# EDGAR Filing Document

**Accession Number:** 0000923601
**File Stem:** 0001641172-25-024828
**Filing Date:** 2025-8
**Character Count:** 134054
**Document Hash:** 1e99f54d2b23eb9a4e91226a6664aa79
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001641172-25-024828.hdr.sgml**: 20250819

**ACCESSION NUMBER**: 0001641172-25-024828

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 82

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250819

**DATE AS OF CHANGE**: 20250819

**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:** 251231790

**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 June 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 of incorporation or organization) | (I.R.S. Employer 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 August 15, 2025, there were 2,514,571 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** | **PART I – FINANCIAL INFORMATION** |  |
| Item 1. | [Financial Statements](#a_001) | 2 |
|  | [Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024](#a_002) | 2 |
|  | [Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (Unaudited)](#a_003) | 3 |
|  | [Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2025 and 2024 (Unaudited)](#a_004) | 4 |
|  | [Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)](#a_005) | 5 |
|  | [Notes to Condensed Consolidated Financial Statements (Unaudited)](#a_006) | 6 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#sd_001) | 27 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#sd_002) | 35 |
| Item 4. | [Controls and Procedures](#sd_003) | 35 |
| [**PART II – OTHER INFORMATION**](#sd_004) | [**PART II – OTHER INFORMATION**](#sd_004) | 37 |
| Item 1. | [Legal Proceedings](#sd_005) | 37 |
| Item 1A. | [Risk Factors](#sd_006) | 37 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#sd_007) | 37 |
| Item 3. | [Defaults Upon Senior Securities](#sd_008) | 37 |
| Item 4. | [Mine Safety Disclosures](#sd_009) | 37 |
| Item 5. | [Other Information](#sd_010) | 37 |
| Item 6. | [Exhibits](#sd_011) | 38 |

---

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
|  | **(unaudited)** | |
| **<u>Assets</u>** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $1134000 | $7550000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $101,000 and $274,000, respectively | 2317000 | 4373000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, related party | 124000 | 212000 |
| &nbsp;&nbsp;&nbsp;Note receivable - related party |  | 701000 |
| &nbsp;&nbsp;&nbsp;Inventory | 2733000 | 2186000 |
| &nbsp;&nbsp;&nbsp;Returns asset | 93000 | 1621000 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 1219000 | 120000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets** | 7620000 | 16763000 |
| **Property and equipment, net** | 252000 | 284000 |
| **Other non-current assets** | 90000 | 124000 |
| **Intangible assets, net** | 315000 | 345000 |
| **Goodwill** | 4418000 | 786000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $12695000 | $18302000 |
| **<u>Liabilities and Shareholders' Equity</u>** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $1996000 | $3808000 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 3295000 | 4224000 |
| &nbsp;&nbsp;&nbsp;Refund due to customer | 1232000 | 38000 |
| &nbsp;&nbsp;&nbsp;Reserve for sales returns | 521000 | 3355000 |
| &nbsp;&nbsp;&nbsp;Warrant liability |  | 16603000 |
| &nbsp;&nbsp;&nbsp;Promissory notes payable,net | 379000 |  |
| &nbsp;&nbsp;&nbsp;Current portion of promissory note payable - SemiCab, Inc. | 1500000 |  |
| &nbsp;&nbsp;&nbsp;Current portion of notes payable to related parties | 265000 | 265000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 62000 | 145000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities** | 9250000 | 28438000 |
| **Notes payable to related parties, net of current portion** | 385000 | 385000 |
| **Promoissory note payable - SemiCab, Inc., net of current portion** | 250000 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | 9885000 | 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 June 30, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.01 par value; 800,000,000 and 100,000,000 shares authorized; 2,514,571 and 470,825 shares issued and outstanding at June 30, 2025 and December 31, 2024 | 25000 | 5000 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 63854000 | 39682000 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (58948000) | (49172000) |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | (1363000) | (1036000) |
| &nbsp;&nbsp;&nbsp;Treasury stock, 10,990 and 0 shares reserved at June 30, 2025 and December 31, 2024 | (758000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Algorhythm Holdings Shareholders' Equity (Deficit)** | 2810000 | (10521000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Shareholders' Equity (Deficit)** | $12695000 | $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 Six Months Ended** | **For the Six Months Ended** |
|  | **June 30, 2025** | **June 30, 2024** | **June 30, 2025** | **June 30, 2024** |
| **Net Sales** | $2716000 | $2440000 | $4709000 | $4866000 |
| **Cost of Goods Sold** | 1762000 | 2116000 | 3255000 | 4040000 |
| **Gross Profit** | 954000 | 324000 | 1454000 | 826000 |
| **Operating Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 234000 | 547000 | 998000 | 1177000 |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 1502000 | 2053000 | 4048000 | 4212000 |
| &nbsp;&nbsp;&nbsp;Operating lease impairment expense | - | 3878000 | - | 3878000 |
| **Total Operating Expenses** | 1736000 | 6478000 | 5046000 | 9267000 |
| **Loss from Operations** | (782000) | (6154000) | (3592000) | (8441000) |
| **Other Expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liability |  |  | (6468000) |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (27000) | (17000) | (43000) | (45000) |
| **Total Other Expenses** | (27000) | (17000) | (6511000) | (45000) |
| **Loss Before Income Tax Benefit** | (809000) | (6171000) | (10103000) | (8486000) |
| **Income Tax Benefit** | - | 52000 | - | - |
| **Net Loss** | (809000) | (6119000) | (10103000) | (8486000) |
| Net loss attributable to non-controlling interest | 224000 | - | 327000 | - |
| **Net Loss Available to Common Shareholders** | $(585000) | $(6119000) | $(9776000) | $(8486000) |
| **Income (Loss) Per Common Share** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | $(0.24) | $(190.68) | $(4.40) | $(264.44) |
| **Weighted Average Common and Common** |  |  |  |  |
| **Equivalent Shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | 2472464 | 32090 | 2224047 | 32090 |

