | January 14, 2025 | January 14, 2025 | January 13, 2025 |
| Expected stockholder approval probability | 50% | 50% | 100% |

---

---

| | | |
|:---|:---|:---|
| Warrant Liability – Series B Warrants | Issuance Date | December 31, 2024 |
| Stock price on valuation date | $18.00 | $18.00 |
| Exercise price | $68.00 | $68.00 |
| Number of shares of common stock | 279412 | 279412 |
| Remaining term (years) | 2.50 | 2.43 |
| Annual equity volatility | 126.0% | 120.0% |
| Annual volume volatility | 409.0% | 416.0% |
| Risk-free interest rate | 4.00% | 4.17% |
| Expected stockholder approval date | January 14, 2025 | January 14, 2025 |
| Expected stockholder approval probability | 50% | 50% |

---

The Series B warrant liabilities were remeasured on each exercise date based on the closing price of the Company's common stock on the date the warrants were exercised.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

On January 13, 2025, the Company's shareholders approved the issuance of the Series A and Series B Warrants. This approval triggered the adjustment to the exercise price described above. In connection with this approval, the holders of the Series B warrants exercised their warrants in full under the alternative cashless exercise provision, resulting in the issuance of 1,910,975 shares of common stock and no additional proceeds received by the Company. The Series A warrants became exercisable for 1,133,652 shares of common stock at an exercise price of $8.38 per share after the shareholder approval adjustment was finalized on March 17, 2025. In addition, the Company reassessed the classification of the Series A warrants after the shareholder approval adjustment was finalized, concluding that the Series A warrants now met the requirements for equity classification under ASC 480 and ASC 815. The Company adjusted the Series A Warrants to fair value upon reclassification and reclassified that value to additional paid-in capital during the year ended December 31, 2025.

The following table details the Company's financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of December 31, 2024:

Schedule of Fair Value on a Recurring Basis

---

| | | | |
|:---|:---|:---|:---|
| December 31, 2024 | Level 1 | Level 2 | Level 3 |
| Liabilities |  |  |  |
| Warrant liabilities | $— | $— | $16603000 |
| Total liabilities | $— | $— | $16603000 |

---

The Company did not have any warrant liabilities outstanding at December 31, 2025.

The following table provides a roll-forward of the fair value of the derivative liabilities described above during the year ended December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | Series A<br> Warrants | Series B<br> Warrants | Total Warrant<br> Liabilities |
| Balance at December 31, 2023 | $— | $— | $— |
| Issuances | 5901000 | 11036000 | 16937000 |
| Exercises |  |  |  |
| Loss (gain) on change in fair value | (445000) | 111000 | (334000) |
| Balance at December 31, 2024 | $5456000 | $11147000 | $16603000 |
| Exercises |  | (15214000) | (15214000) |
| Loss on change in fair value | 2401000 | 4067000 | 6468000 |
| Reclassification to equity | (7857000) |  | (7857000) |
| Balance at December 31, 2025 | $— | $— | $— |

---

The following table provides a roll-forward of the number of warrants issued during the years ended December 31, 2025 and 2024:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Pre-Funded <br>Warrants | Series A<br> Warrants | Series B<br> Warrants | Other<br> Warrants | Total |
| Balance at December 31, 2023 |  |  |  | 4511 | 4511 |
| Issuances | 258412 | 279412 | 279412 |  | 817236 |
| Exercises | (258412) |  |  |  | (258412) |
| Balance at December 31, 2024 |  | 279412 | 279412 | 4511 | 563335 |
| Issuances |  |  |  |  |  |
| Exercises |  |  | (279412) |  | (279412) |
| Balance at December 31, 2025 |  | 279412 |  | 4511 | 283923 |

---

The Company did not issue any warrants during the year ended December 31, 2025.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Note 14 – Income Taxes**

The Company's loss before income taxes for the years ended December 31, 2025 and 2024 is as follows:

---

| | | |
|:---|:---|:---|
|  | Year ended | Year ended |
|  | December 31, 2025 | December 31, 2024 |
| United States | $(14513000) | $(24414000) |
| Foreign | (2012000) | 47000 |
| Loss before income taxes | $(16525000) | $(24367000) |

---

The Company did not have any provision for income taxes for the years ended December 31, 2025 and 2024.

The Company's net deferred tax assets as of December 31, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| NOL Federal carryforward | $6491000 | $4085000 |
| State NOL carryforward | 2235000 | 1426000 |
| Inventory differences |  | 355000 |
| Impairment of goodwiIll - SemiCab, Inc. | 614000 | 674000 |
| Stock option compensation expense | 197000 | 179000 |
| Intangibles | 136000 | 253000 |
| ROU liability |  | 14000 |
| Section 163(j) | 853000 | 694000 |
| Allowance for doubtful accounts | 31000 | 40000 |
| Warrant liability | 1687000 |  |
| Reserve for estimated returns |  | 476000 |
| Accrued vacation | - | 19000 |
|  | 12244000 | 8215000 |
| Less: valuation allowance | (12209000) | (8039000) |
| Deferred tax asset | 35000 | 176000 |
| Depreciable and amortizable assets |  | (39000) |
| ROU asset |  | (14000) |
| Warrant liability |  | (92000) |
| Prepaid expenses | (35000) | (31000) |
| Deferred tax liability | (35000) | (176000) |
| Net deferred tax | $- | $- |

---

The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company's estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences and the length of carryback and carryforward periods available under the applicable federal, state and foreign laws; and the amount and timing of future taxable income. The Company evaluated the realizability of its deferred tax assets as of December 31, 2025 and 2024 in accordance with accounting principles generally accepted in the United States of America and concluded that a valuation allowance against all of the Company's deferred tax assets was necessary based upon the Company's conclusions regarding, among other considerations, the Company's recent history of losses and projected losses for fiscal year 2026 and in the future.

