# EDGAR Filing Document

**Accession Number:** 0000923601
**File Stem:** 0001493152-25-024305
**Filing Date:** 2025-11
**Character Count:** 232270
**Document Hash:** dcd648dc9eafe7aba97233c05525a3c7
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-25-024305.hdr.sgml**: 20251119

**ACCESSION NUMBER**: 0001493152-25-024305

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 87

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251119

**DATE AS OF CHANGE**: 20251119

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Algorhythm Holdings, Inc.
- **CENTRAL INDEX KEY:** 0000923601
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 953795478
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41405
- **FILM NUMBER:** 251500039

**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, DC 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

For the quarterly period ended September 30, 2025

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from ___________ to ___________

**Commission File Number: 001-41405**

![](form10-q_001.jpg)

**ALGORHYTHM HOLDINGS, INC.**

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

---

| | |
|:---|:---|
| **Delaware** | **95-3795478** |
| (State or other jurisdiction<br> of incorporation or organization) | (I.R.S. Employer<br> Identification Number) |

---

---

| | | |
|:---|:---|:---|
| **6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL** | <br> **33309** | **(954) 596-1000** |
| (Address of principal executive offices) | (Zip Code) | (Registrant's telephone number, including area code) |

---

Securities registered under Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbol** | **Name of each exchange on which registered** |
| Common Stock,<br> $0.01 par value per share | RIME | NASDAQ Capital Market |

---

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 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:

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☐

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 17, 2025, there were 2,721,778 shares of the issuer's common stock, $0.01 par value per share, outstanding.

**ALGORHYTHM HOLDINGS, INC.**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | Page |
| **[PART I – FINANCIAL INFORMATION](#su_001)** | **[PART I – FINANCIAL INFORMATION](#su_001)** | 2 |
| Item 1. | [Financial Statements](#su_002) | 2 |
|  | [Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024](#su_003) | 2 |
|  | [Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (Unaudited)](#su_004) | 3 |
|  | [Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 (Unaudited)](#su_005) | 4 |
|  | [Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (Unaudited)](#su_006) | 5 |
|  | [Notes to Condensed Consolidated Financial Statements (Unaudited)](#su_007) | 6 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#nor_001) | 29 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#nor_002) | 37 |
| Item 4. | [Controls and Procedures](#nor_003) | 37 |
| **[PART II – OTHER INFORMATION](#nor_004)** | **[PART II – OTHER INFORMATION](#nor_004)** | 38 |
| Item 1. | [Legal Proceedings](#nor_005) | 38 |
| Item 1A. | [Risk Factors](#nor_006) | 38 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#nor_007) | 38 |
| Item 3. | [Defaults Upon Senior Securities](#nor_008) | 38 |
| Item 4. | [Mine Safety Disclosures](#nor_009) | 38 |
| Item 5. | [Other Information](#nor_010) | 38 |
| Item 6. | [Exhibits](#nor_011) | 39 |

---

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **December 31,<br> 2024** |
|  | **(unaudited)** | |
| **<u>Assets</u>** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $2839000 | $7233000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $113,000 and $127,000, respectively | 1816000 | 121000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, related party |  | 701000 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 859000 | 59000 |
| &nbsp;&nbsp;&nbsp;Current assets of discontinued operations | - | 8649000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets** | 5514000 | 16763000 |
| **Property and equipment, net** | 20000 | 2000 |
| **Other non-current assets** | 52000 |  |
| **Intangible assets, net** | 841000 | 345000 |
| **Goodwill** | 4418000 | 786000 |
| **Non-current assets of discontinued operations** | - | 406000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $10845000 | $18302000 |
| **<u>Liabilities and Shareholders' Equity</u>** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $1229000 | $387000 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 2390000 | 1746000 |
| &nbsp;&nbsp;&nbsp;Refund due to customer | 265000 |  |
| &nbsp;&nbsp;&nbsp;Warrant liability |  | 16603000 |
| &nbsp;&nbsp;&nbsp;Promissory notes payable, net | 3985000 |  |
| &nbsp;&nbsp;&nbsp;Current portion of notes payable to related parties | 2150000 | 265000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 50000 | 50000 |
| &nbsp;&nbsp;&nbsp;Current liabilities of discontinued operations | 426000 | 9387000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities** | 10495000 | 28438000 |
| **Notes payable to related parties, net of current portion** | 250000 | 385000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | 10745000 | 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 September 30, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.01 par value; 800,000,000 and 100,000,000 shares authorized; |  |  |
| &nbsp;&nbsp;&nbsp;2,641,778 and 470,825 shares issued and outstanding at September 30, 2025 and December 31, 2024 | 26000 | 5000 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 64125000 | 39682000 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (61910000) | (49172000) |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | (1383000) | (1036000) |
| &nbsp;&nbsp;&nbsp;Treasury stock, 10,990 and 0 shares reserved at September 30, 2025 and December 31, 2024 | (758000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Shareholders' Equity (Deficit)** | 100000 | (10521000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Shareholders' Equity (Deficit)** | $10845000 | $18302000 |

---

See notes to the condensed consolidated financial statements

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30,<br> 2025** | **September 30,<br> 2024** | **September 30,<br> 2025** | **September 30,<br> 2024** |
| **Net Sales** | $1744000 | $127000 | $3018000 | $127000 |
| **Cost of Sales** | 2095000 | 159000 | 3716000 | 159000 |
| **Gross Loss** | (351000) | (32000) | (698000) | (32000) |
| **Operating Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 3000 |  | 3000 |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 1211000 | 1791000 | 3184000 | 2830000 |
| **Total Operating Expenses** | 1214000 | 1791000 | 3187000 | 2830000 |
| **Loss From Operations** | (1565000) | (1823000) | (3885000) | (2862000) |
| **Other Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liability |  |  | (6468000) |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (293000) | (283000) | (336000) | (328000) |
| **Total Other Expenses** | (293000) | (283000) | (6804000) | (328000) |
| **Loss From Continuing Operations Before Income Tax** | (1858000) | (2106000) | (10689000) | (3190000) |
| Income tax loss attributable to continuing operations | (24000) | - | (24000) | - |
| **Net Loss From Continuing Operations** | (1882000) | (2106000) | (10713000) | (3190000) |
| Net gain (loss) from discontinued operations | (1100000) | 3080000 | (2372000) | (4323000) |
| **Net Income (Loss)** | (2982000) | 974000 | (13085000) | (7513000) |
| Net loss attributable to non-controlling interest | 20000 | 221000 | 347000 | 221000 |
| **Net Income (Loss) Available to Common Shareholders** | $(2962000) | $1195000 | $(12738000) | $(7292000) |
| **Income (Loss) Per Common Share** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted from continuing operations | $(0.72) | $(0.21) | $(4.44) | $(0.40) |
| &nbsp;&nbsp;&nbsp;Basic and diluted from discontinued operations | (0.43) | 0.34 | (1.01) | (0.59) |
| &nbsp;&nbsp;&nbsp;Basic and diluted | (1.15) | 0.13 | (5.45) | (0.99) |
| **Weighted Average Common and Common Equivalent Shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | 2568508 | 9095504 | 2337272 | 7341204 |

---

*See notes to the condensed consolidated financial statements*

#### Algorhythm Holdings, Inc. and Subsidiaries

#### CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

#### For the Three Months Ended September 30, 2025 and 2024 (Unaudited)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Non-<br> Controlling**<br>**Interest** | **Treasury**<br>**Stock** | **Accumulated**<br>**Deficit** |<br>**Total** |
| **Balance at June 30, 2025** | **2514571** | $**25000** | $**63854000** | $**(1363000)** | $**(758000)** | $**(58948000)** | $**2810000** |
| Net loss |  |  |  | (20000) |  | (2962000) | (2982000) |
| Stock-based compensation |  |  | 6000 |  |  | **-** | 6000 |
| Common stock issued as commitment fee to investor | 95694 | 1000 | 190000 |  |  | **-** | 191000 |
| Common stock issued for services | 31513 | - | 75000 | - | - | - | 75000 |
| **Balance at September 30, 2025** | **2641778** | $**26000** | $**64125000** | $**(1383000)** | $**(758000)** | $**(61910000)** | $**100000** |
| **Balance at June 30, 2024** | **6418061** | $**64000** | $**33465000** | $- | $**-** | $**(34401000)** | $**(872000)** |
| Net (loss) income |  |  |  | (221000) | **-** | 1195000 | 974000 |
| Sale of common stock, net of offering costs | 1673077 | 18000 | 1471000 |  | **-** |  | 1489000 |
| Stock-based compensation | 1019811 | 10000 | 569000 | **-** | **-** |  | 579000 |
| Common stock issued for acquisition of SemiCab assets | 641806 | 6000 | 488000 |  | **-** |  | 494000 |
| Issuance of subsidiary stock to non-controlling interest |  |  |  | 74000 |  |  | 74000 |
| Other | - | - | 2000 | (1000) | **-** | - | 1000 |
| **Balance at September 30, 2024** | **9752755** | $**98000** | $**35995000** | $**(148000)** | $**-** | $**(33206000)** | $**2739000** |

---

**For the Nine Months Ended September 30, 2025 and 2024 (Unaudited)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Non-<br> Controlling**<br>**Interest** | **Treasury**<br>**Stock** | **Accumulated**<br>**Deficit** |<br>**Total** |
| **Balance at December 31, 2024** | **470825** | $**5000** | $**39682000** | $**(1036000)** | $- | $**(49172000)** | $**(10521000)** |
| Net loss |  |  |  | (347000) |  | (12738000) | (13085000) |
| Exercise of Series B warrants | 1910975 | 19000 | 15195000 |  |  |  | 15214000 |
| Stock-based compensation | 23818 |  | 53000 |  |  |  | 53000 |
| Reclassification of Series A warrants to equity |  |  | 7857000 |  |  |  | 7857000 |
| 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 to investor | 95694 | 1000 | 190000 |  |  |  | 191000 |
| Common stock issued for services | 31513 |  | 75000 |  |  |  | 75000 |
| Other | 201 | - | - | - | - | - | - |
| **Balance at September 30, 2025** | **2641778** | $**26000** | $**64125000** | $**(1383000)** | $**(758000)** | $**(61910000)** | $**100000** |
| **Balance at December 31, 2023** | **6418061** | $**64000** | $**33429000** | $- | $- | $**(25915000)** | $**7578000** |
| Net loss |  |  |  | (221000) |  | (7292000) | (7513000) |
| Sale of common stock, net of offering costs | 1673077 | 18000 | 1471000 |  |  |  | 1489000 |
| Stock-based compensation | 1019811 | 10000 | 606000 |  |  |  | 616000 |
| Common stock issued for acquisition of SemiCab assets | 641806 | 6000 | 488000 |  |  |  | 494000 |
| Issuance of subsidiary stock to non-controlling interest |  |  |  | 74000 |  |  | 74000 |
| Other | - | - | 1000 | (1000) | - | 1000 | 1000 |
| **Balance at September 30, 2024** | **9752755** | $**98000** | $**35995000** | $**(148000)** | $**-** | $**(33206000)** | $**2739000** |

---

*See notes to the condensed consolidated financial statements*

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss from continuing operations | $(10713000) | $(3190000) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 112000 | 44000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reduction in SMCB loan in exchange for services | 304000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on allowance for credit loss | (439000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | 6468000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 53000 | 616000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of early termination fee on operating lease termination settlement |  | (150000) |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (1376000) | 105000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, related party |  | (572000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (423000) | (796000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | 437000 | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 545000 | 318000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 424000 | (147000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refunds due to customers | 265000 | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities attributable to continuing operations | (4343000) | (3770000) |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (10000) |  |
| &nbsp;&nbsp;&nbsp;Capitalization of internal use software costs | (541000) |  |
| &nbsp;&nbsp;&nbsp;Repurchase of shares of common stock | (758000) |  |
| &nbsp;&nbsp;&nbsp;Cash received from acquisition of SemiCab assets |  | 17000 |
| &nbsp;&nbsp;&nbsp;Cash received from acquisition of SMCB | 593000 |  |
| &nbsp;&nbsp;&nbsp;Advances to SMCB | (1172000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities attributable to continuing operations | (1888000) | 17000 |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of promissory notes, net | 4293000 |  |
| &nbsp;&nbsp;&nbsp;Payment of promissory notes | (178000) |  |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of stock, net of offering costs |  | 1489000 |
| &nbsp;&nbsp;&nbsp;Payments on merchant cash advances payable |  | (327000) |
| &nbsp;&nbsp;&nbsp;Other | - | (59000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities attributable to continuing operations | 4115000 | 1103000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities attributable to discontinued operations | (3123000) | 2162000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities attributable to discontinued operations | 845000 | (36000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities attributable to discontinued operations | - | (62000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash provided by (used in) discontinued operations | (2278000) | 2064000 |
| **Net change in cash** | (4394000) | (586000) |
| **Cash at beginning of period** | 7233000 | 586000 |
| **Cash at end of period** | $2839000 | $- |
| **Supplemental disclosures of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $165000 | $320000 |
| **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;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 for services | $75000 | $- |
| &nbsp;&nbsp;&nbsp;Common stock issued as commitment fee to investor | $191000 | $- |
| &nbsp;&nbsp;&nbsp;Common stock issued for acquisition of SemiCab assets | $- | $569000 |

---

*See notes to the condensed consolidated financial statements*

**Note 1 – Nature of Business**

Algorhythm Holdings, Inc. (f/k/a The Singing Machine Company, Inc.) (the "Company") is an artificial intelligence ("AI") technology holding company that currently has one business unit, which is SemiCab. SemiCab is an AI-enabled software logistics and distribution business operated through the Company's subsidiary, SemiCab Holdings, LLC. Prior to August 1, 2025, the Company had a second business unit, which was Singing Machine. Singing Machine was a home karaoke consumer products business that designed and distributed karaoke products globally to retailers and ecommerce partners through the Company's 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 line.