---

 ****

***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 June 30, 2025 and 2024 (Unaudited)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | |
|  | **Shares** | **Amount** | **Additional Paid-in**<br>**Capital** | **Non-<br> Controlling**<br>**Interest** | **Treasury**<br>**Stock** | **Accumulated**<br>**Deficit** |<br>**Total** |
| **Balance at March 31, 2025** | **2394829** | $**24000** | $**63577000** | $**(1139000)** | $**(758000)** | $**(58363000)** | $**3341000** |
| Net loss |  |  |  | (224000) |  | (585000) | (809000) |
| Stock-based compensation |  |  | (38000) |  |  | **-** | (38000) |
| Common stock issued for acquisition of SMCB | 119742 | 1000 | 315000 | - | - | **-** | 316000 |
| **Balance at June 30, 2025** | **2514571** | $**25000** | $**63854000** | $**(1363000)** | $**(758000)** | $**(58948000)** | $**2810000** |
| **Balance at March 31, 2024** | **6418061** | $**64000** | $**33448000** | $**-** | $**-** | $**(28282000)** | $**5230000** |
| Net loss |  |  |  |  |  | (6119000) | **(6119000)** |
| Stock-based compensation | - | - | 17000 | - | - | - | **17000** |
| **Balance at June 30, 2024** | **6418061** | $**64000** | $**33465000** | $**-** | $**-** | $**(34401000)** | $**(872000)** |

---

**For the Six Months Ended June 30, 2025 and 2024 (Unaudited)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | |
|  | **Shares** | **Amount** | **Additional 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 |  |  |  | (327000) |  | (9776000) | (10103000) |
| Exercise of Series B warrants | 1910975 | 19000 | 15195000 |  |  |  | 15214000 |
| Stock-based compensation | 23818 |  | 47000 |  |  |  | 47000 |
| 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) |  |  |
| Other | 201 | - | - | - | - | - | - |
| **Balance at June 30, 2025** | **2514571** | $**25000** | $**63854000** | $**(1363000)** | $**(758000)** | $**(58948000)** | $**2810000** |
| **Balance at December 31, 2023** | **6418061** | $**64000** | $**33429000** | $**-** | $**-** | $**(25915000)** | $**7578000** |
| Net income |  |  |  |  |  | (8486000) | (8486000) |
| Stock-based compensation | - | - | 36000 | - | - | - | 36000 |
| **Balance at June 30, 2024** | **6418061** | $**64000** | $**33465000** | $**-** | $**-** | $**(34401000)** | $**(872000)** |