The Company's income tax expense differs from the amount computed due to the application of the U.S. federal statutory tax rate of 21% to loss before income taxes as follows:

---

| | | |
|:---|:---|:---|
|  | Pre- ASU 2023-09 Adoption | Pre- ASU 2023-09 Adoption |
|  | Year ended December 31, 2025 | Year ended December 31, 2025 |
|  | Amount | % |
| U.S. Federal statutory income tax rate | (3471000) | 21.0% |
| State and local income taxes, net of federal benefit | (1075000) | 6.5% |
| Permanent differences: |  |  |
| Meals & Entertainment | 6000 | 0.0% |
| Permanent difference gain on sale of SMH | (233000) | 1.4% |
| Foreign tax rate differential | 601000 | (3.6)% |
| Change in valuation allowance | 4170000 | (25.2)% |
| Other | (45000) | 0.3% |
| Income tax loss | $(47000) | 0.3% |

---

---

| | |
|:---|:---|
|  | Pre- ASU 2023-09 Adoption<br>Year ended December 31, 2024 |
| Expected tax expense (benefit) | $(5117000) |
| State income taxes, net of federal income tax effect | (1574000) |
| Permanent differences | (441000) |
| Permanent difference loss on issuance of warrants | 2441000 |
| Tax rate differential on foreign earnings | 13000 |
| Change in valuation allowance | 4428000 |
| Other | 250000 |
| Actual tax (benefit) provision | $- |

---

At December 31, 2025, the Company had federal tax net operating loss carryforwards in the amount of $30,911,000 that begin to expire in the year 2026. The net operating loss carryforward is subject to an IRS Section 382 limitation that limited the amount available to use beginning in fiscal 2020 to $150,000 per year. In addition, the Company had state tax net operating loss carryforwards in the amount of $36,908,000 that will begin to expire in 2026. These tax net operating loss carryforwards may be subject to further adjustment based on future changes in ownership.

At December 31, 2025, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP and concluded that a valuation allowance of $12,209,000 against deferred tax assets is necessary. The change in valuation allowance increased $4,170,000 to $12,209,000 as of December 31, 2025 from $8,039,000 as of December 31, 2024. The recognition of the remaining net deferred tax asset and corresponding tax benefit is based upon the Company's conclusions regarding, among other considerations, the Company's current and anticipated customers, contracts and product introductions, and recent operating results.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The Company's policy is to recognize interest or penalties related to income tax matters in the provision for income taxes. The Company currently has no liabilities recorded for accrued interest or penalties and does not have any liabilities recorded related to uncertain tax positions.

**Note 15 – Segment Information and Revenue Disaggregation**

**Segment Information**

In accordance with ASC 280, Segment Reporting, an operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, for which discrete financial information is available, and whose operating results are regularly reviewed by the CODM in allocating resources and assessing performance.

Prior to August 1, 2025, the CODM determined that the Company operated in two reportable segments: (i) the SemiCab business, and (ii) the Singing Machine business. On August 1, 2025, the Company completed the sale of its Singing Machine business. Upon the completion of this transaction, the Company began operating as a single reportable segment consisting of its SemiCab business. As a result of the sale, the operating results and cash flows of the Singing Machine business have been reclassified as discontinued operations for all periods presented in the consolidated financial statements. Additional information regarding the discontinued operations is provided in *Note 19 – Discontinued Operations*.

The Company's CODM reviews consolidated operating results including net sales, gross profit, loss from operations, and net loss from continuing operations, as presented in the consolidated statements of operations. The CODM also considers consolidated operating expenses, non-financial information, and qualitative factors in evaluating performance, monitoring budgeted to actual results, and making decisions regarding capital allocation and levels of investment in operating activities. The CODM does not review segment asset information for purposes of allocating resources.

**Geographic Information**

Revenue is attributed to geographic areas based on the location where services are rendered. For the year ended December 31, 2025, substantially all of the Company's revenues were generated from customers located in India. For the year ended December 31, 2024, all of the Company's revenues were generated from customers located in the United States.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**Notes 16 – Concentrations, Risks and Uncertainties**

**Bank Liquidity and Financial Stability**

At times, the Company maintains cash in United States bank accounts that are more than the Federal Deposit Insurance Corporation insured amounts. The Company maintains cash balances in foreign financial institutions. The Company regularly monitors the financial stability of this financial institution and believes that it is not exposed to any significant credit risk in cash and cash equivalents. However, in March and April 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on the Company's operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the Company's ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.

**Revenue Concentration**

The Company derives a majority of its revenue from sales of its AI-enabled software logistics services in India. The Company's allowance for credit losses is based upon management's estimates and historical experience and reflects the fact that accounts receivable is concentrated with several large customers. As of December 31, 2025, 58% of accounts receivable were due from three customers in India that each individually owed more than 10% of the Company's total accounts receivable. At December 31, 2024, no customer individually owed more than 10% of the Company's total accounts receivable.

Revenue derived from the Company's largest customer and three largest customers collectively as a percentage of total net sales was 32% and 72% of the Company's revenue, respectively, for the year ended December 31, 2025. The loss of any of these customers could have an adverse impact on the Company.

**Note 17 – Related Party Transactions**

**Stingray Holdings Music Subscription Agreement**

The Company has a music subscription sharing agreement with Stingray Group under which the Company generated music subscription revenue of $64,000 and $780,000 during the years ended December 31, 2025 and 2024, respectively. This revenue was included in net loss from discontinued operations on the Company's consolidated statements of operations for the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, the Company had $0 and $212,000, respectively, due from Stingray Group for music subscription reimbursement. These accounts receivable were included in current assets of discontinued operations in the Company's consolidated balance sheets as of December 31, 2024. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of the Company's board of directors until October 6, 2025.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

**SMCB**

 ****

*VIE Analysis*

The Company determined that SMCB, which was a subsidiary of SemiCab, Inc. prior to SemiCab Holdings' acquisition of 99.99% of the equity shares of SMCB on May 2, 2025, was a VIE as the Company provides financial support to SMCB. While not contractually obligated, SMCB currently relies on the Company's reimbursement of certain costs under an intercompany services agreement ("MSA") whereby SMCB agrees to provide IT software development services to SemiCab, Inc. In exchange, under the MSA, the Company grants intellectual property rights to SMCB to use the software platform in India. Compensation for services is invoiced and paid on a monthly or quarterly basis as agreed by both parties, with rates subject to periodic review and revision. The agreement is for a term of two years ending on April 1, 2025 and automatically renews for additional 12-month periods unless prior notice is given by the terminating party. The agreement automatically renewed for an additional 12-month period on April 1, 2025. As a result of this relationship and the financial support provided by the Company to SMCB under the loan agreement described below to fund SMCB's operations, SMCB has been determined to be a VIE prior to May 2, 2025.