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.

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 3, 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 Company accounted for the Singing Machine business as a discontinued operation in this Quarterly Report on Form 10-Q. 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**

**Going Concern Analysis**

As of September 30, 2025, the Company's cash balance was $2,839,000. This will not be sufficient to fund the Company's planned operations for at least one year after the date the condensed 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 condensed consolidated financial statements are issued.

The condensed 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 condensed 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.

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

**Basis of Presentation**

The accompanying unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by US GAAP for complete consolidated financial statements.

In the opinion of management, the condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of September 30, 2025 and condensed financial statement information for the three and nine months ended September 30, 2025 and 2024 are unaudited, whereas the condensed consolidated balance sheet as of December 31, 2024 is derived from the audited consolidated balance sheet as of that date. The condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2024. There have been no changes to the Company's significant accounting policies as disclosed on the Company's annual report on Form 10-K for the year ended December 31, 2024.

**Segment Reporting**

Pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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.*

**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.

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.

**Note 5 – Variable Interest Entities**

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 condensed 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 condensed consolidated financial statements. A discussion of this transaction is set forth herein in *Note 18 – Acquisition of SMCB*

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

A summary of the Company's property and equipment at September 30, 2025 and December 31, 2024 is as follows:

Schedule of Property and Equipment

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | September 30,<br>2025 | December 31,<br>2024 |
| Computer and office equipment | 5-7 years | $60000 | $8000 |
| Less: accumulated depreciation |  | (40000) | (6000) |
|  |  | $20000 | $2000 |

---

Depreciation expense was $1,000 and $5,000 for the three and nine months ended September 30, 2025, respectively, and $0 for the three and nine months ended September 30, 2024.

A summary of the Company's intangible assets at September 30, 2025 and December 31, 2024 is as follows:

Schedule of Intangible Assets

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | September 30,<br>2025 | December 31,<br>2024 |
| Customer relationships | 5-7 years | $25000 | $25000 |
| Trade name | 7 years | 25000 | 25000 |
| Developed technology | 3-5 years | 325000 | 325000 |
| Internal use software | 5 years | 541000 | - |
|  |  | 916000 | 375000 |
| Less: accumulated amortization |  | (75000) | (30000) |
|  |  | $841000 | $345000 |

---

Amortization expense was $15,000 and $45,000 for the three and nine months ended September 30, 2025, respectively, and $44,000 for the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2025, 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.

On September 30, 2025, the Company tested the amount of goodwill that it recorded in connection with the acquisition of SemiCab, Inc.'s business on July 3, 2024 for impairment 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. The Company determined that no impairment of goodwill needed to be recorded with respect to that goodwill during the nine months ended September 30, 2025. Accordingly, the balance of that goodwill was $786,000 on September 30, 2025.

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 $3,632,000. As a result, the balance of the Company's goodwill was $4,418,000 on September 30, 2025.

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

SemiCab Holdings assumed several unsecured loans from Ajesh Kapoor and Vivek Sehgal in the acquisition of SemiCab, Inc.'s business. The Company incurred interest expense on these loans of $15,000 and $46,000 for the three and nine months ended September 30, 2025, respectively. The Company did not have any accrued interest payable as of September 30, 2025.

The terms of each loan are summarized in the table below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Issue | Maturity |  | Interest | |
| Note Holder | Date | Date | Status | Rate | Principal |
| Ajesh Kapoor | 7/10/2021 | 7/10/2026 | Current | 9% | $150000 |
| Ajesh Kapoor | 8/27/2021 | 8/26/2026 | Current | 9% | 235000 |
| Vivek Sehgal | 4/17/2023 | 2/1/2026 | Current | 10% | 50000 |
| Ajesh Kapoor | 5/5/2023 | 2/1/2026 | Current | 10% | 50000 |
| Ajesh Kapoor | 5/17/2023 | 2/1/2026 | Current | 10% | 165000 |
| Balance as of September 30, 2025 |  |  |  |  | $650000 |
| Less: current portion of notes payable to related parties |  |  |  |  | 650000 |
| Notes payable to related parties, net of current portion |  |  |  |  | $- |

---

As of December 31, 2024, the loans described above that were issued between April 17, 2023 and May 17, 2023 were in default. Subsequent to December 31, 2024, the Company entered into waivers and amendments with each of the note holders who are parties to those loans to extend the maturity dates of the loans to February 1, 2026. Additional information about these loans is presented in Note 20 – Subsequent Events.

On February 18, 2025, the Company issued a promissory note to each of Stingray Group and Regalia Ventures in the amount of $286,000 and $472,000, respectively. A discussion of these transactions and the terms of the promissory notes is set forth herein in *Note 12 – Securities Transactions*.

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*.

**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. As of June 30, 2024, there was no availability under the Credit Facility as there were no eligible accounts receivable.

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.

**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 was 15% per year. 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 was 18% per year. As of December 31, 2024, the merchant cash advance had been repaid in full.

**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 SemiCab, Inc.'s business, the Company assumed this settlement liability. The final payment of the settlement was made during the nine months ended September 30, 2025. Accordingly, there was no unpaid balance at September 30, 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 condensed 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.

**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 Liability**

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.

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 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 condensed 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 judgement 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. 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.

As of September 30, 2025, there were 1,667 shares of common stock authorized for issuance under the plan. Of this amount, awards representing 1,183 shares of common stock had been granted under the plan and 484 shares remained available for issuance under the plan. The Company did not issue any share-based awards under the plan during the nine months ended September 30, 2025 and 2024, and no shares were forfeited during the three and nine months ended September 30, 2025.

As of September 30, 2025, there was an unrecognized expense of $96,150 remaining on stock options currently vesting over time with an approximate weighted average of three years and eight months remaining until the options would be fully vested. The vested options outstanding as of September 30, 2025, had no intrinsic value.

**Note 11 – Net Income (Loss) Per Share**

The computations of basic and dilutive income (loss) per share of commons stock outstanding for the three and nine months ended September 30, 2025 and 2024 are as follows:

Schedule of Basic and Diluted Income (Loss) Per Share

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended<br>September 30, 2025 | Three Months Ended<br>September 30, 2024 | Nine Months Ended<br>September 30, 2025 | Nine Months Ended<br>September 30, 2024 |
| Net income (loss) available to common shareholders | $(2962000) | $1195000 | $(12738000) | $(7292000) |
| Basic and diluted weighted average of common stock outstanding | 2568508 | 9095504 | 2337272 | 7341204 |
| Income (loss) per common share | (1.15) | 0.13 | (5.45) | (0.99) |

---

The computation of the fully diluted weighted average number of shares of common stock outstanding for the three and nine months ended September 30, 2025 and 2024 is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended<br>September 30, 2025 | Three Months Ended<br>September 30, 2024 | Nine Months Ended<br>September 30, 2025 | Nine Months Ended<br>September 30, 2024 |
| Basic weighted average common shares outstanding | 2568508 | 9095504 | 2337272 | 7341204 |
| Effect of dilutive stock options and warrants | - | - | - | - |
| Diluted weighted average of common shares outstanding | 2568508 | 9095504 | 2337272 | 7341204 |

---

Basic net income (loss) per share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income (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.

For the three and nine months ended September 30, 2025, 484 of common stock underlying stock options, respectively, and 1,138,163 shares of common stock underlying warrants were excluded from the calculation of diluted net income (loss) per share as the result would have been anti-dilutive. For the three and nine months ended September 30, 2024, 543 shares of common stock underlying stock options and 4,511 shares of common stock underlying warrants were excluded from the calculation of diluted net income (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 nine months ended September 30, 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 serves as a member of the Company's board of directors.

**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.

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 nine months ended September 30, 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 serves as a member of the Company's board of directors.

**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 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 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. The Series A and B warrants include an exercise price adjustment feature upon shareholder approval, whereby the exercise price will adjust to the greater of the lowest daily volume weighted average price during the reset period or the floor price, which was $6.84 per share, with a proportional increase in the number of warrant shares.

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*.

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 condensed consolidated balance sheet at September 30, 2025. The Company recognized a loss of $6,468,000 for the change in the fair value measurement of the warrant liability as of the date the warrant liability was reclassified to equity.

**1800 Diagonal Financing Transactions**

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.

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 is 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.

**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.

**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.

**Streeterville Capital Securities Purchase Agreement**

On August 21, 2025, the Company entered into a securities purchase agreement (the "Securities Purchase Agreement") with Streeterville Capital, LLC ("Streeterville"), providing for the issuance and sale of shares of the Company's common stock in one or more secured prepaid purchases (the "Pre-Paid Purchases") for aggregate gross proceeds of up to $20,000,000. In connection with the Securities Purchase Agreement, the Company issued 95,694 shares of common stock as a commitment fee to Streeterville.

The initial Pre-Paid Purchase was $4,390,000, reduced by an original issue discount of $360,000 and transaction expenses of $465,000, resulting in net proceeds of $3,565,000.

The initial Pre-Paid Purchase balance accrues interest at 9% per annum, matures three years from issuance, and is secured by all assets of the Company and guaranteed by its subsidiaries. The Securities Purchase Agreement provides for additional Pre-Paid Purchases over a two-year period, subject to certain conditions, with each purchase having a 9% original issue discount and accruing interest at 9% per annum.

Streeterville has the right, but not the obligation, to convert the outstanding balances of Pre-Paid Purchases into shares of common stock at a price equal to 90% of the lowest daily volume weighted average price during the ten trading days preceding notice, but not less than a stated floor price, and cannot beneficially own greater than 9.99% of the Company's outstanding shares of common stock at any given time. Unless and until the Company obtains the requisite stockholder approval as required by Nasdaq Listing Rule 5635(d), the total cumulative number of shares of common stock that may be issued to Streeterville under all Pre-Paid Purchases cannot exceed the numerical threshold required by that rule.

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 elects to do so, the Company must pay Streeterville an amount equal to 110% multiplied by the portion of the outstanding balance the Company has elected to prepay. If an event of default occurs, the outstanding balance becomes immediately due and payable, increases by 7.5%, and accrues interest at a rate of 18% per annum (or the maximum rate permitted by law).

As of September 30, 2025, the outstanding balance of the Pre-Paid Purchases was $4,390,000. This amount was presented in the condensed consolidated balance sheets net of the unamortized deferred debt issuance costs of $360,000 and transaction expenses of $465,000. Although the initial Pre-Paid Purchase matures three years from its effective date, the entire outstanding balance has been classified as a current liability on the Company's condensed consolidated balance sheet as of September 30, 2025. Under the terms of the initial Pre-Paid Purchase, Streeterville may, in its sole discretion, deliver purchase notices to the Company at any time to require the Company to issue shares of common stock to Streeterville equal in value to the outstanding balance of the initial Pre-Paid Purchase. Streeterville can then sell such shares, the proceeds of which are applied to the outstanding balance of the initial Pre-Paid Purchase. The Company does not have an unconditional right to defer such settlement beyond twelve months from the balance sheet date. Accordingly, the Company determined that current liability classification was appropriate.

The 95,694 shares of common stock issued for the commitment fee were valued at $2.00 per share, which was the closing price of the Company's common stock on the measurement date, for aggregate consideration of $191,000. Interest expense related to the Pre-Paid Purchases was $34,000 for both the three and nine months ended September 30, 2025.

The debt issuance costs and commitment fee incurred under the Securities Purchase Agreement are being amortized using the effective rate method. Amortization, which is included in interest expense, was $29,000 for the three and nine months ended September 30, 2025.

**Common Stock Issued for Services**

During the nine months ended September 30, 2025, the Company issued an aggregate of 31,513 shares of its common stock to a vendor as consideration for services rendered. The shares were issued in a non-cash transaction and were valued at $2.38 per share, the closing price of the Company's common stock on the measurement date, resulting in a total fair value of $75,000. The total fair value was recorded as general and administrative expenses in the accompanying condensed consolidated statement of operation for the period then ended.