---

 ****

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

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30, 2025** | **June 30, 2024** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(10103000) | $(8486000) |
| &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 | 96000 | 125000 |
| &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;Provision for estimated cost of returns | 1528000 | 1301000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for inventory obsolescence | 4000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit losses | 3000 | 14000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment expense |  | 3878000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve for sales returns | (2834000) | (1217000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 47000 | 36000 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 2372000 | 4945000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from banks |  | (187000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable - related parties | 88000 | (145000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (551000) | (38000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (722000) | 69000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | 523000 | (64000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (2184000) | (3940000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | (1147000) | (771000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refunds due to customers | 1194000 | (649000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (83000) | (281000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (5436000) | (5410000) |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (22000) | (6000) |
| &nbsp;&nbsp;&nbsp;Repurchase of shares of common stock | (758000) |  |
| &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 used in investing activities | (1359000) | (6000) |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of promissory notes, net | 379000 |  |
| &nbsp;&nbsp;&nbsp;Other | - | (42000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | 379000 | (42000) |
| **Net change in cash** | (6416000) | (5458000) |
| **Cash at beginning of year** | 7550000 | 6703000 |
| **Cash at end of period** | $1134000 | $1245000 |
| **Supplemental disclosures of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $43000 | $40000 |
| **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 | $- |

---

 **

***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 and consumer electronics holding company with two primary business units – SemiCab and Singing Machine. SemiCab is an AI-enabled software logistics business operated through the Company's subsidiary, SemiCab Holdings, LLC. Singing Machine is a home karaoke consumer products business that designs and distributes karaoke products globally to retailers and ecommerce partners through the Company's subsidiary, The Singing Machine Company, Inc.

The Company's operations include 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"), MICS Hospitality Holdings, Inc., a Delaware corporation ("MICS Hospitality"), MICS Hospitality Management, LLC, a Delaware limited liability company ("MICS Hospitality Management"), and MICS Nomad, LLC, a Delaware limited liability company ("MICS NY"), and its 80%-owned subsidiaries, SemiCab Holdings, LLC, a Nevada limited liability company ("SemiCab Holdings") and SMCB Solutions Private Limited, an Indian Company ("SMCB").

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.

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 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.

**Note 2 – Liquidity, Going Concern and Management Plans**

**Going Concern Analysis**

As of June 30, 2025, the Company's cash balance was $1,134,000. 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 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 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 and outflow 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 3 – Summary of Significant Accounting Policies**

**Basis of Presentation**

The accompanying unaudited condensed consolidated financial statements for the three and six months ended June 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 June 30, 2025 and condensed financial statement information for the three and six months ended June 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") for the purposes of ASC 280. The CODM concluded that the Company operates two reportable segments. One segment consists of its SemiCab business and the other segment consists of its Singing Machine business. The CODM manages the Company's operations and business separately for each operating segment and uses net loss to allocate resources, making operating decisions and evaluating financial performance. The CODM also uses net loss, along with non-financial inputs and qualitative information, to evaluate the Company's performance, establish compensation, monitor budget versus actual results, and decide the level of investment in various operating activities and other capital allocation activities. *See Note 14 – Segment Information and Revenue Disaggregation – Segment Information*.

**Recent Accounting Pronouncements**

In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*. ASU 2023-09 is intended to enhance the usefulness of income tax disclosures by requiring entities to disclose specific rate reconciliations, the amount of income taxes separated by federal and individual tax jurisdictions, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated among federal, state and foreign. ASU 2023-09 is effective for the Company for its fiscal year beginning January 1, 2025. The adoption of ASU 2023-09 did not have a material impact on the Company's consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, *Income Statement – Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)*. This ASU requires disclosure on an annual and interim basis, in the notes to the financial statements, of disaggregated information about specific categories underlying certain income statement expense line items. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods with annual reporting periods beginning after December 15, 2027, on a retrospective basis. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, *Debt – Debt with Conversion and Other Options (Subtopic 470-20)*. This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. Adoption can be on a prospective or retrospective basis. 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 2025-03, *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.

**Note 4 – 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 SMCB's significant activities related to its business. Accordingly, the Company had not consolidated SMCB's results of operations and financial position in its condensed consolidated financial statements prior to May 2, 2025.