The Company further determined that it was not the primary beneficiary of SMCB because the Company did not have the power to direct or control SMCB's significant activities related to its business. Accordingly, the Company has not consolidated SMCB's results of operations and financial position in its condensed consolidated financial statements prior to May 2, 2025.

Pursuant to the terms of the asset purchase agreement that the Company entered into on June 11, 2024, the Company entered into an option agreement that granted SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB for 1,605 shares of the Company's common stock. The Company did not exercise this right and the option agreement expired on August 31, 2024.

*Loan Agreement*

The Company is a party to a loan agreement with SMCB dated March 22, 2024. Under the loan agreement, the Company agreed to loan up to $2,500,000 to SMCB. The loans are anticipated to be made in tranches. Disbursements of any tranches are fully at the discretion of the Company. Each tranche has a repayment period of five years. The loans can be repaid at any time prior to the five-year maturity date without penalty. Interest on the loans accrues at a rate of six percent per year and is payable quarterly.

At December 31, 2024, a total of $1,140,000 was outstanding under the loan agreement. During the period beginning January 1, 2025 and ending May 2, 2025, the date the Company acquired 99.99% of the equity shares of SMCB, the Company made advances to SMCB in the amount of $1,172,000. During the same period, SMCB charged $304,000 for services to the Company that were performed under the MSA, which charges offset amounts due under the loan with SMCB. As a result, as of May 2, 2025, a total of $2,008,000 of loans were outstanding under the loan agreement, and a total of $492,000 remained available for future borrowings under the loan agreement as of May 2, 2025. As of May 2, 2025, SMCB had not made any interest payments due under the loan agreement. As a result, the loans were in default as of May 2, 2025.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

On May 2, 2025, the loan payable of $2,008,000 of SMCB and the loan receivable of $2,008,000 of the Company were eliminated in consolidation. As a result, no such loans payable and loans receivable were outstanding on the Company's condensed consolidated balance sheet at December 31, 2025. Also on May 2, 2025, revenue generated by SMCB for services performed by SMCB under the MSA of $304,000, and expenses for the Company for services performed by SMCB under the MSA of $304,000, during the period commencing January 1, 2025 and ending May 2, 2025 were eliminated in consolidation on May 2, 2025. As a result, no such revenue and expenses were reflected on the Company's condensed consolidated statements of operations for the year ended December 31, 2025 and 2024.

**Note 18 – Acquisition of SMCB**

On May 2, 2025, the Company and SemiCab Holdings entered into an equity purchase agreement with SemiCab, Inc. pursuant to which: (i) SemiCab Holdings purchased 9,999 shares of the issued and outstanding equity shares, Rs. 10 par value, of SMCB, representing 99.99% of the issued and outstanding equity shares of SMCB, for $1,750,000, the payment of which amount was evidenced by the issuance of a promissory note by the Company to the SemiCab, Inc., and (ii) the Company purchased the 20% membership interest in SemiCab Holdings then held by SemiCab, Inc. for aggregate consideration consisting of 119,742 shares of the Company's common stock. The acquisition was completed on May 2, 2025 (the "Closing Date"). The promissory note provides that $1,500,000 is due and payable by the Company on the first anniversary of the Closing Date and the remaining $250,000 is due and payable by the Company on the 18-month anniversary of the Closing Date. The promissory note bears interest at six percent per annum. The Company completed the acquisition to expand its AI logistics and distribution into India.

On the Closing Date, the Company and SemiCab Holdings entered into an amended and restated employment agreement with each of Ajesh Kapoor and Vivek Sehgal pursuant to which Mr. Kapoor agreed to serve as the Chief Executive Officer and Chief Technology Officer of SemiCab Holdings and Mr. Sehgal agreed to serve as the Chief Product Officer of SemiCab Holdings. Pursuant to the terms of the employment agreements, SemiCab Holdings granted Messrs. Kapoor and Sehgal a membership interest in SemiCab Holdings of 15% and five percent, respectively. Of these amounts, one quarter of each such grant vested in full on the date of grant, and the remaining amounts vest evenly over three years.

The following table summarizes the allocation of the purchase price as May 2, 2025, the date the acquisition was completed:

---

| | |
|:---|:---|
| **Consideration:** | |
| Promissory note | $1750000 |
| 119,742 shares of common stock | 316000 |
| Assumption of debt | 2008000 |
| &nbsp;&nbsp;&nbsp;Total | $4074000 |
| **Identifiable net tangible assets acquired:** |  |
| Cash and cash equivalents | $593000 |
| Accounts receivable, net | 319000 |
| Prepaid expenses and other current assets | 377000 |
| Property and equipment, net | 11000 |
| Other non-current assets | 128000 |
| Accounts payable, accrued expenses and other liabilites | (731000) |
| Net tangible assets acquired | $697000 |
| **Identifiable intangible assets acquired:** |  |
| Customer relationships | $1007000 |
| Reacquired rights | 294000 |
| Trade name | 180000 |
| Net intangible assets acquired | $1481000 |
| Net assets acquired | $2178000 |
| **Goodwill** | $**1896000** |

---

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

*Pro Forma Information*

The unaudited pro forma financial information below presents the effects of the acquisition as though it had been completed on January 1, 2024. The pro forma adjustments are derived from the historically reported transactions of the respective companies. The pro forma results do not include anticipated combined effects or other expected benefits of the acquisition. The pro forma results for the year ended December 31, 2025 and 2024 reflect the combined performance of the Company and the SMCB business for that period. The unaudited pro forma information is based on available data and certain assumptions that the Company believes are reasonable given the circumstances. However, actual results may differ materially from the assumptions used in the accompanying unaudited pro forma financial information. This selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not intended to represent what the actual consolidated results of operations would have been had the acquisition date occurred on January 1, 2024, nor does it attempt to forecast future consolidated results of operations.

---

| | | |
|:---|:---|:---|
|  | Year ended | Year ended |
|  | December 31, 2025 | December 31, 2024 |
| Net revenue | $8394527 | $6432000 |
| Operating loss from continuing operations | (11215915) | (16092000) |
| Net loss | $(25251915) | $(26535000) |

---

Additional information on the acquisition of SMCB is presented in *Note 20 – Subsequent Events*.