**Note 13 – Derivative Liability**

During the nine months ended September 30, 2025, 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:

Schedule of Derivative Warrant Liabilities

---

| | | |
|:---|:---|:---|
| Warrant Liability – Series A Warrants | January 17, 2025 | December 31, 2024 |
| Stock price on valuation date | $8.38 | $18.00 |
| Exercise price | $8.38 | $34.00 |
| Number of shares of common stock | 1133652 | 279412 |
| Remaining term (years) | 4.88 | 4.93 |
| Annual equity volatility | 126.0% | 113.0% |
| Annual volume volatility | 377.0% | 379.0% |
| Risk-free interest rate | 4.32% | 4.29% |
| Expected stockholder approval date | January 13, 2025 | January 14, 2025 |
| Expected stockholder approval probability | 100% | 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.

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 nine months ended September 30, 2025.

The following table provides a roll-forward of the fair value of the derivative liabilities described above during the nine months ended September 30, 2025:

Schedule of Fair Value of the Derivative Liabilities

---

| | | | |
|:---|:---|:---|:---|
|  | Series A Warrants | Series B Warrants | Total Warrant Liabilities |
| 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 September 30, 2025 | $— | $— | $— |

---

The following table provides a roll-forward of the number of warrants issued during the nine months ended September 30, 2025:

**Schedule of Shares of Common Stock Underlying Warrants**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Series A Warrants | Series B Warrants | Other Warrants | Total |
| Balance at December 31, 2024 | 279412 | 279412 | 4511 | 563335 |
| Exercises |  | (279412) |  | (279412) |
| Balance at September 30, 2025 | 279412 |  | 4511 | 283923 |

---

The Company did not issue any warrants during the three and nine months ended September 30, 2024 and did not have any warrants outstanding as of September 30, 2024.

**Note 14 – Income Taxes**

The Company's income tax provision for the nine months ended September 30, 2024, was approximately $52,000 due to income taxes due on amended federal tax returns filed for 2020 and 2021 which took into account the one-time refunds received from the Employee Retention Credit program. The Company did not have any provision for income taxes for the three and nine months ended September 30, 2025 and 2024.

The Company tax loss for income taxes for the three and nine months ended September 30, 2025 was $24,000 and $0 for the three and nine months ended September 30, 2024. The Company's income tax expense differs from the expected tax expense based on statutory rates primarily due to full valuation allowance for all of its subsidiaries for the three and nine months ended September 30, 2025 and 2024.

**Note 15 – Segment Information**

**Segment Information**

On August 1, 2025, the Company sold its Singing Machine business to Stingray USA. Prior to this transaction, the Company operated two reportable segments: (i) the Singing Machine business, a home karaoke consumer products business, and (ii) the SemiCab business, an AI-enabled software logistics and distribution platform. Following the sale, the Company's operations consist solely of its SemiCab business. The Company is therefore managed on a consolidated basis and now has a single operating and reportable segment. 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. Additional information regarding the discontinued operations is provided in *Note 19 – Discontinued Operations*.

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.

The Company's CODM, its Chief Executive Officer, 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 three and nine months ended September 30, 2025 and September 30, 2024, substantially all of the Company's revenues were generated from customers located in India.

**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 September 30, 2025, 56% of accounts receivable were due from two 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 31% and 72% of the Company's revenue, respectively, for the three months ended September 30, 2025. Revenue derived from the Company's largest customer and three largest customers collectively as a percentage of total net sales was 31% and 73% of the Company's revenue, respectively, for the nine months ended September 30, 2025. The loss of any of these customers could have an adverse impact on the Company.

Revenue from customers representing greater than 10% of total net sales that were derived from the Company's three largest customers as a percentage of total net sales for the three months ended September 30, 2025 was 31%, 30% and 12%. Revenue from customers representing greater than 10% of total net sales that were derived from the Company's three largest customers as a percentage of total net sales for the nine months ended September 30, 2025 was 32%, 28% and 13%. The loss of any of these customers could have an adverse impact on the Company.

**Note 17 – Related Party Transactions**

**Stingray Group Subscription Payments**

The Company has a music subscription sharing agreement with Stingray Group. For the three and nine months ended September 30, 2025, the Company received music subscription revenue of $64,000 and $515,000, respectively, from Stingray Group. For the three and nine months ended September 30, 2024, the Company received music subscription revenue of $218,000 and $567,000, respectively, from Stingray Group. As of September 30, 2025 and December 31, 2024, the Company had $0 and $212,000, respectively, due from Stingray Group for music subscription reimbursement.

**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.

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 September 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 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 three and nine months ended September 30, 2025.

**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 Company has performed a preliminary valuation analysis of the fair market value of SMCB assets acquired and liabilities assumed. Using the total consideration for the acquisition, the Company has estimated the allocations to such assets and liabilities. The following table summarizes the allocation of the preliminary 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 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 | 489000 |
| Accounts payable and accrued expenses | (372000) |
| Other current liabilities | (975000) |
| Net assets acquired | 442000 |
| **Goodwill** | $**3632000** |

---

This preliminary purchase price allocation has been used to prepare the transaction accounting adjustments in the pro forma balance sheet and income statement. The fair values of assets and liabilities acquired represent the Company's estimates of fair values as of the acquisition date. Management believes that the fair values recognized for the assets and liabilities acquired are based on reasonable estimates and assumptions. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the transaction accounting adjustments. The final allocation may include: (i) changes in fair values of property and equipment, (ii) changes in allocations to goodwill, and (iii) other changes to assets and liabilities.

*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 nine months ended September 30, 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.

Schedule of Pro Forma Financial Information

---

| | | |
|:---|:---|:---|
|  | Nine Months Ended | Nine Months Ended |
|  | September 30, 2025 | September 30, 2024 |
| Net revenue | $9182000 | $6262000 |
| Operating loss from continuing operations | (6104000) | (10512000) |
| Net loss | $(13195000) | $(10841000) |

---

**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 condensed consolidated balance sheets, the condensed consolidated statements of operations and the condensed consolidated statement of cash flows have been adjusted for prior periods to reflect the Singing Machine business as a discontinued operation.

The following table summarizes the results of the Singing Machine business as a discontinued operation in the condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024:

Algorhythm Holdings, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **September 30, 2025** | **September 30, 2024** | **September 30, 2025** | **September 30, 2024** |
| **Net Sales** | $584000 | $10495000 | $4019000 | $15361000 |
| **Cost of Goods Sold** | 399000 | 8088000 | 2033000 | 12128000 |
| **Gross Profit** | 185000 | 2407000 | 1986000 | 3233000 |
| **Operating Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 100000 | 653000 | 1098000 | 1830000 |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 1081000 | 2548000 | 3156000 | 5722000 |
| &nbsp;&nbsp;&nbsp;Net (gain) loss on early termination of operating lease | - | (3874000) | - | 4000 |
| **Total Operating Expenses** | 1181000 | (673000) | 4254000 | 7556000 |
| **Income (Loss) from Operations** | (996000) | 3080000 | (2268000) | (4323000) |
| **Other Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss on sale of Singing Machine business | (104000) | - | (104000) | - |
| **Total Other Expenses** | (104000) | - | (104000) | - |
| **Income (Loss) Before Income Tax Benefit** | (1100000) | 3080000 | (2372000) | (4323000) |
| **Income Tax** | - | - | - | - |
| **Net Income (Loss) from Discontinued Operations** | $(1100000) | $3080000 | $(2372000) | $(4323000) |

---

The following table summarizes the assets and liabilities of the discontinued operations as of September 30, 2025 and December 31, 2024:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **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 | 426000 | 95000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities of Discontinued Operations** | $426000 | $9387000 |

---

**Note 20 – Subsequent Events**

**Repayment of Notes Payable to Related Parties** 

On October 8, 2025, the Company repaid two unsecured loans that it had assumed in connection with the acquisition of SemiCab, Inc.'s business on July 3, 2024. The repaid loans consisted of: (i) a loan made to SemiCab, Inc. by Vivek Sehgal on April 17, 2023, and (ii) a loan made to SemiCab, Inc. by Ajesh Kapoor on May 5, 2023, each in the original principal amount of $50,000. Mr. Kapoor serves as the Chief Executive Officer and Chief Technology Officer of SemiCab Holdings and as a member of the Board of Directors of the Company, and Mr. Sehgal serves as the Chief Product Officer of SemiCab Holdings.

**Streeterville Capital Financing**

On November 13, 2025, the Company entered into Secured Pre-Paid Purchase #2 with Streeterville Capital, LLC, a Utah limited liability company ("Streeterville"), under that certain securities purchase agreement (the "Securities Purchase Agreement"), dated August 21, 2025, between us and Streeterville. Under the Securities Purchase Agreement, the Company agreed to issue and sell shares of its common stock to Streeterville 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. Secured 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 (9%) per annum and has a maturity date of three years.

The Second Pre-Paid Purchase is similar to the first Pre-Paid Purchase that the Company completed on August 21, 2025, 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 "Minimum Balance Amount"). The Minimum Balance Amount is 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, and Streeterville (the "DACA Agreement"). 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 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 Minimum Balance Amount. The Second Pre-Paid Purchase is secured by the Guaranty, the Security Agreement, and the IP Security Agreement (each as defined in the Securities Purchase Agreement). In addition, 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 Securities, LLC to serve as the placement agent in the offering (the "Placement Agent") that supersedes the placement agency agreement that the Company previously entered into with them on August 21, 2025 in connection with the offering. The Company agreed to pay the Placement Agent a cash fee equal to eight percent (8%) of the aggregate gross proceeds received by the Company from any Pre-Paid Purchases that it completes and reimburse the Placement Agent for legal fees in the amount of $50,000. The cash fee for the Second Pre-Paid Purchase must be paid on February 28, 2026; *provided, however*, that the Company may request that the payment date be extended by 90 days.

**Item 2. 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. The following should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this report and the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024.

**Overview**

We are an artificial intelligence ("AI") technology company that currently has one business unit, which is SemiCab. SemiCab is an AI-enabled software logistics business operated through our subsidiary, SemiCab Holdings, LLC. Prior to August 1, 2025, we had a second business unit, which was Singing Machine. Singing Machine was a home karaoke consumer products business that designed and distributed karaoke products globally to retailers and ecommerce partners 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 line.

 

*SemiCab* 

SemiCab is a 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 Transportation Management System ("TMS") and Electronic Logging Device ("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 its 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.

 

 

*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 specialized 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.

**Recent Corporate Events**

*Name and Symbol Change*

Effective September 5, 2024, our Certificate of Incorporation was amended to change our name from "The Singing Machine Company, Inc." to "Algorhythm Holdings, Inc." In addition, effective September 8, 2024, our ticker symbol was changed from "MICS" to "RIME."

*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. In accordance with SEC rules and regulations, all share numbers and prices throughout this report and our condensed consolidated financial statements reflect post-reverse stock split numbers.

**Acquisition of SMCB**

On May 2, 2025 (the "Closing Date"), 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 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.

**Sale of Singing Machine**

On August 1, 2025, we 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 our Singing Machine business for $500,000. The transaction closed on August 1, 2025.

We 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 represents a strategic shift that will have a significant effect on our operations and financial results. Accordingly, we have accounted for the Singing Machine business as a discontinued operation in this Quarterly Report on Form 10-Q. Unless otherwise noted, the information contained in this *Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations* consists exclusively of our continuing operations and does not include the operations of the Singing Machine business. Additional information concerning the Singing Machine business is presented in *Note 19 -- Discontinued Operations* of our condensed consolidated financial statements.

**Streeterville Capital Financing**

On November 13, 2025, we entered into Secured Pre-Paid Purchase #2 with Streeterville Capital, LLC, a Utah limited liability company ("Streeterville"), under that certain securities purchase agreement (the "Securities Purchase Agreement"), dated August 21, 2025, between us and Streeterville. Under the Securities Purchase Agreement, we agreed to issue and sell shares of our common stock to Streeterville 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. Secured 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 (9%) per annum and has a maturity date of three years.

The Second Pre-Paid Purchase is similar to the first Pre-Paid Purchase that we completed on August 21, 2025, 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 "Minimum Balance Amount"). The Minimum Balance Amount is 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, and Streeterville (the "DACA Agreement"). 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 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 Minimum Balance Amount. The Second Pre-Paid Purchase is secured by the Guaranty, the Security Agreement, and the IP Security Agreement (each as defined in the Securities Purchase Agreement). In addition, 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 Securities, LLC to serve as the placement agent in the offering (the "Placement Agent") that supersedes the placement agency agreement that we previously entered into with them on August 21, 2025 in connection with the offering. We agreed to pay the Placement Agent a cash fee equal to eight percent (8%) of the aggregate gross proceeds received by us from any Pre-Paid Purchases that we complete and reimburse the Placement Agent for legal fees in the amount of $50,000. The cash fee for the Second Pre-Paid Purchase must be paid on February 28, 2026; *provided, however*, that we may request that the payment date be extended by 90 days.