On May 2, 2025, the Company and 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 17 – Acquisition of SMCB*

 

**Note 5 – Property and Equipment, Intangible Assets and Goodwill**

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

Schedule of Property and Equipment

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | June 30,<br>2025 | December 31,<br>2024 |
| Computer and office equipment | 5-7 years | $462000 | $412000 |
| Furniture and fixtures | 7 years | 107000 | 107000 |
| Molds and tooling | 3-5 years | 2312000 | 2297000 |
|  |  | 2881000 | 2816000 |
| Less: accumulated depreciation |  | 2629000 | 2532000 |
|  |  | $252000 | $284000 |

---

Depreciation expense was $31,000 and $64,000 for the three and six months ended June 30, 2025, respectively, and $53,000 and $105,000 for the three and six months ended June 30, 2024, respectively.

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

Schedule of Intangible Assets

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | June 30,<br>2025 | December 31,<br>2024 |
| Customer relationships | 5-7 years | $25000 | $25000 |
| Trade names | 7 years | 25000 | 25000 |
| Developed technology | 3-5 years | 325000 | 325000 |
|  |  | 375000 | 375000 |
| Less: accumulated amortization |  | 60000 | 30000 |
|  |  | $315000 | $345000 |

---

Amortization expense was $17,000 and $32,000 for the three and six months ended June 30, 2025, respectively. The Company did not have any intangible assets or goodwill during the six months ended June 30, 2024.

On June 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, 2025 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 six months ended June 30, 2025. Accordingly, the balance of that goodwill was $786,000 on June 30, 2025.

On May 2, 2025, the Company and 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 June 30, 2025.

**Note 6 – 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 had accrued interest payable of $5,000 as of June 30, 2025 that was included as a component of accrued expenses on the Company's condensed consolidated balance sheets. The Company incurred interest expense on these loans of $15,000 and $31,000 for the three and six months ended June 30, 2025, respectively.

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 June 30, 2025 |  |  |  |  | $650000 |
| Less: current portion of notes payable to related parties |  |  |  |  | 265000 |
| Notes payable to related parties, net of current portion |  |  |  |  | $385000 |

---

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.

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 11 – 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 17 – Acquisition of SMCB*.

**Note 7 – 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 8 – 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 six months ended June 30, 2025. Accordingly, there was no unpaid balance at June 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 and was due on July 1, 2024 and was not made. In the event this payment is made, the remaining settlement shall be deemed satisfied. If this payment is not made, the Company shall owe a total of $225,000 by October 1, 2024. In the event this payment is made, the remaining settlement shall be deemed satisfied. If neither payment is made, Blue Yonder shall be entitled to execute the full $509,119 beginning January 1, 2025. As of the date of this filing, none of the scheduled payments have been made. A liability of $509,119 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 9 – 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 June 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 six months ended June 30, 2025 and 2024, and no shares were forfeited during the three and six months ended June 30, 2025.

As of June 30, 2025, there was an unrecognized expense of $60,000 remaining on stock options currently vesting over time with an approximate weighted average of three years and nine months remaining until the options would be fully vested. The vested options outstanding as of June 30, 2025, had no intrinsic value.

**Note 10 – Net Loss Per Share**

The computations of basic and dilutive loss per share of commons stock outstanding for the three and six months ended June 30, 2025 and 2024 are as follows:

Schedule of Basic and Diluted Loss Per Share

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months<br>Ended<br>June 30, 2025 | Three Months<br>Ended<br>June 30, 2024 | Six Months<br>Ended<br>June 30, 2025 | Six Months<br>Ended<br>June 30, 2024 |
| Net loss available to common shareholders | $(585000) | $(6119000) | $(9776000) | $(8486000) |
| Basic and diluted weighted average of common stock outstanding | 2472464 | 32090 | 2224047 | 32090 |
| Loss per common share | $(0.24) | $(190.68) | $(4.40) | $(264.44) |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months<br>Ended<br>June 30, 2025 | Three Months<br>Ended<br>June 30, 2024 | Six Months<br>Ended<br>June 30, 2025 | Six Months<br>Ended<br>June 30, 2024 |
| Basic weighted average common shares outstanding | 2472464 | 32090 | 2224047 | 32090 |
| Effect of dilutive stock options and warrants | - | - | - | - |
| Diluted weighted average of common shares outstanding | 2472464 | 32090 | 2224047 | 32090 |

---

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

For the three and six months ended June 30, 2025, 484 shares 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 loss per share as the result would have been anti-dilutive. For the three and six months ended June 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 loss per share as the result would have been anti-dilutive.