**Note 19 – Discontinued Operations**

On August 1, 2025, the Company entered into an asset purchase agreement with SMC and Stingray Music USA, Inc. ("Stingray USA") pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with the Company's Singing Machine business for $500,000. The transaction closed on August 1, 2025.

The Company determined that the sale of the Singing Machine business met the criteria under Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements – Discontinued Operations ("ASC 205-20"), to be classified as a discontinued operation as the sale represented a strategic shift that will have a significant effect on the Company's operations and financial results. Accordingly, the consolidated balance sheets, the consolidated statements of operations and the consolidated statement of cash flows have been adjusted for prior periods to reflect the Singing Machine business as a discontinued operation.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The following table summarizes the results of the Singing Machine business as a discontinued operation in the consolidated statements of operations for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| **Net Sales** | $4019000 | $23197000 |
| **Cost of Goods Sold** | 2033000 | 18222000 |
| **Gross Profit** | 1986000 | 4975000 |
| **Operating Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 1098000 | 2874000 |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 2429000 | 7584000 |
| **Total Operating Expenses** | 3527000 | 10458000 |
| **Loss From Operations** | (1541000) | (5483000) |
| **Other Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Gain on sale of Singing Machine business | 179000 | - |
| **Total Other Expenses** | 179000 | - |
| **Loss Before Income Tax Benefit** | (1362000) | (5483000) |
| **Income Tax** | - | - |
| **Net Loss From Discontinued Operations** | $(1362000) | $(5483000) |

---

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

The following table summarizes the assets and liabilities of the Singing Machine business as a discontinued operation in the consolidated balance sheet for the year ended December 31, 2024:

---

| | |
|:---|:---|
|  | **December 31, 2024** |
| **<u>Assets</u>** |  |
| **Current Assets** |  |
| &nbsp;&nbsp;&nbsp;Cash | $317000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 4252000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, related party | 212000 |
| &nbsp;&nbsp;&nbsp;Inventory | 2186000 |
| &nbsp;&nbsp;&nbsp;Returns asset | 1621000 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 61000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets of Discontinued Operations** | $8649000 |
| **Property and equipment, net** | 282000 |
| **Other non-current assets** | 124000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Non-Current Assets of Discontinued Operations** | $406000 |
| **<u>Liabilities</u>** |  |
| **Current Liabilities** |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $3421000 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 2478000 |
| &nbsp;&nbsp;&nbsp;Refund due to customer | 38000 |
| &nbsp;&nbsp;&nbsp;Reserve for sales returns | 3355000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 95000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities of Discontinued Operations** | $9387000 |

---

There are no assets or liabilities of the discontinued operations as of December 31, 2025.

The following table summarizes the cash flows of the Singing Machine business as a discontinued operation in the consolidated statements of cash flows for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2025** | **December 31, 2024** |
| Net cash used in operating activities | $(2539000) | $(5080000) |
| Net cash provided by investing activities | 845000 | 122000 |
| Net cash provided by financing activities | - | - |
| &nbsp;&nbsp;&nbsp;Total cash used in discontinued operations | $(1694000) | $(4958000) |

---

**Note 20 – Subsequent Events**

**Streeterville Capital Transaction**

Pre-Paid Purchase #1

Between January 1, 2026 and March 13, 2026, the Company repaid outstanding principal in the amount of $3,305,000 under the First Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 3,218,166 shares of the Company's common stock. The current outstanding balance of the First Pre-Paid Purchase is $1,085,000.

**ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2025 and 2024**

Pre-Paid Purchase #2

Between January 1, 2026 and February 13, 2026, the Company repaid outstanding principal in the amount of $4,912,000 under the Second Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 6,447,017 shares of the Company's common stock. The Second Pre-Paid Purchase was repaid in full on February 13, 2026.

Pre-Paid Purchase #3

Between January 1, 2026 and January 7, 2026, the Company repaid outstanding principal in the amount of $991,000 under the Third Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 1,132,410 shares of the Company's common stock. The Third Pre-Paid Purchase was repaid in full on January 7, 2026.

Pre-Paid Purchase #4

On February 17, 2026, the Company entered into Secured Pre-Paid Purchase #4 with Streeterville ("Pre-Paid Purchase #4"). Pre-Paid Purchase #4 provides for a fourth Pre-Paid Purchase in the principal amount of $10,355,000, before deducting an original issue discount of $855,000 (the "Fourth Pre-Paid Purchase"). The Fourth Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has a maturity date of three years. The Fourth Pre-Paid Purchase is similar to the Second Pre-Paid Purchase in that the Fourth Pre-Paid Purchase is secured by cash in an amount not less than the lesser of: (i) $3,500,000, and (ii) 90% of the then-current outstanding balance of the Fourth Pre-Paid Purchase (the "PPP4 Minimum Balance Amount"). Accordingly, of the $9,500,000 in proceeds that the Company received from the Fourth Pre-Paid Purchase, $3,500,000 was placed in the DACA Account.

The Company has the right to use funds in the DACA Account to repay any portion of the outstanding balance of the Fourth Pre-Paid Purchase, but only so long as the payment does not cause the outstanding balance to drop below the PPP4 Minimum Balance Amount. As long as no event of default has occurred, the Company may withdraw from the Deposit Account any funds in excess of the PPP4 Minimum Balance Amount. RIME Holdings executed a guaranty of the obligations outstanding under the Fourth Pre-Paid Purchase for the benefit of Streeterville.

The Company paid Univest a cash fee equal to eight percent of the aggregate gross proceeds received from the Fourth Pre-Paid Purchase that were not placed in the DACA Account. The Company will pay Univest a cash fee equal to eight percent of the funds held in the DACA Account when they are released to the Company.

The Company has not repaid any of the principal outstanding under the Fourth Pre-Paid Purchase.

**Acquisition of SMCB**

In January 2026, the Indian government approved the purchase by SemiCab Holdings of the remaining outstanding equity share in SMCB, representing 0.01% of the issued and outstanding equity shares of SMCB, from Sudheer Srinivas Kadandale for $10.