We completed the offer and sale of these securities in a private placement transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act without engaging in any advertising or general solicitation of any kind.

**Strategy**

We intend to invest in our SemiCab business to develop and grow it into a significant revenue producer for us. This will involve investments in the continued research and development of its technology, the hiring of additional qualified employees, marketing and advertising initiatives, and back-office support. While SemiCab is a nascent business, it has already acquired several multinational 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 SemiCab. We also believe that SemiCab's proven 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 SemiCab.

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 SemiCab 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 SemiCab business or could help us to more quickly expand our SemiCab 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 revenue of $1,744,000 for the three-month period ended September 30, 2025, compared to $127,000 for the three-month period ended September 30, 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. Gross loss was $351,000, or 20% of net sales, for the three-month period ended September 30, 2025, compared to $32,000, or 25% of net sales, for the three-month period ended September 30, 2024. The increase was due primarily to an increase of $1,617,000 for net sales and an increase of $1,936,000 for cost of sales.

Our operating expenses were $1,214,000 for the three-month period ended September 30, 2025, compared to $1,791,000 for the three-month period ended September 30, 2024. The decrease in operating expenses was due primarily to a decrease of $816,000 for operating expenses incurred during the three-month period ended September 30, 2024 related to acquisition of the SemiCab business on July 3, 2024. We incurred net loss from continuing operations of $1,882,000 for the three-month period ended September 30, 2025 compared to $2,106,000 for the three-month period ended September 30, 2024.

We generated net loss available to common shareholders of $2,962,000, or $1.15 per share of common stock, for the three-month period ended September 30, 2025, compared to a net gain available to common shareholders of $1,195,000, or $0.13 per share of common stock, for the three-month period ended September 30, 2024. The net gain available to common shareholders for 2024 was due primarily to a one-time gain of $3,874,000 that we recognized on the early termination of an operating lease that we included in discontinued operations as a result of the sale of our Singing Machine business. We had total assets of $10,845,000 and $18,302,000 at September 30, 2025 and December 31, 2024, respectively. Net cash used by operating activities attributable to continuing operations was $4,343,000 for the nine-month period ended September 30, 2025 compared to $3,770,000 for the nine-month period ended September 30, 2024.

**Outlook**

We expect net sales generated from our SemiCab business to increase substantially over the next 12 months as we generate more business from our growing customer base in India. We expect gross loss to decrease over the next 12 months as the increase in net sales that we expect to generate from our SemiCab business exceeds the increase in cost of sales that we expect to incur in connection with the growth in sales. We expect operating expenses to increase over the next 12 months due to increases in legal and accounting expenses that we incur as we engage in additional capital-raising activities as needed to fund our business and increases in expenses that we expect to incur to fund the growth and development of our SemiCab business. Net loss available to common stockholders is expected to remain at similar levels. We expect cost reduction activities that we are engaging in to beneficially impact our net loss, but expect this to be offset by increases in the investment we will continue to make in 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.

**Comparison of the Three-Month Periods Ended September 30, 2025 and 2024**

*Net Sales*

Net sales consist of sales generated by our SemiCab business. Net sales increased $1,617,000 to $1,744,000 for the three-month period ended September 30, 2025, compared to $127,000 for the three-month period ended September 30, 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 from our growing customer base in India

*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 $1,936,000 to $2,095,000 for the three-month period ended September 30, 2025, compared to $159,000 for the three-month period ended September 30, 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 and general and administrative expenses.

Selling Expenses

Selling expenses consist primarily of marketing and advertising activities that we engage in from time to time. Selling expenses were $3,000 for the three-month period ended September 30, 2025. We did not incur any selling expenses for the three-month period ended September 30, 2024. We expect selling expenses to increase 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.

General and Administrative Expenses

General and administrative expenses consist primarily of payroll expenses, legal and accounting expenses, and rent expense associated with our SemiCab business and corporate expenses.

General and administrative expenses decreased $580,000 to $1,211,000 for the three-month period ended September 30, 2025, compared to $1,791,000 for the three-month period ended September 30, 2024. The decrease was due primarily to a decrease of $816,000 for operating expenses incurred during the three-month period ended September 30, 2024 in connection with our acquisition of SemiCab's business on July 3, 2024. 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.

*Other Expenses*

Other expenses consist of financing costs that we incurred under our loans and other financing activities. Other expenses increased $10,000 to $293,000 for the three-months ended September 30, 2025, compared to $283,000 for the three-month period ended September 30, 2024. We may incur additional financing costs during the next 12 months and expect to continue to incur additional non-operating expenses in connection with the operation and growth of our SemiCab business.

*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 $20,000 for the three-month period ended September 30, 2025 represents the amount of loss incurred by SemiCab Holdings that was allocated to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest in SemiCab Holdings for the three-month period ended September 30, 2025. The net loss attributable to non-controlling interest of $221,000 for the three-month period ended September 30, 2024 represents the amount of loss incurred by SemiCab Holdings that was allocated to SemiCab, Inc. through its 20% membership interest in SemiCab Holdings for the three-month period ended September 30, 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 SemiCab's business.

**Comparison of the Nine-Month Periods Ended September 30, 2025 and 2024**

 

*Net Sales*

Net sales increased $2,891,000 to $3,018,000 for the nine-month period ended September 30, 2025, compared to $127,000 for the nine-month period ended September 30, 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.

*Cost of Sales*

Cost of sales increased $3,557,000 to $3,716,000 for the nine-month period ended September 30, 2025, compared to $159,000 for the nine-month period ended September 30, 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.

 

 

*Operating Expenses*

 

Selling Expenses

Selling expenses were $3,000 for the nine-month period ended September 30, 2025. We did not incur any selling expenses for the nine-month period ended September 30, 2024.

General and Administrative Expenses

General and administrative expenses increased $354,000 to $3,184,000 for the nine-month period ended September 30, 2025, compared to $2,830,000 for the nine-month period ended September 30, 2024. The increase was due primarily to increases in general and administrative expenses incurred in the growth and development of our SemiCab business.

 

*Other Expenses*

Other expenses increased $6,476,000 to $6,804,000 for the nine-month period ended September 30, 2025, compared to $328,000 for the nine-month period ended September 30, 2024. The increase was due primarily to an increase of $6,468,000 for a one-time, non-cash loss that we incurred in connection with the change in fair value of warrants sold in the public offering of securities that we completed on December 6, 2024.

*Net Loss Attributable to Non-Controlling Interest*

The net loss attributable to non-controlling interest of $347,000 represents the amount of loss incurred by SemiCab that was allocated to SemiCab, Inc. through its 20% membership interest in SemiCab Holdings for period beginning January 1, 2025 and ending May 2, 2025, and the amount of loss incurred by SemiCab that was allocated to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest in SemiCab Holdings for the period beginning May 2, 2025 and ending September 30, 2025. The net loss attributable to non-controlling interest of $221,000 for the nine-month period ended September 30, 2024 represents the loss incurred by SemiCab Holdings that was allocated to SemiCab, Inc. through its 20% membership interest in SemiCab Holdings for the nine-month period ended September 30, 2024.

**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 September 30, 2025, our cash balance was $2,839,000.

Net cash used by operating activities attributable to continuing operations was $4,343,000 during the nine-month period ended September 30, 2025, compared to $3,770,000 during the nine-month period ended September 30, 2024. The increase of $573,000 was due primarily to an increase of $7,523,000 for loss from continuing operations, partially offset by an increase of $6,468,000 for the loss that we incurred in connection with the change in fair value of warrants sold in the public offering of securities that we completed on December 6, 2024.

Net cash used by investing activities attributable to continuing operations was $1,888,000 during the nine-month period ended September 30, 2025, compared cash provided by investing activities attributable to continuing operations of $17,000 during the nine-month period ended September 30, 2024. The difference of $1,905,000 was due primarily to increases of $1,172,000 for advances to SMCB under our loan agreement with them, $758,000 for repurchases of shares of our common stock, and $541,000 for the capitalization of internal use software costs. These increases were partially offset by an increase of $593,000 for cash received in connection with our acquisition of SMCB on May 2, 2025.

Net cash provided by financing activities attributable to continuing operations was $4,115,000 during the nine-month period ended September 30, 2025, compared to $1,103,000 during the nine-month period ended September 30, 2024. The difference of $3,012,000 was due primarily to an increase of $4,293,000 for proceeds from the issuance of promissory notes, partially offset by a decrease of $1,489,000 for proceeds from the sale of stock.

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.

**Off-Balance Sheet Arrangements**

As of September 30, 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.

**Critical Accounting Estimates**

Our interim financial statements were prepared in accordance with United States generally accepted accounting principles, which require management to make subjective decisions, assessments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions increases, such judgements become even more subjective. While management believes that its assumptions are reasonable and appropriate, actual results may be materially different than estimated. Our critical accounting estimates and assumptions have not materially changed from those identified in our Annual Report on Form 10-K for the year ended December 31, 2024.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

Not required for small reporting companies.

**Item 4. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Our principal executive officer and principal financial officer, with the assistance of other members of our management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and is accumulated and communicated to our management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective at December 31, 2024 due to the material weaknesses described below.

&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.

2*.* We lacked sufficient resources in our accounting department, which resulted in our inability to have proper segregation of duties for the preparation, review and approval of 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.

Despite the material weaknesses identified above, we believe that the condensed consolidated financial statements included in the period covered by this report fairly present, in all material aspects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.

**Changes in Internal Controls over Financial Reporting**

During our fiscal quarter ended September 30, 2025, there were no additional changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

**PART II - OTHER INFORMATION**

**Item 1. Legal Proceedings**

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 judgement 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. The outcome of this matter is uncertain.

There were no other material changes to the disclosures made in *Part I – Item 3. Legal Proceedings* of our Annual Report on Form 10-K for our fiscal year ended December 31, 2024 and *Part II – Other Information – Item 1. Legal Proceedings* of our Quarterly Reports on Form 10-Q for our fiscal quarters ended March 31, 2025 and June 30, 2025 regarding these matters.

**Item 1A. Risk Factors**

Not required for small reporting companies.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds** 

On August 18, 2025, we issued 31,513 shares of common stock to a vendor as consideration for services rendered. We completed the offer and sale of these securities to an accredited investor in a private placement transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act without engaging in any advertising or general solicitation of any kind.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

**Rule 10b5-1 Trading Arrangements**

During the three-month period ended September 30, 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 6. 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.

---

| | |
|:---|:---|
| Exhibit<br> No. | Description |
| 10.1 | [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 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 7, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225022621/ex10-1.htm) |
| 10.2 | [Securities Purchase Agreement, dated August 21, 2025, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-1.htm) |
| 10.3 | [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 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-2.htm) |
| 10.4 | [Security Agreement, dated August 21, 2025, by and among Algorhythm Holdings, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-3.htm) |
| 10.5 | [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 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225025707/ex10-4.htm)<br>|
| 10.6\* | [Secured Pre-Paid Purchase #2, dated November 13, 2025, by and between Algorhythm Holdings, Inc. and Streeterville Capital, LLC](ex10-6.htm) |
| 10.7\* | [Deposit Account Control Agreement, dated November 13, 2025, by and among RIME Holdings, LLC, Lakeside Bank and Streeterville Capital, LLC](ex10-7.htm) |
| 10.8\* | [Guaranty, dated November 13, 2025, issued by RIME Holdings, LLC for the benefit of Streeterville Capital, LLC](ex10-8.htm) |
| 31.1\* | [Certification of Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a)](ex31-1.htm) |
| 31.2\* | [Certification of Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a)](ex31-2.htm) |
| 32.1\*\* | [Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code](ex32-1.htm) |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |

---

\* Filed herewith

\*\* Furnished herewith.

**SIGNATURES**

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **ALGORHYTHM HOLDINGS, INC.** | **ALGORHYTHM HOLDINGS, INC.** |
| Date: November 19, 2025 | By: | */s/ Gary Atkinson* |
|  |  | Gary Atkinson |
|  |  | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
| Date: November 19, 2025 | By: | */s/ Alex Andre* |
|  |  | Alex Andre |
|  |  | Chief Financial Officer & General Counsel |
|  |  | (Principal Financial and Accounting Officer) |

---

## Exhibit 10.6

**Exhibit 10.6**

**SECURED PRE-PAID PURCHASE #2**

---

| | |
|:---|:---|
| November 13, 2025 | U.S. $5,450,000.00 |

---

FOR VALUE RECEIVED, Algorhythm Holdings, Inc., a Delaware corporation ("**Company**"), promises to pay to Streeterville Capital, LLC, a Utah limited liability company, or its successors or assigns ("**Investor**"), $5,450,000.00 and any interest, fees, charges, and late fees accrued hereunder in accordance with the terms set forth herein and to pay interest on the Outstanding Balance at the rate of nine percent (9%) per annum from the Purchase Price Date until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily, and shall be payable in accordance with the terms of this Secured Pre-Paid Purchase #2 (this "**Pre-Paid Purchase**"), which is issued and made effective as of the date set forth above (the "**Effective Date**"). This Pre-Paid Purchase is issued pursuant to that certain Securities Purchase Agreement dated August 21, 2025, as the same may be amended from time to time, by and between Company and Investor (the "**Purchase Agreement**"). Certain capitalized terms used herein are defined in <u>Attachment 1</u> attached hereto and incorporated herein by this reference.