**Note 11 – 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 six months ended June 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 six months ended June 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 12 – 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 June 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.

**Note 12 – Derivative Liability**

During the six months ended June 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 warrants | 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 six months ended June 30, 2025.

The following table provides a roll-forward of the fair value of the derivative liabilities described above during the six months ended June 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 June 30, 2025 | $— | $— | $— |

---

The following table provides a roll-forward of the number of shares of common stock underlying warrants issued during the six months ended June 30, 2025:

---

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

---

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

**Note 13 – Income Taxes**

The Company's income tax provision for the three and six months ended June 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 six months ended June 30, 2025.

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 six months ended June 30, 2025 and 2024.

**Note 14 – Segment Information and Revenue Disaggregation**

**Segment Information**

Pursuant to ASC 280, the Company's Chief Executive Officer serves as the Company's Chief Operating Decision Maker ("CODM") for the purposes of ASC 280. The CODM concluded that the Company operates two reportable segments. One segment consists of its Singing Machine business and the other segment consists of its SemiCab business. The CODM manages the Company's operations and business separately for each operating segment and uses net sales and net loss to allocate resources, making operating decisions and evaluating financial performance. The CODM also uses net sales and net loss, along with non-financial inputs and qualitative information, to evaluate the Company's performance, establish compensation, monitor budget versus actual results, and decide the level of investment in various operating activities and other capital allocation activities.

The following table details the revenues, significant expenses and other segment items regularly provided to the CODM:

Schedule of Details the Revenue, Significant expenses and Other Segment

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2024 |
|  | Singing<br>Machine |<br>SemiCab |<br>Total | Singing<br>Machine |<br>SemiCab |<br>Total | Singing<br>Machine |<br>SemiCab |<br>Total | Singing<br>Machine |<br>SemiCab |<br>Total |
| Revenues | $1564000 | $1152000 | $2716000 | $2440000 | $&nbsp;&nbsp;&nbsp;&nbsp; - | $2440000 | $3434000 | $1275000 | $4709000 | $4866000 | $&nbsp;&nbsp;&nbsp;&nbsp;- | $4866000 |
| Less: |  |  |  |  |  |  |  |  |  |  |  |  |
| Adjusted cost of revenues | 270000 | 1492000 | 1762000 | 2116000 |  | 2116000 | 1634000 | 1621000 | 3255000 | 4040000 |  | 4040000 |
| Adjusted sales and marketing | 234000 |  | 234000 | 547000 |  | 547000 | 998000 |  | 998000 | 1177000 |  | 1177000 |
| Adjusted general and administrative <sup>(1)</sup> | 751000 | 744000 | 1495000 | 1982000 |  | 1982000 | 2684000 | 1224000 | 3908000 | 4070000 |  | 4070000 |
| Adjusted depreciation and amortization | 28000 | 17000 | 45000 | 54000 |  | 54000 | 61000 | 32000 | 93000 | 106000 |  | 106000 |
| Adjusted impairement of ROU lease |  |  |  | 3878000 |  | 3878000 |  |  |  | 3878000 |  | 3878000 |
| Share based compensation | (38000) |  | (38000) | 17000 |  | 17000 | 47000 |  | 47000 | 36000 |  | 36000 |
| Change in fair value of warrant liability |  |  |  |  |  |  | 6468000 |  | 6468000 |  |  |  |
| Gain on disposal of fixed assets |  |  |  |  |  |  |  |  |  |  |  |  |
| Loss on issuance of warrants |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest expense | 9000 | 18000 | 27000 | 17000 |  | 17000 | 9000 | 34000 | 43000 | 45000 |  | 45000 |
| Other income (expense), net |  |  |  |  |  |  |  |  |  |  |  |  |
| Income tax provision | - | - | - | (52000) | - | (52000) | - | - | - | - | - | - |
| Segment net loss | $310000 | $(1119000) | $(809000) | $(6119000) | $- | $(6119000) | $(8467000) | $(1636000) | $(10103000) | $(8486000) | $- | $(8486000) |
| Total segment assets | $5244000 | $3033000 | $8277000 | $12367000 | $- | $12367000 | $5244000 | $3033000 | $8277000 | $12367000 | $- | $12367000 |

---

 

<sup>(1)</sup> Excludes depreciation and amortization, share-based compensation, impairment of goodwill and impairment of a note receivable.