## Exhibit 19.1

**Exhibit 19.1**

**THE SINGING MACHINE COMPANY, INC.**

**INSIDER TRADING POLICY**

**(effective July 25, 2022)**

**<u>Background</u>**

The board of directors of The Singing Machine Company, Inc. (the "Company") has adopted this Insider Trading Policy for directors, officers, employees and consultants of the Company and its affiliates with respect to the trading of the Company's securities, as well as the securities of publicly traded companies with whom we have a business relationship.

Federal and state securities laws prohibit the purchase or sale of a company's securities by persons who are aware of material information about that company that is not generally known or available to the public. These laws also prohibit persons who are aware of such material nonpublic information from disclosing this information to others who may trade. Companies and their controlling persons are also subject to liability if they fail to take reasonable steps to prevent insider trading by company personnel.

It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be severe. Both the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority investigate and are very effective at detecting insider trading. The SEC, together with the U.S. Attorneys, pursue insider trading violations vigorously. Cases have been successfully prosecuted against trading by employees through foreign accounts, trading by family members and friends, and trading involving only a small number of shares.

This policy is designed to prevent insider trading or allegations of insider trading, and to protect the Company's reputation for integrity and ethical conduct. It is your obligation to understand and comply with this policy. The securities rules do not recognize any mitigating circumstances, and even the appearance of an improper transaction must be avoided to preserve the Company's reputation for adhering to the highest standards of conduct. Should you have any questions regarding this policy, please contact the Company's Chief Financial Officer.

**<u>Penalties for Noncompliance</u>**

*Civil and Criminal Penalties.* Potential penalties for insider trading violations include (1) imprisonment for up to 20 years, (2) criminal fines of up to $5 million, and (3) civil fines of up to three times the profit gained or loss avoided.

 

*Controlling Person Liability.* If the Company fails to take appropriate steps to prevent illegal insider trading, the Company may have "controlling person" liability for a trading violation, with civil penalties of up to the greater of $2,166,279 (subject to adjustment for inflation) and three times the profit gained or loss avoided, as well as a criminal penalty of up to $25 million. The civil penalties can extend personal liability to the Company's directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading.

*Company Sanctions.* Failure to comply with this policy may also subject you to Company-imposed sanctions, including dismissal for cause, whether or not your failure to comply with this policy results in a violation of law.

**<u>Scope of Policy</u>**

*Persons Covered.* As a director, officer, employee or consultant of the Company or its affiliates, this policy applies to you. The same restrictions that apply to you apply to your family members who reside with you, anyone else who lives in your household and any family members who do not live in your household but whose transactions in Company securities are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in Company securities).

In addition, subject to the last sentence in this paragraph, this Policy applies to any entities that you influence or control (including corporations, limited liability companies, partnerships or trusts). For entities that are venture or similar investment funds, you have influence or control of the shares held by those funds if you can vote or dispose of them. Any transactions by entities that you have influence or control over should be treated for purposes of this Policy and applicable securities laws as if they were for your own account. However, this Policy shall not apply to any entity that engages in the investment of securities in the ordinary course of its business (e.g., a venture capital or similar investment fund or partnership) if such entity has established its own insider trading controls and procedures in compliance with applicable securities laws.

You are responsible for ensuring compliance with this policy by any such person or entity whose transactions are subject to this policy.

*Companies Covered.* The prohibition on insider trading in this policy is not limited to trading in the Company's securities. It includes trading in the securities of other firms, such as customers or suppliers of the Company and those with which the Company may be negotiating major transactions, such as an acquisition, investment or sale. Information that is not material to the Company may nevertheless be material to one of those other firms.

*Transactions Covered.* Trading includes purchases and sales of stock, derivative securities such as put and call options and convertible debentures or preferred stock, and debt securities (debentures, bonds and notes). Trading also includes certain transactions under Company plans, as described below.

● *Stock Option Exercises*. This policy's trading restrictions generally do not apply to the exercise of a stock option. The trading restrictions do apply, however, to any sale of the underlying stock or to a cashless exercise of the option through a broker, as this entails selling a portion of the underlying stock to cover the costs of exercise.

● *Restricted Stock Units or Restricted Stock Awards*. This policy's trading restrictions generally do not apply to the vesting of restricted stock units or restricted stock awards or the Company's withholding of shares to satisfy tax withholding requirements upon the vesting of such awards (assuming such withholding is permitted by the Company). The trading restrictions do apply, however, to any market sale of stock received upon vesting of such awards.

● *Employee Stock Purchase Plan*. This policy's trading restrictions do not apply to purchases of Company stock in an employee stock purchase plan resulting from your periodic payroll contributions to the plan under an election you made at the time of enrollment in the plan. The trading restrictions do apply to your sales of Company stock purchased under the plan.

● *401(k) Plan*. This policy's trading restrictions do not apply to purchases of Company stock in the 401(k) plan resulting from your periodic contribution of money to the plan pursuant to your payroll deduction election. The trading restrictions do apply, however, to elections you may make under the 401(k) plan to (a) increase or decrease the percentage of your periodic contributions that will be allocated to the Company stock fund, (b) make an intra-plan transfer of an existing account balance into or out of the Company stock fund, (c) borrow money against your 401(k) plan account if the loan will result in a liquidation of some or all of your Company stock fund balance, and (d) pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund.

● *Dividend Reinvestment Plan*. This policy's trading restrictions do not apply to purchases of Company stock under any Company dividend reinvestment plan resulting from your reinvestment of dividends paid on Company securities. The trading restrictions do apply, however, to voluntary purchases of Company stock resulting from additional contributions you choose to make to the plan, and to your election to participate in the plan or increase your level of participation in the plan. This policy also applies to your sale of any Company stock purchased pursuant to the plan.

**<u>Statement of Policy</u>**

*No Trading on Inside Information.* You may not trade in the securities of the Company, directly or through family members or other persons or entities, if you are aware of material nonpublic information relating to the Company. Similarly, you may not trade in the securities of any other company if you are aware of material nonpublic information about that company which you obtained in the course of your employment with the Company.

 

*No Tipping.* You may not pass material nonpublic information on to others or recommend to anyone the purchase or sale of any securities when you are aware of such information. This practice, known as "tipping," also violates the securities laws and can result in the same civil and criminal penalties that apply to insider trading, even though you did not trade and did not gain any benefit from another's trading.

*No Exception for Hardship.* The existence of a personal financial emergency does not excuse you from compliance with this policy.