This Pre-Paid Purchase carries an original issue discount of $450,000.00 ("**OID**"). The OID is included in the initial principal balance of this Pre-Paid Purchase and is deemed to be fully earned and non-refundable as of the Purchase Price Date. The purchase price of $5,000,000.00 (the "**Purchase Price**") shall be payable via wire transfer of immediately available funds as follows: (a) $4,500,000.00 to the Deposit Account (as defined in the DACA (as defined below)), and (b) $500,000.00 to the bank account designated in writing by Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Payment; Prepayment; Maturity Date</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1. <u>Payment</u>. All payments owing hereunder shall be in lawful money of the United States of America, as provided for herein, and delivered to Investor at the address or bank account furnished to Company for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest, and thereafter, to (d) principal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2. <u>Prepayment</u>. Notwithstanding the foregoing, with ten (10) Trading Days' prior written notice Company may prepay all or any portion of the Outstanding Balance (less such portion of the Outstanding Balance for which Company has received a Purchase Notice (as defined below) from Investor where the applicable Purchase Shares (as defined below) have not yet been delivered). For the avoidance of doubt, during the ten (10) Trading Day prepayment notice period, Investor shall retain the right to submit Purchase Notices, if applicable. If Company exercises its right to prepay this Pre-Paid Purchase, Company shall make payment to Investor of an amount in cash equal to 110% multiplied by the portion of the Outstanding Balance Company elects to prepay. Company will lose the right to prepay this Pre-Paid Purchase if: (a) an Event of Default (as defined below) occurs hereunder; or (b) Company elects to prepay this Pre-Paid Purchase and fails to do so on the date set forth in the prepayment notice sent to Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3. <u>Maturity Date</u>. Any remaining Outstanding Balance will be due and payable in cash on the date that is three (3) years from the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Security</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. <u>DACA</u>. This Pre-Paid Purchase will be secured by cash in an amount not less than the lesser of (i) $4,500,000.00, and (ii) 90% of the then-current Outstanding Balance (the "**Minimum Balance Amount**"). The Minimum Balance Amount will be held in the Deposit Account pursuant to a Deposit Account Control Agreement among RIME Holdings, LLC, a Utah limited liability and wholly owned subsidiary of Company (the "**RIME Holdings**"), Lakeside Bank, an Illinois banking company ("**Lakeside Bank**"), and Investor, in substantially the form attached hereto as <u>Exhibit A</u> (the "**DACA**"). Company shall have the right to use such cash to repay any portion of the Outstanding Balance, but only so long as such payment does not cause the Outstanding Balance to drop below the Minimum Balance Amount. So long as no Event of Default has occurred, Company may withdraw from the Deposit Account any funds in excess of the Minimum Balance Amount (the "**Excess Funds**"). In the event Company wishes to withdraw any Excess Funds, Company shall notify Investor of the amount of funds Company wishes to withdraw so that Investor can confirm that the amount of funds requested for withdrawal by Company constitutes Excess Funds. Within three (3) Trading Days of receipt of such notification, Investor shall either confirm that the amount of funds requested for withdrawal by Company constitutes Excess Funds or will provide Company with an explanation as to why such funds exceed the amount available for withdrawal by Company. In the event that Investor confirms that the amount of funds requested for withdrawal by Company constitutes Excess Funds, Investor shall execute joint instructions to be originated and executed by RIME Holdings and Investor directing the withdrawal of the funds by Company. Company may only request withdrawals from the Deposit Account no more than once per week in an amount not less than $25,000.00. Company hereby grants to Investor a first-position security interest in the Deposit Account and acknowledges and agrees that Investor will have the right to file a UCC-1 Financing Statement with respect to the Deposit Account. Company acknowledges and agrees that Investor will have control over the Deposit Account within the meaning of Section 9-104 of the Uniform Commercial Code pursuant to the terms of the DACA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2. <u>Collateral Documents</u>. This Pre-Paid Purchase is also secured by the Guaranty (as defined in the Purchase Agreement), the Pledge Agreement (as defined in the Purchase Agreement), the Security Agreement (as defined in the Purchase Agreement), and the IP Security Agreement (as defined in the Purchase Agreement). For the avoidance of doubt, Company acknowledges and agrees that all of the equity interests it owns in RIME Holdings will be considered Pledged Equity (as defined in the Pledge Agreement) under and subject to the Pledge Agreement, and will be considered Collateral (as defined in the Security Agreement) under and subject to the Security Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3. <u>Covenants</u>. Until all of Company's obligations under this Pre-Paid Purchase are satisfied in full, Company will at all times comply with the following covenants: (i) Company will notify Investor in writing of any action, suit, proceeding, inquiry or investigation filed or initiated against Company or RIME Holdings within five (5) Trading Days of the initiation of the same; (ii) neither Company nor RIME Holdings will grant any security interest, lien, pledge or other encumbrance in any of RIME Holdings' assets (including, without limitation, any equity interest in RIME Holdings) without Investor's prior written consent, which consent may be granted or withheld in Investor's sole and absolute discretion; (iii) neither Company nor RIME Holdings will sell, transfer, or issue any equity or grant any rights to any equity interest or voting rights in RIME Holdings without Investor's prior written consent, which consent may be granted or withheld in Investor's sole and absolute discretion; and (iv) Company will not allow RIME Holdings to issue or incur any debt or conduct any business operations without Investor's prior written consent, which consent may be granted or withheld in Investor's sole and absolute discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4. <u>Lender Transfers and Redemptions</u>. In the event Investor exercises its rights under the DACA to transfer from the Deposit Account any funds to any person other than Company or its affiliates, or redeem any funds in the Deposit Account, then, upon the completion of such transfer or redemption, the Outstanding Balance shall be reduced by the amount of such transfer or redemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5. <u>Termination of Security Interest and DACA</u>. Upon the repayment of this Pre-Paid Purchase in full, Investor will, promptly notify Lakeside Bank that its security interest in the Deposit Account has terminated and that the DACA is terminated in its entirety effective immediately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Investor Purchases; Closings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1. <u>Purchases; Purchase Mechanics</u>. Upon the terms and subject to the conditions of this Pre-Paid Purchase and the other Transaction Documents (as defined in the Purchase Agreement), Investor, at its sole discretion, shall have the right, but not the obligation, to purchase from Company, and Company shall issue and sell to Investor, Purchase Shares by the delivery to Company of Purchase Notices as provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Purchase Notice</u>. At any time following the Effective Date, Investor may, by providing written notice to Company in the form set forth on <u>Exhibit B</u> attached hereto (each, a "**Purchase Notice**"), require Company to issue and sell Purchase Shares to Investor, in accordance with the following provisions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Investor shall, in each Purchase Notice, indicate the portion of the Outstanding Balance that Investor elects to apply to the purchase of Purchase Shares pursuant to this Pre-Paid Purchase (each, a "**Purchase**", and such amount, the "**Purchase Amount**"), in its sole discretion, and the timing of delivery; *provided* that the Purchase Amount shall not exceed the Outstanding Balance, or result in Investor exceeding the limitation set forth in Section 3.1(b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each Purchase Notice shall be delivered to Company in accordance with the notice provisions set forth in the Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Each Purchase Notice shall set forth the Purchase Amount, the Purchase Share Purchase Price, the number of Purchase Shares to be issued by Company and purchased by Investor, and the remaining Outstanding Balance following the Closing (as defined below) of the Purchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any Purchase Shares issued hereunder must be issued free trading to Investor pursuant to: (1) an effective Registration Statement (as defined in the Purchase Agreement); or (2) an applicable exemption from registration (e.g., Rule 144).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) In the event the Purchase Share Purchase Price is below the Floor Price, Investor will have the right to elect to have the applicable Purchase Amount paid in cash rather than Purchase Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) In the event Company has not obtained the Approval (as defined in the Purchase Agreement) and cannot issue shares pursuant to a Purchase Notice without exceeding the Exchange Cap (as defined in the Purchase Agreement), Investor will have the right to elect to have the applicable Purchase Amount paid in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Ownership Limitation</u>. Notwithstanding anything to the contrary contained in this Pre-Paid Purchase or the other Transaction Documents (as defined in the Purchase Agreement), Company shall not effect any issuance of Purchase Shares pursuant to this Pre-Paid Purchase to the extent that after giving effect to such issuance, the issuance would cause Investor (together with its affiliates) to beneficially own a number of Common Shares exceeding 9.99% of the number of Common Shares outstanding on such date (including for such purpose the Common Shares issuable upon such issuance) (the "**Maximum Percentage**"). For purposes of this section, beneficial ownership of Common Shares will be determined pursuant to Section 13(d) of the 1934 Act (as defined in the Purchase Agreement). The Maximum Percentage is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2. <u>Closings</u>. The closing of each purchase and sale of Purchase Shares (each, a "**Closing**") shall take place in accordance with the procedures set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Promptly after receipt of a Purchase Notice with respect to each Purchase (and, in any event, not later than two (2) Trading Days after such receipt), Company will, or will cause its transfer agent to, electronically transfer such number of Purchase Shares to be purchased by Investor (as set forth in the Purchase Notice) by crediting Investor's account or its designee's account at DTC through its DWAC system or by such other means of delivery as may be mutually agreed upon by the parties hereto, and transmit notification to Investor that such share transfer has been requested. Promptly upon receipt of such notification, Investor shall pay to Company the aggregate purchase price for the Purchase Shares (as set forth in the Purchase Notice) by offsetting the Purchase Amount against an equal amount outstanding under this Pre-Paid Purchase (first towards accrued and unpaid interest, if any, and then towards outstanding principal as shown in such Purchase Notice). No fractional shares shall be issued, and any fractional amounts shall be rounded to the nearest whole number of shares. To facilitate the transfer of the Purchase Shares by Investor, the Purchase Shares will not bear any restrictive legends so long as there is an effective Registration Statement or an available exemption from registration for the resale of such Purchase Shares (it being understood and agreed by Investor that notwithstanding the lack of restrictive legends, Investor may only sell such Purchase Shares in compliance with the requirements of the Securities Act (including any applicable prospectus delivery requirements)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In connection with each Closing, each of Company and Investor shall deliver to the other all documents, instruments and writings expressly required to be delivered by either of them pursuant to this Pre-Paid Purchase in order to implement and effect the transactions contemplated herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Events of Default and Remedies</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1. <u>Event of Default</u>. The following are events of default under this Pre-Paid Purchase (each, "**Event of Default**"): (a) Company fails to pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) a receiver, trustee or other similar official shall be appointed over Company or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; (c) Company becomes insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; (d) Company makes a general assignment for the benefit of creditors; (e) Company files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); (f) an involuntary bankruptcy proceeding is commenced or filed against Company; (g) Company fails to observe or perform any covenant set forth in Section 4 or Section 5 of the Purchase Agreement; (h) the occurrence of a Fundamental Transaction without Investor's prior written consent; (i) Company fails to timely establish and maintain the Share Reserve (as defined in the Purchase Agreement); (j) Company fails to deliver any Purchase Shares in accordance with the terms hereof; (k) any money judgment, writ or similar process is entered or filed against Company or any subsidiary of Company or any of its property or other assets for more than $500,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented to by Investor; (l) Company fails to be DWAC Eligible; (m) Company or any subsidiary of Company, breaches any covenant or other term or condition contained in any Other Agreement in any material respect; (n) Company defaults or otherwise fails to observe or perform any covenant, obligation, condition or agreement of Company contained herein or in any other Transaction Document (as defined in the Purchase Agreement) in any material respect, other than those specifically set forth in this Section 4.1 or Section 4 or Section 5 of the Purchase Agreement or Section 2.3 above; (o) any representation, warranty or other statement made or furnished by or on behalf of Company to Investor herein, in any Transaction Document, or otherwise in connection with the issuance of this Pre-Paid Purchase is false, incorrect, incomplete or misleading in any material respect when made or furnished; (p) at any time during the period beginning on the effective date of the Registration Statement and ending on the six (6) month anniversary of the Purchase Price Date, the Registration Statement is suspended, halted, declared ineffective or otherwise unavailable for Lender to sell Purchase Shares; (q) a non-management supported preliminary proxy is filed against Company; and (q) Company or any subsidiary of Company breaches any material covenant or other material term or condition contained in any Other Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2. <u>Default Remedies</u>. At any time and from time to time following the occurrence of any Event of Default, Investor may accelerate this Pre-Paid Purchase by written notice to Company, with the Outstanding Balance becoming immediately due and payable in cash. Notwithstanding the foregoing, upon the occurrence of any Event of Default described in clauses (b) – (f) of Section 4.1, an Event of Default will be deemed to have occurred and the Outstanding Balance as of the date of the occurrence of such Event of Default shall become immediately and automatically due and payable in cash. At any time following the occurrence of any Event of Default, upon written notice given by Investor to Company, the Outstanding Balance will automatically increase by seven-and-a-half percent (7.5%) and interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred at an interest rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law ("**Default Interest**"). Notwithstanding the foregoing, and for the avoidance of doubt, Investor may continue making Purchases pursuant to Section 3 at any time following an Event of Default until such time as the Outstanding Balance is paid in full. In connection with acceleration described herein, Investor need not provide, and Company hereby waives, any presentment, demand, protest or other notice of any kind, and Investor may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Investor at any time prior to payment hereunder and Investor shall have all rights as a holder of the Pre-Paid Purchase until such time, if any, as Investor receives full payment pursuant to this Section 4.2. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Nothing herein shall limit Investor's right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to Company's failure to timely deliver Purchase Shares pursuant to a Purchase as required pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Unconditional Obligation; No Offset</u>. Company acknowledges that this Pre-Paid Purchase is an unconditional, valid, binding and enforceable obligation of Company not subject to offset, deduction or counterclaim of any kind. Company hereby waives any rights of offset it now has or may have hereafter against Investor, its successors and assigns, and agrees to make the payments or Purchases called for herein in accordance with the terms of this Pre-Paid Purchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Waiver</u>. No waiver of any provision of this Pre-Paid Purchase shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Opinion of Counsel</u>. In the event that an opinion of counsel is needed for Purchases under this Pre-Paid Purchase, Investor has the right to have any such opinion provided by its counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Governing Law; Venue</u>. This Pre-Paid Purchase shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Pre-Paid Purchase shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Arbitration of Disputes</u>. By its issuance or acceptance of this Pre-Paid Purchase, each party agrees to be bound by the Arbitration Provisions (as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Cancellation</u>. After repayment of the entire Outstanding Balance, this Pre-Paid Purchase shall be deemed paid in full, shall automatically be deemed canceled, and shall not be reissued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Amendments</u>. The prior written consent of both parties hereto shall be required for any change or amendment to this Pre-Paid Purchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Assignments</u>. Company may not assign this Pre-Paid Purchase without the prior written consent of Investor. This Pre-Paid Purchase and any Purchase Shares issued upon Purchase of this Pre-Paid Purchase may be offered, sold, assigned or transferred by Investor without the consent of Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Notices</u>. Whenever notice is required to be given under this Pre-Paid Purchase, unless otherwise provided herein, such notice shall be given in accordance with the subsection of the Purchase Agreement titled "Notices."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Liquidated Damages</u>. Investor and Company agree that in the event Company fails to comply with any of the terms or provisions of this Pre-Paid Purchase, Investor's damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties' inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Investor and Company agree that any fees, balance adjustments, Default Interest or other charges assessed under this Pre-Paid Purchase are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Investor's and Company's expectations that any such liquidated damages will tack back to the Purchase Price Date for purposes of determining the holding period under Rule 144).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Severability</u>. If any part of this Pre-Paid Purchase is construed to be in violation of any law, such part shall be modified to achieve the objective of Company and Investor to the fullest extent permitted by law and the balance of this Pre-Paid Purchase shall remain in full force and effect.