The following reconciles total segment assets to consolidated total assets as of June 30, 2025:

****

---

| | | |
|:---|:---|:---|
|  | June 30,<br>2025 | December 31,<br>2024 |
| Total segment assets | $8277000 | $17516000 |
| Goodwill | 4418000 | 786000 |
| Total assets | $12695000 | $18302000 |

---

The total segment assets of $17,516,000 at December 31, 2024 were comprised of $16,301,000 for the Singing Machine segment and $1,215,000 for the SemiCab segment.

**Revenue Disaggregation**

The Company disaggregates revenues by product line and major geographic region.

The Company's product lines consist of AI-enabled software logistics services and home karaoke consumer products. Revenue by product line for the three and six months ended June 30, 2025 and 2024 was as follows:

Schedule of Revenue by Product Line

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended |
| Product Line | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 |
| Karaoke machines | $1533000 | $1257000 | $2275000 | $2308000 |
| Licensed products | 1000 | 107000 | 15000 | 198000 |
| Kids youth electronics | 103000 | 102000 | 170000 | 171000 |
| Microphones and accessories | (260000) | 865000 | 523000 | 1818000 |
| Music subscriptions | 187000 | 109000 | 451000 | 371000 |
| Logistics services | 1152000 | - | 1275000 | - |
| Total revenue | $2716000 | $2440000 | $4709000 | $4866000 |

---

The geographic region of sales is based primarily on where the product and services were delivered. Revenue by geographic region for the three and six months ended June 30, 2025 and 2024 was:

Schedule of Revenue by Revenue by Geographic Region

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended |
| Geographic Area | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 |
| North America | $1410000 | $2316000 | $3403000 | $4742000 |
| Australia | 46000 | 124000 | 46000 | 124000 |
| India | 1137000 |  | 1137000 |  |
| All Others | 123000 | - | 123000 | - |
|  | $2716000 | $2440000 | $4709000 | $4866000 |

---

**Notes 15 – 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.

**U.S. Trade Policies**

U.S. government administration and members of the U.S. Congress have recently implemented significant changes in U.S. trade policy and taken certain actions that are impacting the Company's business, including imposing tariffs on certain goods imported into the United States. Some of these changes have triggered retaliatory actions by affected countries and may result in "trade wars" and increased costs for goods imported into the United States. All of the Company's products are manufactured and imported from China and the Company sells its products in Canada and other countries. The implementation of tariffs has resulted in an increase in the cost of the Company's products. If the Company is unable to mitigate these increased costs through price increases, it may experience lower sales which would negatively impact its revenue, gross profit margin and results of operations.

**Revenue Concentration**

The Company derives a majority of its revenue from sales by retailers of its home karaoke consumer products in North America 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 June 30, 2025, 17% of accounts receivable were due from one customer in North America and 16% of accounts receivable were due from one customer in India that each individually owed more than 10% of the Company's total accounts receivable. At December 31, 2024, 68% of accounts receivable were due from three customers in North America that each individually owed more than 10% of the Company's total accounts receivable.

Revenue derived from the Company's top customer and top three customers collectively as a percentage of total net sales was 11% and 66% of the Company's revenue, respectively, for the three months ended June 30, 2025 and 2024, respectively. Revenue derived from the Company's top three customers collectively as a percentage of total net sales was 37% and 71% of the Company's revenue, respectively, for the six months ended June 30, 2025 and 2024, respectively. 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 top customer as a percentage of total net sales for the three months ended June 30, 2025 was 11%. Revenue from customers representing greater than 10% of total net sales that were derived from the Company's top three customers as a percentage of total net sales for the three months ended June 30, 2024 was 39%, 14%, and 13%. Revenue from customers representing greater than 10% of total net sales that were derived from the Company's top three customers as a percentage of total net sales for the six months ended June 30, 2025 was 10%, 11% and 16%. Revenue from customers representing greater than 10% of total net sales that were derived from the Company's top three customers as a percentage of total net sales for the six months ended June 30, 2024 was 50%, 11%, and 10%. The loss of any of these customers could have an adverse impact on the Company.