*Blackout and Pre-Clearance Procedures*. To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on the basis of inside information, the Company's board of directors has adopted an Addendum to Insider Trading Policy that applies to directors, executive officers subject to Section 16 of the Securities Exchange Act of 1934 ("executive officers"), and certain designated employees and consultants of the Company and its affiliates who have access to material nonpublic information about the Company. The Company will notify you if you are subject to the addendum.

The addendum generally prohibits persons covered by it from trading in the Company's securities during quarterly blackout periods (beginning 15 days before the end of a quarter and ending after the second full business day following the release of the Company's earnings for that quarter) and during certain event-specific blackouts. Persons covered by the addendum also must pre-clear all transactions in the Company's securities.

**<u>Definition of Material Nonpublic Information</u>**

Note that inside information has two important elements—materiality and public availability.

*Material Information.* Information is material if there is a substantial likelihood that a reasonable investor would consider it important in deciding whether to buy, hold or sell a security. Any information that could reasonably be expected to affect the price of the security is material. Common examples of material information are:

● Projections of financial performance, including future earnings or losses or other earnings guidance.

● Financial results of a completed period.

● Earnings that are inconsistent with the consensus expectations of the investment community.

● A pending or proposed merger, acquisition or tender offer or an acquisition or disposition of significant assets.

● A pending or proposed joint venture.

● A change in management.

● Major events regarding the Company's securities, including the declaration of a stock split or the offering of additional securities.

● Severe financial liquidity problems.

● Actual or threatened major litigation, or the resolution of such litigation.

● A cybersecurity risk or incident involving the Company's business, including relating to customer, employee or Company data, or a product or service.

● New major contracts, orders, suppliers, customers or finance sources, or the loss thereof.

● Development of a significant new product, process or service.

Both positive and negative information can be material. Because trading that receives scrutiny will be evaluated after the fact with the benefit of hindsight, questions concerning the materiality of particular information should be resolved in favor of materiality, and trading should be avoided.

*Nonpublic Information*. Nonpublic information is information that is not generally known or available to the public. One common misconception is that material information loses its "nonpublic" status as soon as a press release is issued disclosing the information. In fact, information is considered to be available to the public only when it has been released broadly to the marketplace (such as by a press release or an SEC filing) *and the investing public has had time to absorb the information fully*. As a general rule, information is considered nonpublic until the second full trading day after the information is released. For example, if the Company announces financial earnings before trading begins on a Tuesday, the first time you can buy or sell Company securities is the opening of the market on Thursday (assuming you are not aware of other material nonpublic information at that time). However, if the Company announces earnings after trading begins on that Tuesday, the first time you can buy or sell Company securities is the opening of the market on Friday.

**<u>Additional Guidance</u>**

The Company considers it improper and inappropriate for those employed by or associated with the Company to engage in short-term or speculative transactions in the Company's securities or in other transactions in the Company's securities that may lead to inadvertent violations of the insider trading laws. Accordingly, your trading in Company securities is subject to the following additional guidance.

*Short Sales*. Short sales (the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company's prospects. In addition, short sales may reduce a seller's incentive to improve the Company's performance. For these reasons, you may not engage in short sales of the Company's securities, including a "sale against the box" (a sale with delayed delivery).

*Publicly Traded Options*. Given the relatively short term of publicly traded options, you may not engage in transactions in publicly traded options, such as puts, calls and other derivative securities, on an exchange or in any other organized market.

*Standing Orders*. Standing orders and limit orders should be used only for a very brief period of time. A standing order placed with a broker to sell or purchase stock at a specified price leaves you with no control over the timing of the transaction. As a result, a standing order transaction executed by the broker when you are aware of material nonpublic information may result in unlawful insider trading. The Company discourages such standing order transactions on Company securities.

 

*Hedging Transactions.* Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a person to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the person to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the person may no longer have the same objectives as the Company's other shareholders. Therefore, all directors, officers, employees and consultants of the Company are prohibited from engaging in such transactions.

 

*Margin Accounts and Pledges*. Securities held in a margin account or pledged as collateral for a loan may be sold without your consent by the broker if you fail to meet a margin call or by the lender in foreclosure if you default on the loan. Because a margin or foreclosure sale may occur at a time when you are aware of material nonpublic information or otherwise are not permitted to trade in Company securities, you are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. An exception to this prohibition may be granted where you wish to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrate the financial capacity to repay the loan without resort to the pledged securities. If you wish to pledge Company securities as collateral for a loan, you must submit a request for approval to the Chief Financial Officer of General Counsel if there is one, at least two weeks prior to the proposed execution of documents evidencing the proposed pledge.

**<u>Post-Termination Transactions</u>**

This policy continues to apply to your transactions in Company securities even after you have terminated employment or other services to the Company or an affiliate as follows: if you are aware of material nonpublic information when your employment or service relationship terminates, you may not trade in Company securities until that information has become public or is no longer material.

**<u>Unauthorized Disclosure</u>**

Maintaining the confidentiality of Company information is essential for competitive, security and other business reasons, as well as to comply with securities laws. You should treat all information you learn about the Company or its business plans in connection with your employment as confidential and proprietary to the Company. Inadvertent disclosure of confidential or inside information may expose the Company and you to significant risk of investigation and litigation.

The timing and nature of the Company's disclosure of material information to outsiders is subject to legal rules, the breach of which could result in substantial liability to you, the Company and its management. Accordingly, it is important that responses to inquiries about the Company by the press, investment analysts or others in the financial community be made on the Company's behalf only through authorized individuals.

Please consult the Company's management for more details regarding the Company's policy on speaking to the media, financial analysts and investors.

**<u>Personal Responsibility</u>**

You should remember that the ultimate responsibility for adhering to this policy and avoiding improper trading rests with you. If you violate this policy, the Company may take disciplinary action, including dismissal for cause.

**<u>Company Assistance</u>**

Your compliance with this policy is of the utmost importance both for you and for the Company. If you have any questions about this policy or its application to any proposed transaction, you may obtain additional guidance from the Company's Chief Financial Officer. Do not try to resolve uncertainties on your own, as the rules relating to insider trading are often complex, not always intuitive and carry severe consequences.