*[Remainder of page intentionally left blank; signature page follows]*

 

 

IN WITNESS WHEREOF, Company has caused this Pre-Paid Purchase to be duly executed as of the Effective Date.

---

| | |
|:---|:---|
| COMPANY: | COMPANY: |
| **Algorhythm Holdings, Inc.** | **Algorhythm Holdings, Inc.** |
| By: | */s/ Gary Atkinson* |
|  | Gary Atkinson, CEO |

---

<u>ACKNOWLEDGED, ACCEPTED AND AGREED:</u>

---

| | |
|:---|:---|
| INVESTOR: | INVESTOR: |
| **Streeterville Capital, LLC** | **Streeterville Capital, LLC** |
| By: | */s/ John M. Fife* |
|  | John M. Fife, President |

---

*[Signature Page to Pre-Paid Purchase #2]*

**ATTACHMENT 1**

**DEFINITIONS**

For purposes of this Pre-Paid Purchase, the following terms shall have the following meanings:

A1. "**Common Shares**" means Company's common shares, par value $0.01 per share.

A2. "**DTC**" means the Depository Trust Company or any successor thereto.

A3. "**DTC/FAST Program**" means the DTC's Fast Automated Securities Transfer program.

A4. "**DWAC**" means the DTC's Deposit/Withdrawal at Custodian system.

A5. "**DWAC Eligible**" means that (a) Company's Common Shares are eligible at DTC for full services pursuant to DTC's operational arrangements, including without limitation transfer through DTC's DWAC system; (b) Company has been approved (without revocation) by DTC's underwriting department; (c) Company's transfer agent is approved as an agent in the DTC/FAST Program; (d) the Purchase Shares are otherwise eligible for delivery via DWAC; and (e) Company's transfer agent does not have a policy prohibiting or limiting delivery of the Purchase Shares via DWAC.

A6. "**Floor Price**" means $0.4348.

A7. "**Fundamental Transaction**" means that (a) (i) Company or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not Company or any of its subsidiaries is the surviving corporation) any other person or entity, (ii) Company or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other person or entity, (iii) Company or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of Company (not including any shares of voting stock of Company held by the person or persons making or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), (iv) Company or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Company (not including any shares of voting stock of Company held by the other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business combination), (v) Company or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the Common Shares or preferred stock, other than an increase in the number of authorized Common Shares or a forward or reverse stock split, (vi) Company transfers any material asset to any subsidiary, affiliate, person or entity under common ownership or control with Company, or (vii) Company pays or makes any monetary or non-monetary dividend or distribution to its shareholders; or (b) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of Company. For the avoidance of doubt: (x) Company or any of its subsidiaries entering into a definitive agreement that contemplates a Fundamental Transaction will be deemed to be a Fundamental Transaction unless such agreement contains a closing condition that this Pre-Paid Purchase is repaid in full upon consummation of the transaction; and (y) "Fundamental Transaction" shall not include a reincorporation by the Company into another State.

A8. "**Other Agreements**" means, collectively, (a) all existing and future agreements and instruments between, among or by Company (or an affiliate), on the one hand, and Investor (or an affiliate), on the other hand, and (b) any financing agreement or a material agreement that affects Company's ongoing business operations.

A9. "**Outstanding Balance**" means as of any date of determination, the initial principal amount, as reduced or increased, as the case may be, pursuant to the terms hereof for payment, Purchases, offset, or otherwise, accrued but unpaid interest, collection and enforcements costs (including attorneys' fees) incurred by Investor, transfer, stamp, issuance and similar taxes and fees related to Purchases, and any other fees or charges incurred under this Pre-Paid Purchase.

A10. "**Purchase Notice Date**" means the date the applicable Purchase Notice is delivered by Investor to Company.

A11. "**Purchase Price Date**" means the date the Purchase Price is delivered by Investor to Company.

A12. "**Purchase Shares**" means Common Shares purchased pursuant to this Pre-Paid Purchase.

A13. "**Purchase Share Purchase Price**" means 90% multiplied by the lowest daily VWAP during the ten (10) Trading Day period preceding the applicable measurement date.

A14. "**Trading Day**" means any day on which Company's principal market is open for trading.

A15. "**VWAP**" means the volume weighted average price of the Common Shares on the principal market for a particular Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg.

*[Remainder of page intentionally left blank]*

 

 

**<u>EXHIBIT A</u>**

**DACA**

*[See attached]*

 

**<u>EXHIBIT B</u>**

**PURCHASE NOTICE**

On behalf of Streeterville Capital, LLC ("**Investor**"), the undersigned hereby certifies, with respect to the purchase of Common Shares of Algorhythm Holdings, Inc. ("**Company**") issuable in connection with this Purchase Notice, delivered pursuant to that certain Pre-Paid Purchase #2, dated as of November 13, 2025 (as amended and supplemented from time to time), as follows:

&nbsp;&nbsp;&nbsp;&nbsp;A. Purchase
 Notice Date: ____________

&nbsp;&nbsp;&nbsp;&nbsp;B. Purchase
 Amount: ____________

&nbsp;&nbsp;&nbsp;&nbsp;C. Purchase
 Share Purchase Price: ___________

&nbsp;&nbsp;&nbsp;&nbsp;D. Number
 of Purchase Shares Due to Investor: ____________________

&nbsp;&nbsp;&nbsp;&nbsp;E. Outstanding
 Balance Following Purchase: ____________

***Please transfer the Purchase Shares electronically (via DWAC) to the following account***:

---

| | |
|:---|:---|
| Broker: | Address: |
| DTC#: |  |
| Account #: |  |
| Account Name: |  |

---

---

| | |
|:---|:---|
| Investor: | Investor: |
| **Streeterville Capital, LLC** | **Streeterville Capital, LLC** |
| By: |  |
|  | John M. Fife, President |

---

## Exhibit 10.7

**Exhibit 10.7**

**<u>DEPOSIT ACCOUNT CONTROL AGREEMENT</u>**

This Deposit Account Control Agreement is made as of November 13, 2025, by and among Lakeside Bank, an Illinois banking corporation (the "**Bank**"), Streeterville Capital, LLC, a Utah limited liability company (the "**Lender**"), and RIME Holdings, LLC, a Utah limited liability company (the "**Guarantor**").

**WHEREAS**, Lender has agreed to purchase that certain Secured Pre-Paid Purchase #2 in the original principal amount of $5,450,000.00 from Guarantor's parent company, Algorhythm Holdings, Inc.; and

**WHEREAS**, pursuant to the terms of a Guaranty executed by Guarantor in favor of Lender on November 13, 2025, Guarantor has granted Lender a security interest and a lien on the deposit account described on **<u>Exhibit A</u>** attached hereto (the "**Deposit Account**") and the property held in the Deposit Account; and

**WHEREAS**, the parties wish to protect Lender's interest in the Deposit Account and the property held therein.

**NOW, THEREFORE,** in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Deposit Account</u>. The parties represent that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Bank is maintaining the Deposit Account with the account number set forth on **<u>Exhibit A</u>** attached hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Bank does not know of any claim to or interest in the Deposit Account, except for claims and interests of the parties referred to herein; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Deposit Account is owned by Guarantor whose taxpayer identification number is 41-2511144 and who authorizes account statements to be sent to it and Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Deposit Account may also include a **"Reserve Deposit Account,"** which shall earn interest at the standard money market rate then in effect as set by the Bank at that time. If a Reserve Deposit Account is established, it shall be identified and listed in **<u>Exhibit A</u>** alongside the primary Deposit Account. Funds in the Reserve Deposit Account shall be subject to a Zero Balance Sweep arrangement between the Deposit Account and the Reserve Deposit Account, whereby collected funds in the Deposit Account will be automatically transferred to (and from) the Reserve Deposit Account as required to maintain a target balance of $5,000.00 in the Deposit Account at the close of each business day to accommodate posting and clearing activity and to ensure the proper functioning of the Zero Balance Sweep arrangement. The Reserve Deposit Account shall be deemed part of the Deposit Account for purposes of this Agreement, and all rights, interests, and control provisions applicable to the Deposit Account shall likewise apply to the Reserve Deposit Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Control by Lender</u>. Lender shall have "control" over the Deposit Account and the funds held therein for purposes of Article 9 of the Uniform Commercial Code. The Bank will comply with all notifications or instructions it receives directing it to transfer or redeem any property in the Deposit Account (each, a "**Lender Instruction Notice**") originated by Lender without further consent by Guarantor. Guarantor hereby expressly authorizes Bank to act in accordance with each Lender Instruction Notice without Guarantor's consent or concurrence. Further, Guarantor agrees not to assert a claim or demand against Bank for complying with a Lender Instruction Notice received from Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Guarantor's Rights in the Deposit Account</u>. Except for a Lender Instruction Notice, the Bank shall only comply with joint instructions originated and executed by Guarantor and Lender directing the disposition of funds in the Deposit Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Priority of Lender's Lien</u>. The Bank hereby acknowledges the first position security interest in the Deposit Account granted by Guarantor to Lender. The Bank hereby confirms that the Deposit Account is a cash account and that it will not advance any other credit to Guarantor. The Bank subordinates in favor of Lender any security interest, lien, encumbrance, claim or right of setoff it may have, now or in the future, against the Deposit Account or property in the Deposit Account or any free credit balance earned in the Deposit Account. Notwithstanding the foregoing, the Bank is permitted to charge the Deposit Account: (a) for its usual and customary service charges, transfer fees and account maintenance fees and charges relating to such Deposit Account (the "**Fees**"); and (b) for any check deposited into the Deposit Account that is returned unpaid for any reason and for ACH credit entries that may have been originated by Guarantor but that have not settled within two (2) Business Days after the effective date of this Agreement or for any entries, whether credit or debit, that are subsequently returned thereafter (the "**Returned Items**"). In the event that there are not sufficient collected funds in such other accounts to pay the Fees and Returned Items, then Bank may charge the Deposit Account for such Fees and Returned Items. In the event that there are insufficient collected funds on deposit in the Deposit Account, Guarantor agrees upon demand to pay to Bank the amount of such Fees and Returned Items. If Guarantor fails to pay the amount demanded by Bank, Lender agrees to reimburse Bank within three (3) business days of demand thereof by Bank for any Returned Items and overdrafts to the extent Lender received payment in respect thereof pursuant to Section 2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Notices of Adverse Claims</u>. The Bank will use reasonable efforts to promptly notify Lender and Guarantor if it receives notice at any time after the date of this Agreement that any other person claims that it has a property interest in property in the Deposit Account and that it is a violation of that person's rights for anyone else to hold, transfer or deal with the property. For the avoidance of doubt, such notice shall be given in writing and in accordance with the notice provisions set forth in Section 17 below