**Note 16 – Related Party Transactions**

**Stingray Group Subscription Payments**

The Company has a music subscription sharing agreement with Stingray Group. For the three and six months ended June 30, 2025, the Company received music subscription revenue of $187,000 and $451,000, respectively, from Stingray Group. For the three and six months ended June 30, 2024, the Company received music subscription revenue of $109,000 and $349,000, respectively, from Stingray Group. As of June 30, 2025 and December 31, 2024, the Company had $124,000 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 the 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.

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 June 30, 2025. Also on May 2, 2025, revenue generated by SMCB for services performed by SMCB under the MSA of $304,000, and expenses for 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 six months ended June 30, 2025.

**Note 17 – 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 six months ended June 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

---

| | | |
|:---|:---|:---|
|  | Six Months Ended | Six Months Ended |
|  | June 30, 2025 | June 30, 2024 |
| Net revenue | $7438000 | $6135000 |
| Operating loss from continuing operations | (4539000) | (8689000) |
| Net loss | $(11313000) | $(8735000) |

---

**Note 18. Subsequent Events**

**Agile Capital Financing Transaction**

In July 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.

**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.

**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 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 TMS and ELD partners. To build fully loaded round trips, SemiCab uses AI/ML techniques and advanced predictive optimization models.

Since 2020, SemiCab has enabled major retailers, brands and transportation providers to address their transportation needs. SemiCab's Orchestrated Collaboration™ AI model has proven to increase transportation capacity, improve asset utilization, reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show that our SemiCab technology has the capability of reducing costs through optimization. Additionally, our SemiCab technology has the potential to play a key role in the improved sustainability model. Based on 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. Trucking optimization could also reduce carbon emissions attributable to road freight.

 

*Singing Machine*

Through Singing Machine, we engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings. We were a leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke and music enabled consumer products for adults and children. Our products were among the most widely available karaoke products internationally. We sold our Singing Machine business on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business line.

**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 Business**

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.

**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 $2,716,000 for the three-month period ended June 30, 2025, compared to $2,440,000 for the three-month period ended June 30, 2024. The increase in revenue was due primarily to net sales generated by our SemiCab business. This was partially offset by a decrease in net sales of our Singing Machine karaoke products due to the negative impact on our business from recently implemented tariffs on our products manufactured in China. Gross profit was $954,000, or 35.1% of net sales, for the three-month period ended June 30, 2025, compared to $324,000, or 13.3% of net sales, for the three-month period ended June 30, 2024. The increase was due primarily to an increase of $276,000 for net sales and a decrease of $354,000 for cost of goods sold.

Our operating expenses were $1,736,000 for the three-month period ended June 30, 2025, compared to $6,478,000 for the three-month period ended June 30, 2024. The decrease in operating expenses was due primarily to a decrease of $3,878,000 for operating lease impairment expenses. We incurred a loss from operations of $782,000 for the three-month period ended June 30, 2025 compared to $6,154,000 for the three-month period ended June 30, 2024.

We generated net loss available to common shareholders of $585,000, or $0.24 per share of common stock, for the three-month period ended June 30, 2025, compared to $6,119,000, or $190.68 per share of common stock, for the three-month period ended June 30, 2024. We had total assets of $12,695,000 and $18,302,000 at June 30, 2025 and December 31, 2024, respectively. Net cash used by operating activities was $5,436,000 for the six-month period ended June 30, 2025 compared to $5,410,000 for the six-month period ended June 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 the United States and India. We sold our Singing Machine business on August 1, 2025. As a result, we will no longer be generating any net sales from that business line. Overall, total net sales are anticipated to increase over the next 12 months as growth in net sales generated by our SemiCab business is expected to exceed the loss in net sales of our Singing Machine karaoke products. We expect gross profit to decrease over the next 12 months due to an increase in cost of goods sold that we will incur in connection with the increase in net sales that we expect to generate from our SemiCab business. The decrease in gross profit will be partially offset by the reduction in cost of goods sold that we will realize as a result of the sale of our Singing Machine business. We expect operating expenses to decrease over the next 12 months as a result of our sale of the Singing Machine business. The reductions achieved may be partially offset by increases in legal and accounting expenses that we incur as we engage in additional capital-raising activities as needed to fund our business and expenses that we incur to fund the growth and development of our SemiCab business. Net loss available to common stockholders is expected to decrease during the next 12 months primarily due to the sale of our Singing Machine 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 June 30, 2025 and 2024**