**<u>Certification</u>**

All employees must certify their understanding of, and intent to comply with, this policy. A copy of the certification that employees must sign is enclosed with this policy. Directors, executive officers and certain employees and consultants are subject to an "Addendum to Insider Trading Policy—Pre-clearance and Blackout Procedures." Persons who are covered by the addendum should sign the certification attached to the addendum instead of the one enclosed with this policy.

**THE SINGING MACHINE COMPANY, INC.**

**INSIDER TRADING POLICY**

**CERTIFICATION**

To The Singing Machine Company, Inc.:

I, ____________________________ (name), have received and read a copy of The Singing Machine Company, Inc. Insider Trading Policy dated ________, 2022. I hereby agree to comply with the specific requirements of the policy in all respects during my employment or other service relationship with The Singing Machine Company, Inc. or an affiliate. I understand that my failure to comply in all respects with the policy is a basis for termination for cause of my employment or other service relationship with The Singing Machine Company, Inc. or an affiliate.

---

| |
|:---|
| (Signature) |
| (Date) |

---

**THE SINGING MACHINE COMPANY, INC.**

**ADDENDUM TO INSIDER TRADING POLICY REGARDING PRE-<br> CLEARANCE AND BLACKOUT PROCEDURES**

**(effective July 2022)**

To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside information, the Company's board of directors has adopted this Addendum to Insider Trading Policy. This addendum applies to directors, executive officers subject to Section 16 of the Securities Exchange Act of 1934 ("executive officers") and certain designated employees and consultants of the Company and its affiliates who have access to material nonpublic information about the Company (collectively, "covered persons"). The names and/or positions of the covered persons subject to this addendum are listed on the attached Schedule I. The Company may from time to time designate other individuals who are subject to this addendum and will amend Schedule I from time to time as necessary to reflect such changes or the resignation or change of status of any individual. For avoidance of doubt, this addendum shall not apply to any entity that engages in the investment of securities in the ordinary course of its business (e.g., a venture capital or similar investment fund or partnership) if such entity has established its own insider trading controls and procedures in compliance with applicable securities laws and such entity shall not be deemed a covered person for purposes of this addendum.

This addendum is in addition to and supplements the Company's Insider Trading Policy.

Directors and executive officers are also subject to additional procedures designed to address the two-day Form 4 filing requirement under Section 16.

**<u>Pre-clearance Procedures</u>**

Covered persons are covered by the following pre-clearance procedures.

Covered persons, together with their family members and other members of their household, may not engage in any transaction involving the Company's securities (including a stock plan transaction such as an option exercise, or a gift, loan, pledge or hedge, contribution to a trust or any other transfer) without first obtaining pre-clearance of the transaction from the Company's Chief Financial or General Counsel, if there is one (each, the "compliance officer"). A request for pre-clearance should be submitted to the compliance officer at least two business days in advance of the proposed transaction. The compliance officer is under no obligation to approve a trade submitted for pre-clearance, and may determine not to permit the trade. The compliance officer himself or herself may not trade in Company securities unless the Chief Executive Officer has approved the trade(s) in accordance with the procedures set forth in this addendum.

**<u>Blackout Procedures</u>**

All covered persons are subject to the following blackout procedures.

*Quarterly Blackout Periods.* The Company's announcement of its quarterly financial results almost always has the potential to have a material effect on the market for the Company's securities. Therefore, to avoid even the appearance of trading on the basis of material nonpublic information, you may not trade in the Company's securities during the period beginning 15 days prior to the end of the quarter and ending after the second full business day following the release of the Company's earnings for that quarter. Persons subject to these quarterly blackout periods include the persons currently listed on Schedule I attached to this addendum and all other persons who are informed by the compliance officer that they are subject to the quarterly blackout periods.

*Interim Earnings Guidance and Event-Specific Blackouts*. The Company may on occasion issue interim earnings guidance or other potentially material information by means of a press release, SEC filing on Form 8-K or other means designed to achieve widespread dissemination of the information. You should anticipate that trading will be blacked out while the Company is in the process of assembling the information to be released and until the information has been released and fully absorbed by the market.

From time to time, an event may occur that is material to the Company and is known by only a few directors or executives. So long as the event remains material and nonpublic, the persons who are aware of the event, as well as other persons covered by the quarterly earnings blackout procedures, may not trade in the Company's securities, as follows. The existence of an event-specific blackout will not be announced, other than to those who are aware of the event giving rise to the blackout. If, however, a person whose trades are subject to pre-clearance requests permission to trade in the Company's securities during an event-specific blackout, the compliance officer will inform the requesting person of the existence of a blackout period, without disclosing the reason for the blackout. Any person made aware of the existence of an event-specific blackout should not disclose the existence of the blackout to any other person. The failure of the compliance officer to designate a person as being subject to an event-specific blackout will not relieve that person of the obligation not to trade while aware of material nonpublic information.

Covered persons may also be subject to event-specific blackouts pursuant to the SEC's Regulation Blackout Trading Restriction, which prohibits certain sales and other transfers by insiders during certain pension plan blackout periods.

Even if a blackout period is not in effect, at no time may you trade in Company securities if you are aware of material nonpublic information about the Company.

 

*Hardship Exceptions*. A covered person who is subject to a quarterly earnings blackout period and who has an unexpected and urgent need to sell Company stock in order to generate cash may, in appropriate circumstances, be permitted to sell Company stock even during the quarterly blackout period. Hardship exceptions may be granted only by the compliance officer and must be requested at least two days in advance of the proposed trade. A hardship exception may be granted only if the compliance officer concludes that the Company's earnings information for the applicable quarter does not constitute material nonpublic information. Under no circumstance will a hardship exception be granted during an event-specific blackout period or to a director or executive officer.

**<u>Exception for Approved 10b5-1 Plans</u>**

Trades by covered persons in the Company's securities that are executed pursuant to an approved 10b5-1 plan are not subject to the prohibition on trading on the basis of material nonpublic information contained in the Insider Trading Policy or to the restrictions set forth above relating to pre-clearance procedures and blackout periods.

Rule 10b5-1 provides an affirmative defense from insider trading liability under the federal securities laws for trading plans that meet certain requirements. In general, a 10b5-1 plan must be entered into before you are aware of material nonpublic information. Once the plan is adopted, you must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify (including by formula) the amount, pricing and timing of transactions in advance or delegate discretion on those matters to an independent third party.