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Bank's Responsibility</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Bank will not be liable to Guarantor for complying with a Lender Instruction Notice originated by Lender or for failing to comply with directions concerning the Deposit Account from Guarantor, even if Guarantor notifies the Bank that Lender is not legally entitled to issue the Lender Instruction Notice or to restrict Lender's access to the Deposit Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement does not create any obligation of the Bank except for those expressly set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In no event shall Bank be liable, directly or indirectly, for any (i) damages or expenses arising out of services provided under this Agreement, other than damages which result from Bank's gross negligence or willful misconduct, or (ii) indirect, special or consequential damages, including, but not limited to, lost profits, even if Bank has been advised of the possibility of such damages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Bank will be excused from failing to act or delay in acting, and no such failure or delay shall constitute a breach of this Agreement or otherwise give rise to any liability of Bank if (a) such failure or delay is caused by circumstances beyond Bank's reasonable control, including but not limited to legal constraint, emergency conditions, action or inaction of government, civil or military authority, fire, strike, lockout or other labor dispute, war, riot, theft, flood, or other natural disaster, COVID related orders and shutdowns, epidemics, breakdown of public or private or common carrier communications or transmission facilities, equipment failure, or negligence or default of Guarantor or Lender or (b) such failure or delay resulted from Bank's reasonable belief that the action would have violated any guideline, rule or regulation of any governmental authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding any of the other provisions of this Agreement, in the event of the commencement of a case pursuant to Title 11, United States Code, filed by or against Guarantor, Bank may act as it deems necessary to comply with all applicable provisions of governing statutes and shall not be in violation of this Agreement as a result.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Bank shall be permitted to comply with any writ, levy, citation, attachment, garnishment order or other similar judicial or regulatory order or process concerning the Deposit Account or any check and shall not be in violation of this Agreement for so doing; *provided, however*, Bank must take commercially reasonable actions to provide Guarantor and Lender with notice of any such order unless notice cannot be given by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Indemnity</u>. Guarantor and Lender, jointly and severally, will indemnify Bank and hold it harmless, together with its officers, directors, employees and agents against claims, liabilities and expenses and damages of any nature arising out of this Agreement (including, but not limited to, allocated costs of staff counsel, other reasonable attorneys' fees and any other fees and expenses), except to the extent the claims, liabilities or expenses are caused by the Bank's gross negligence or willful misconduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Termination; Survival</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Lender may terminate this Agreement by notice to the Bank and Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If Lender notifies the Bank that Lender's security interest in the Deposit Account has terminated, this Agreement will immediately terminate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subsection 6(c) and Section 7, "Indemnity" shall survive termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Governing Law</u>. This Agreement and the Deposit Account will be governed by the laws of the State of Illinois. The Bank and Guarantor may not change the law governing the Deposit Account without Lender's express written agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Attorneys' Fees</u>. In the event of any litigation arising from or related to this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs incurred in connection with such litigation or dispute, including any appeals, in addition to any other relief to which they may be entitled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Jury Trial Waiver</u>. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING FROM OR RELATED TO THIS AGREEMENT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Entire Agreement</u>. If there is a conflict between this Agreement and any other agreement between Guarantor and the Bank, this Agreement shall control; provided, however, that the terms of this Agreement shall not be deemed or construed to make Lender a party to such account agreement. Subject to the foregoing, this Agreement is the entire agreement, and supersedes any prior agreements and contemporaneous oral agreements of the parties concerning its subject matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Amendments</u>. No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Severability</u>. To the extent a provision of this Agreement is unenforceable, this Agreement will be construed as if the unenforceable provision were omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Successors and Assigns</u>. A successor to or assignee of Lender's rights and obligations under the Guaranty will succeed to Lender's rights and obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Counterparts</u>. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>Notice</u>. Any notices and demands under or related to this Agreement shall be in writing and delivered to the intended party at its address or email stated below, and if to Lender, at its main office if no other address of Lender is specified herein, by one of the following means: (a) by hand, (b) by a nationally recognized overnight courier service, (c) by certified mail, postage prepaid, with return receipt requested, or (d) by email. Notice shall be deemed given: (i) upon receipt if delivered by hand, (ii) on the Delivery Day after the day of deposit with a nationally recognized courier service, (iii) on the third Delivery Day after the notice is deposited in the mail, or (iv) when transmitted to the email address specified below and a confirmation receipt is received by the sender. "Delivery Day" means a day other than a Saturday, a Sunday, or any other day on which national banking associations located in Illinois are authorized to be closed. Any party may change its address for purposes of the receipt of notices and demands by giving notice of such change in the manner provided in this provision.

---

| | |
|:---|:---|
| If to Lender: | Streeterville Capital, LLC |
|  | Attn: John Fife |
|  | 297 Auto Mall Drive #4 |
|  | St. George, Utah 84770 |
| If to Guarantor: | RIME Holdings, LLC |
|  | Attn: Gary Atkinson |
|  | 6301 NW 5th Way, Suite 2900 |
|  | Fort Lauderdale, Florida 33309 |
| If to Bank: | Lakeside Bank |
|  | Attn: Treasury Management Department |
|  | 3855 S. Halsted Street |
|  | Chicago, Illinois 60609 |
|  | Email: treasury.management@lakesidebank.com |
|  | With a copy to: |
|  | Lakeside Bank |
|  | Attn: General Counsel |
|  | 141 W. Jackson Blvd. Suite 130A |
|  | Chicago, IL 60604 |
|  | Email: sfister@lakesidebank.com |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <u>Disclaimer</u>. Nothing contained in the Agreement shall create any agency, fiduciary, joint venture or partnership relationship between the Bank and Guarantor or Lender. Guarantor and Lender agree that nothing in this Agreement, nor any course of dealing among the parties to this Agreement, shall constitute a commitment or other obligation on the part of the Bank to extend credit to Guarantor or Lender.

*[Signatures Appear on Following Page]*

 

**In Witness Whereof**, the parties have executed this Agreement as of the day and year first written above.

---

| | |
|:---|:---|
| **<u>BANK</u>:** | **<u>BANK</u>:** |
| **Lakeside Bank, an Illinois banking corporation** | **Lakeside Bank, an Illinois banking corporation** |
| By: | /s/ Matthew H. Palmisano |
|  | Matthew H. Palmisano, SVP, Director of Treasury Management |
| **<u>LENDER</u>:** | **<u>LENDER</u>:** |
| **Streeterville Capital, LLC, a Utah limited liability company** | **Streeterville Capital, LLC, a Utah limited liability company** |
| **By:** | **/s/ John Fife** |
|  | John Fife, President |
| **<u>GUARANTOR</u>:** | **<u>GUARANTOR</u>:** |
| **RIME Holdings, LLC, a Utah limited liability company** | **RIME Holdings, LLC, a Utah limited liability company** |
| By: | /s/ Gary Atkinson |
|  | Gary Atkinson, Manager |

---

**EXHIBIT A**

**"Deposit Account"**

**Account Title:**

RIME Holdings, LLC, as Guarantor

Streeterville Capital LLC, as Lender, DACA Deposit Account

**Account Number:** 

**"Reserve Deposit Account"**

**Account Title:**

RIME Holdings, LLC, as Guarantor

Streeterville Capital LLC, as Lender, DACA Reserve Account

**Account Number:**

## Exhibit 10.8

**Exhibit 10.8**

**GUARANTY**

This GUARANTY, made effective as of November 13, 2025, is given by RIME Holdings, LLC, a Utah limited liability company ("**Guarantor**"), for the benefit of Streeterville Capital, LLC, a Utah limited liability company, and its successors, transferees, and assigns (collectively "**Investor**").

**PURPOSE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Algorhythm Holdings, Inc., a Delaware corporation and parent of Guarantor ("**Company**"), has issued to Investor that certain Secured Pre-Paid Purchase #2 of even date herewith in the principal amount of $5,450,000.00 (the "**Pre-Paid Purchase**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Pre-Paid Purchase was issued pursuant to the terms of a Securities Purchase Agreement dated August 21, 2025 between Company and Investor (the "**Purchase Agreement**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Investor agreed to provide the financing to Company evidenced by the Pre-Paid Purchase only upon the inducement and representation of Guarantor that Guarantor would guaranty certain indebtedness, liabilities and obligations of Company owed to Investor under the Pre-Paid Purchase, as provided herein.

NOW, THEREFORE, in consideration of $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Investor to purchase the Pre-Paid Purchase and provide the financing contemplated therein, Guarantor hereby agrees for the benefit of Investor as follows:

**GUARANTY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **DACA**. The Obligations shall be secured by a Deposit Account Control Agreement of even date herewith among Guarantor, Investor and Lakeside Bank (the "**DACA**"), the Deposit Account (as defined in the DACA) and the funds held therein pursuant to the DACA. Guarantor hereby grants to Investor a first-position security interest in and lien on the Deposit Account and the funds held in the Deposit Account and acknowledges and agrees that Investor will have the right to file a UCC-1 Financing Statement with respect to the Deposit Account. Guarantor acknowledges and agrees that Investor will have control over the Deposit Account within the meaning of Section 9-104 of the Uniform Commercial Code pursuant to the terms of the DACA. Guarantor acknowledges and agrees that Investor is authorized to send a Lender Instruction Notice (as defined in the DACA) to the Bank (as defined in the DACA) directing the disposition of the funds held in the Deposit Account: (a) upon the occurrence of an Event of Default (as defined in the Pre-Paid Purchase); or (b) upon Investor's receipt of a notice from Company pursuant to Section 2.3(i) of the Pre-Paid Purchase (or otherwise becoming aware of an action described therein). Upon sending a Lender Instruction Notice, Investor will have the right without further notice or demand, to apply all or any portion of the funds held in the Deposit Account to the Obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **Representations and Warranties**. Guarantor hereby represents and warrants to Investor that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Guarantor is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has the power and authority and the legal right to own and operate its properties and to conduct the business in which it is currently engaged.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Guarantor has the power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guaranty and has taken all necessary action required by its form of organization to authorize such execution, delivery and performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) This Guaranty constitutes Guarantor's legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The execution, delivery and performance of this Guaranty will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to Guarantor, (ii) violate or contravene any provision of Guarantor's organizational documents, or (iii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other material agreement, lease or instrument to which Guarantor is a party or by which it or any of its properties may be bound or result in the creation of any lien thereunder. Guarantor is not in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation could have a material adverse effect on its business, operations, properties, assets or condition (financial or otherwise).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on Guarantor's part to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Guaranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) There are no actions, suits or proceedings pending or, to Guarantor's knowledge, threatened against or affecting Guarantor or any of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely to Guarantor, would have a material adverse effect on its business, operations, property or condition (financial or otherwise) or on its ability to perform its obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) (i) This Guaranty is not given with actual intent to hinder, delay or defraud any entity to which Guarantor is, or will become on or after the date of this Guaranty, indebted, (ii) Guarantor has received at least a reasonably equivalent value in exchange for the giving of this Guaranty, (iii) Guarantor is not insolvent, as defined in any applicable state or federal statute, nor will Guarantor be rendered insolvent by the execution and delivery of this Guaranty to Investor, and (iv) Guarantor does not intend to incur debts that will be beyond Guarantor's ability to pay as such debts become due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Guarantor has examined or has had the full opportunity to examine the Pre-Paid Purchase and all the other Transaction Documents, all the terms of which are acceptable to Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) This Guaranty is given in consideration of Investor entering into the Pre-Paid Purchase and providing financing thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Guarantor has received adequate consideration and at least a reasonably equivalent value in exchange for the giving of this Guaranty, which Guarantor hereby acknowledges having received, and thereby will materially benefit from the financial accommodations granted to Company by Investor pursuant to the Pre-Paid Purchase. Investor may rely conclusively on the continuing warranty, hereby made, that Guarantor continues to be benefitted by Investor's extension of credit accommodations to Company and Investor shall have no duty to inquire into or confirm the receipt of any such benefits, and this Guaranty shall be effective and enforceable by Investor without regard to the receipt, nature or value of any such benefits. As such, this Guaranty is a valid and binding obligation of Guarantor. Guarantor further covenants and agrees that it will not use lack of consideration as a defense to its performance of its obligations under this Guaranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **Alteration of Obligations**. In such manner, upon such terms and at such times as Investor and Company deem best and without notice to Guarantor, Investor and Company may alter, compromise, accelerate, extend, renew or change the time or manner for the payment of any Obligation, increase or reduce the rate of interest on the Pre-Paid Purchase, release Company, as to all or any portion of the Obligations, release, substitute or add any one or more guarantors or endorsers, accept additional or substituted security therefor, or release or subordinate any security therefor. No exercise or non-exercise by Investor of any right available to Investor, no dealing by Investor with Guarantor or any other guarantor, endorser of the note or any other person, and no change, impairment or release of all or a portion of the obligations of Company under any of the Transaction Documents or suspension of any right or remedy of Investor against any person, including, without limitation, Company and any other such guarantor, endorser or other person, shall in any way affect any of the obligations of Guarantor hereunder or any security furnished by Guarantor or give Guarantor any recourse against Investor. Guarantor acknowledges that its obligations hereunder are independent of the obligations of Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **Waiver**. To the extent permitted by law, Guarantor hereby waives and relinquishes all rights and remedies accorded by applicable law to guarantors and agrees not to assert or take advantage of any such rights or remedies, including (without limitation) (a) any right to require Investor to proceed against Company or any other person or to pursue any other remedy in Investor's power before proceeding against Guarantor; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Investor to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons; (c) demand, protest and notice of any kind, including, without limitation, notice of the existence, creation or incurring of any new or additional indebtedness, liability or obligation or of any action or non-action on the part of Company, Investor, any endorser or creditor of Company or Guarantor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or liability or evidence of indebtedness held by Investor as collateral or in connection with any Obligation hereby guaranteed; (d) any defense based upon an election of remedies by Investor which may destroy or otherwise impair the subrogation rights of Guarantor or the right of Guarantor to proceed against Company for reimbursement, or both; (e) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (f) any duty on the part of Investor to disclose to Guarantor any facts Investor may now or hereafter know about Company, regardless of whether Investor has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate such facts to Guarantor, since Guarantor acknowledges that it is fully responsible for being and keeping informed of the financial condition of Company and of all circumstances bearing on the risk of non-payment of any Obligation; (g) any defense arising because of Investor's election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code; (g) any defense based on any borrowing or grant of a security interest under Section 364 of the Federal Bankruptcy Code; (h) any claim, right or remedy which Guarantor may now have or hereafter acquire against Company that arises hereunder and/or from the performance by Guarantor hereunder, including, without limitation, any claim, right or remedy of Investor against Company or any security which Investor now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise; and (i) any obligation of Investor to pursue any other guarantor or any other person, or to foreclose on any collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. **Bankruptcy**. So long as any Obligation shall be owing to Investor, Guarantor shall not, without the prior written consent of Investor, commence, or join with any other person in commencing, any bankruptcy, reorganization, or insolvency proceeding against Company. The obligations of Guarantor under this Guaranty shall not be altered, limited or affected by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company, or by any defense which Company may have by reason of any order, decree or decision of any court or administrative body resulting from any such proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. **Claims in Bankruptcy**. Guarantor shall file in any bankruptcy or other proceeding in which the filing of claims is required or permitted by law all claims that Guarantor may have against Company relating to any indebtedness, liability or obligation of Company owed to Guarantor and will assign to Investor all rights of Guarantor thereunder. If Guarantor does not file any such claim, Investor, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Investor's discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Investor's nominee. The foregoing power of attorney is coupled with an interest and cannot be revoked. Investor or Investor's nominee shall have the sole right to accept or reject any plan proposed in such proceeding and to take any other action that a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Investor the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Investor all of Guarantor's rights to any such payments or distributions to which Guarantor would otherwise be entitled; *provided, however*, that Guarantor's obligations hereunder shall not be deemed satisfied except to the extent that Investor receives cash by reason of any such payment or distribution. If Investor receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. If at any time the holder of the Pre-Paid Purchase is required to refund to Company any payments made by Company under the Pre-Paid Purchase because such payments have been held by a bankruptcy court having jurisdiction over Company to constitute a preference under any bankruptcy, insolvency or similar law then in effect, or for any other reason, then in addition to Guarantor's other obligation under this Guaranty, Guarantor shall reimburse the holder in the aggregate amount of such refund payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. **Costs and Attorneys' Fees**. If Company or Guarantor fails to pay all or any portion of any Obligation, or Guarantor otherwise breaches any provision hereof or otherwise defaults hereunder, Guarantor shall pay all such expenses and actual, reasonable attorneys' fees incurred by Investor in connection with the enforcement of any obligations of Guarantor hereunder, including, without limitation, any attorneys' fees incurred in any negotiation, alternative dispute resolution proceeding subsequently agreed to by the parties, if any, litigation, or bankruptcy proceeding or any appeals from any of such proceedings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. **Cumulative Rights**. The amount of Guarantor's liability and all rights, powers and remedies of Investor hereunder and under any other agreement now or at any time hereafter in force between Investor and Guarantor, including, without limitation, any other guaranty executed by Guarantor relating to any indebtedness, liability or obligation of Company owed to Investor, shall be cumulative and not alternative and such rights, powers and remedies shall be in addition to all rights, powers and remedies given to Investor by law. This Guaranty is in addition to and exclusive of the guaranty of any other guarantor of any indebtedness, liability or obligation of Company owed to Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. **Independent Obligations**. The obligations of Guarantor hereunder are independent of the obligations of Company and, to the extent permitted by law, in the event of any breach or default hereunder, a separate action or actions may be brought and prosecuted against Guarantor whether or not Company is joined therein or a separate action or actions are brought against Company. Investor may maintain successive actions for other breaches or defaults. Investor's rights hereunder shall not be exhausted by Investor's exercise of any of Investor's rights or remedies or by any such action or by any number of successive actions until and unless all Obligations have been paid and fully performed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. **Severability**. If any part of this Guaranty is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Guaranty shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. **Successors and Assigns**. This Guaranty shall inure to the benefit of Investor, Investor's permitted successors and assigns, including the assignees of any Obligation, and shall bind the heirs, executors, administrators, personal representatives, successors and assigns of Guarantor. This Guaranty may be assigned by Investor with respect to all or any portion of the Obligations, and when so assigned, Guarantor shall be liable to the assignees under this Guaranty without in any manner affecting the liability of Guarantor hereunder with respect to any Obligations retained by Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. **Notices**. Whenever Guarantor or Investor shall desire to give or serve any notice, demand, request or other communication with respect to this Guaranty, each such notice shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by confirmed facsimile,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the fifth business day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the third business day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the address for such party (or Company, in respect of notices delivered to the Guarantor) set forth in the Purchase Agreement (or at such other addresses as such party may designate by ten (10) calendar days' advance written notice similarly given to each of the other parties hereto).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. **Application of Payments or Recoveries**. With or without notice to Guarantor, Investor, in Investor's sole discretion and at any time and from time to time and in such manner and upon such terms as Investor deems fit, may (a) apply any or all payments or recoveries from Company or from any other guarantor or endorser under any other instrument or realized from any security, in such manner and order of priority as Investor may determine, to any indebtedness, liability or obligation of Company owed to Investor, whether or not such indebtedness, liability or obligation is guaranteed hereby or is otherwise secured or is due at the time of such application; and (b) refund to Company any payment received by Investor in connection with any Obligation and payment of the amount refunded shall be fully guaranteed hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. **Setoff**. Investor shall have a right of setoff against the Deposit Account. Such right is in addition to any right of setoff Investor may have by law. All rights of setoff may be exercised without notice or demand to Guarantor. No right of setoff shall be deemed to have been waived by any act or conduct on the part of Investor, or by any neglect to exercise such right of setoff, or by any delay in doing so. Every right of setoff shall continue in full force and effect until specifically waived or released by an instrument in writing executed by Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. **Miscellaneous**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.1 <u>Governing Law and Venue</u>. This Guaranty shall be governed by and interpreted in accordance with the laws of the State of Utah for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Without modifying Guarantor's obligations to resolve disputes hereunder pursuant to the Arbitration Provisions (as defined below), Guarantor consents to and expressly agrees that exclusive venue for the arbitration of any dispute arising out of or relating to this Guaranty or the relationship of the parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the parties obligations to resolve disputes hereunder pursuant to the Arbitration Provisions (as defined below), for any litigation arising in connection with this Agreement, Guarantor hereby (a) consents to and expressly submits to the exclusive personal jurisdiction of any state court sitting in Salt Lake County, Utah, (b) expressly submits to the exclusive venue of any such court for the purposes hereof, and (c) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.2 <u>Arbitration of Claims</u>. The parties hereto hereby incorporate by this reference the arbitration provisions set forth as an exhibit to the Purchase Agreement ("**Arbitration Provisions**"). The parties shall submit all Claims (as defined in the Arbitration Provisions) arising under this Guaranty or other agreements between the parties and their affiliates to binding arbitration pursuant to the Arbitration Provisions. The parties hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other provisions of this Guaranty. Any capitalized term not defined in the Arbitration Provisions shall have the meaning set forth in the Purchase Agreement. By executing this Guaranty, Guarantor represents, warrants and covenants that Guarantor has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Guarantor will not take a position contrary to the foregoing representations. Guarantor acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Guarantor regarding the Arbitration Provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.3 <u>Entire Agreement</u>. Except as provided in any other written agreement now or at any time hereafter in force between Investor and Guarantor, this Guaranty shall constitute the entire agreement of Guarantor with Investor with respect to the subject matter hereof, and no representation, understanding, promise or condition concerning the subject matter hereof shall be binding upon Investor unless expressed herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.4 <u>Construction</u>. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever. The headings of this Guaranty are inserted for convenience only and shall have no effect upon the construction or interpretation hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.5 <u>Waiver</u>. No provision of this Guaranty or right granted to Investor hereunder can be waived in whole or in part nor can Guarantor be released from Guarantor's obligations hereunder except by a writing duly executed by an authorized officer of Investor. Any such waiver shall be effective only for the specific instance and purpose for which it is given.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.6 <u>No Subrogation</u>. Until all indebtedness, liabilities and obligations of Company owed to Investor have been paid in full, Guarantor shall not have any right of subrogation, contribution, or reimbursement against Company or any other guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.7 <u>Survival</u>. All representations, warranties, covenants, and obligations contained in this Guaranty shall survive the execution, delivery and performance of this Guaranty, the creation and payment of the Obligations, and any termination or expiration of this Guaranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.8 <u>Joint and Several Liability</u>. Guarantor's covenants, obligations and agreements set forth herein are joint and several liabilities and obligations of Guarantor together with every other guarantor of the Obligations, whether now existing or hereafter arising, and whether or not such other guarantors are named in this Guaranty.

*[Remainder of page intentionally left blank; signature page to follow]*

 

 

IN WITNESS WHEREOF, Guarantor has executed this Guaranty to be effective as of the date first set forth above.

---

| | |
|:---|:---|
| **RIME Holdings, LLC** | **RIME Holdings, LLC** |
| By: | */s/ Gary Atkinson* |
|  | Gary Atkinson, Manager |

---

*[Signature Page to Guaranty]*

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

I, Gary Atkinson, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Algorhythm Holdings, Inc. for the period ended September 30, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 controls 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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 an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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.

---

| | |
|:---|:---|
| Date: November 19, 2025 | */s/ Gary Atkinson* |
|  | Gary Atkinson |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

I, Alex Andre, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Algorhythm Holdings, Inc. for the period ended September 30, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 controls 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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 an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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.

---

| | |
|:---|:---|
| Date: November 19, 2025 | */s/ Alex Andre* |
|  | Alex Andre |
|  | Chief Financial Officer |
|  | (Principal Financial and Accounting Officer) |

---

## 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 Quarterly Report of Algorhythm Holdings, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: November 19, 2025 | By: | */s/ Gary Atkinson* |
|  | Name: | Gary Atkinson |
|  | Title: | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
| Date: November 19, 2025 | By: | */s/ Alex Andre* |
|  | Name: | Alex Andre |
|  | Title: | Chief Financial Officer |
|  |  | (Principal Financial and Accounting Officer) |

---