The Company requires that all 10b5-1 plans be pre-cleared in writing in advance by the compliance officer. 10b5-1 plans generally may not be adopted or amended during a blackout period and may only be adopted or amended when the person adopting or amending the plan is not aware of material nonpublic information.

**<u>Post-Termination Transactions</u>**

If you are aware of material nonpublic information when you terminate employment or services, you may not trade in the Company's securities until that information has become public or is no longer material. In all other respects, the procedures set forth in this addendum will cease to apply to your transactions in Company securities upon the expiration of any "blackout period" that is applicable to your transactions at the time of your termination of employment or services.

**<u>Company Assistance</u>**

Your compliance with this addendum and the Company's Insider Trading Policy is of the utmost importance both for you and for the Company. If you have any questions about this addendum, the Insider Trading Policy or their application to any proposed transaction, you may obtain additional guidance from the compliance officer.

**<u>Certification</u>**

All covered persons subject to the procedures set forth in this addendum must certify their understanding of, and intent to comply with, the Company's Insider Trading Policy and this addendum on the form attached to this addendum.

**THE SINGING MACHINE COMPANY, INC.**

**ADDENDUM TO INSIDER TRADING POLICY REGARDING<br> PRECLEARANCE AND BLACKOUT PROCEDURES**

**CERTIFICATION**

To The Singing Machine Company, Inc.:

I, ____________________________ (name), have received and read a copy of The Singing Machine Company, Inc. Insider Trading Policy dated ________, 2022 and the Addendum to Insider Trading Policy dated ___________, 2022 regarding pre-clearance and blackout procedures. I hereby agree to comply with the specific requirements of the policy and the addendum in all respects during my employment or other service relationship with The Singing Machine Company, Inc. or an affiliate. I understand that my failure to comply in all respects with the policy and the addendum is a basis for termination for cause of my employment or other service relationship with The Singing Machine Company, Inc. or an affiliate.

---

| |
|:---|
| (Signature) |
| (Date) |

---

**<u>Schedule I</u>**

**Covered Persons**

## Exhibit 21.1

**Exhibit 21.1**

**Subsidiaries of Algorhythm Holdings, Inc.**

SemiCab Holdings, LLC, a Nevada limited liability company

SMCB Solutions Private Limited, an Indian company

The Singing Machine Company, Inc., a Delaware corporation

RIME Holdings, LLC, a Utah limited liability company

## Exhibit 23.1

**Exhibit 23.1**

![](ex23.jpg)

**<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

We hereby consent to the incorporation by reference in this Registration Statement on S-3 (No. 333-259341) of our report dated April 1, 2026 relating to the consolidated financial statements of Algorhythm Holdings, Inc.'s audit of the consolidated financial statements as of and for the year ended December 31, 2025 and the reference to our firm under the caption "Experts" in the Registration Statement.

 */s/ M&K CPAS, PLLC*

The Woodlands, TX

April 1, 2026

## Exhibit 23.2

**Exhibit 23.2**

![](ex23.jpg)

**<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

We hereby consent to the incorporation by reference in this Registration Statement on S-3 (No. 333-269183) of our report dated April 1, 2026 relating to the consolidated financial statements of Algorhythm Holdings, Inc.'s audit of the consolidated financial statements as of and for the year ended December 31, 2025 and the reference to our firm under the caption "Experts" in the Registration Statement.

*/s/ M&K CPAS, PLLC*

The Woodlands, TX

April 1, 2026

## Exhibit 23.3

**Exhibit 23.3**

![](ex23.jpg)

**<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

We hereby consent to the incorporation by reference in this Registration Statement on S-8 (No. 333-268106) of our report dated April 1, 2026 relating to the consolidated financial statements of Algorhythm Holdings, Inc.'s audit of the consolidated financial statements as of and for the year ended December 31, 2025 and the reference to our firm under the caption "Experts" in the Registration Statement.

*/s/ M&K CPAS, PLLC*

The Woodlands, TX

April 1, 2026

## Exhibit 23.4

**Exhibit 23.4**

**<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

We consent to the incorporation by reference in the Registration Statement of Algorhythm Holdings, Inc. on Form S-3 (Nos. 333-269183 and 333-259341) and Form S-8 (No. 333-268106), of our report dated April 15, 2025, with respect to our audit of the consolidated financial statements of Algorhythm Holdings, Inc. as of December 31, 2024, and for the year ended December 31, 2024, included in this Annual Report on Form 10-K for the year ended December 31, 2025.

/s/ MARCUM LLP

Philadelphia, Pennsylvania

April 1, 2026

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

I, Gary Atkinson, certify that:

1. I have reviewed this Annual Report on Form 10-K of Algorhythm Holdings, Inc. for the year ended December 31, 2025;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of a Transition Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| */s/ Gary Atkinson* |
| Gary Atkinson |
| Chief Executive Officer |
| (Principal Executive Officer) |
| Date: April 1, 2026 |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

I, Alex Andre, certify that:

1. I have reviewed this Annual Report on Form 10-K of Algorhythm Holdings, Inc. for the year ended December 31, 2025;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of a Transition Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| */s/ Alex Andre* |
| Alex Andre |
| Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
| Date: April 1, 2026 |

---

## Exhibit 32.1

**Exhibit 32.1** 

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO SECTION 906** 

**OF THE SARBANES-OXLEY ACT OF 2002** 

In connection with the Annual Report of Algorhythm Holdings, Inc. (the "Company") on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary Atkinson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Algorhythm Holdings, Inc. and will be retained by Algorhythm Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

---

| |
|:---|
| */s/ Gary Atkinson* |
| Gary Atkinson |
| Chief Executive Officer |
| (Principal Executive Officer) |
| Date: April 1, 2026 |

---

## Exhibit 32.2

**Exhibit 32.2** 

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO SECTION 906** 

**OF THE SARBANES-OXLEY ACT OF 2002** 

In connection with the Annual Report of Algorhythm Holdings, Inc. (the "Company") on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alex Andre, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to The Singing Machine Company, Inc. and will be retained by The Singing Machine Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

---

| |
|:---|
| */s/ Alex Andre* |
| Alex Andre |
| Chief Financial Officer |
| (Principal Financial Officer) |
| Date: April 1, 2026 |

---