 

*Net Sales*

Net sales consist primarily of sales generated by our SemiCab managed services logistics platform and sales of our Singing Machine karaoke products. Net sales increased $276,000 to $2,716,000 for the three-month period ended June 30, 2025, compared to $2,440,000 for the three-month period ended June 30, 2024. The increase in net sales was due primarily to net sales generated by our SemiCab business. This was partially offset by a decrease in net sales of our Singing Machine karaoke products due to the negative impact on our business from recently implemented tariffs on our products manufactured in China. We sold our Singing Machine business on August 1, 2025. As a result, we will no longer be generating any revenue from that business line. However, we anticipate total revenue to increase over the next 12 months as growth in revenue generated by our SemiCab business exceeds the loss in net sales of our Singing Machine karaoke products.

 

*Cost of Goods Sold*

Cost of goods sold consists primarily of costs for raw materials and the manufacturing of our Singing Machine karaoke products, and freight, handling and servicing costs that we incur in connection with our SemiCab business. Cost of goods sold decreased $354,000 to $1,762,000 for the three-month period ended June 30, 2025, compared to $2,116,000 for the three-month period ended June 30, 2024. The decrease in cost of goods sold was due primarily to a decrease in cost of goods sold for our Singing Machine karaoke products associated with lower net sales of these products. This was partially offset by freight, handling and servicing costs that we incurred in connection with our SemiCab business. We expect costs of goods sold to increase over the next 12 months in connection with the increase in net sales that we expect to generate from our SemiCab business. We expect this increase to be partially offset by the reduction in cost of goods sold that we will realize as a result of the sale of our Singing Machine business.

 

 

*Operating Expenses*

Operating expenses consist of selling expenses and general and administrative expenses.

Selling Expenses

Selling expenses consist primarily of marketing and advertising expenses that we incur in connection with advertising campaigns and online advertising initiatives that we engage in to generate sales of our Singing Machine karaoke products. We did not incur any selling expenses in connection with our SemiCab business. Selling expenses decreased $313,000 to $234,000 for the three-month period ended June 30, 2025, from $547,000 for the three-month period ended June 30, 2024. The decrease was due primarily to a decrease in marketing and advertising expenses commensurate with the decrease in sales of our Singing Mahine karaoke products. We expect selling expenses to decrease substantially over the next 12 months due to the sale of our Singing Machine business.

General and Administrative Expenses

General and administrative expenses consist primarily of payroll expenses, legal and accounting expenses, warehouse expenses and rent expense associated with our Singing Machine business, and general and administrative expenses incurred in the development and growth of our SemiCab business. General and administrative expenses decreased $551,000 to $1,502,000 for the three-month period ended June 30, 2025, compared to $2,053,000 for the three-month period ended June 30, 2024. The decrease was due primarily to decreases in general and administrative expenses incurred by our Singing Machine business, partially offset by increases in general and administrative expenses incurred in the growth and development of our SemiCab business. We expect general and administrative expenses to decrease over the next 12 months due to the sale of our Singing Machine business. We expect the reductions achieved to be partially offset by an increase in expenses that we expect to incur as we continue to invest in the growth and development of our SemiCab business.

Operating Lease Impairment Expense

Operating lease impairment expense consists of the write off of assets including security deposits, rent deposits and right of use assets that we incurred due to our abandonment of our agreement of lease, dated August 23, 2023, with OAC 111 Flatiron, LLC and OAC Adelphi, LLC, during the three months ended June 30, 2024. Operating lease impairment expense was $3,878,000 for the three months ended June 30, 2024. We did not incur any operating lease impairment expense for the three months ended June 30, 2025. We do not expect to incur any additional operating lease impairment expenses during the next 12 months.

 

*Other Expenses*

Other expenses consist of financing costs that we incurred under our loan and security agreement, dated March 28, 2024, with Oxford Business Credit and other non-operating expenses that we incurred in connection with our SemiCab business. Other expenses increased $10,000 to $27,000 for the three months ended June 30, 2025, compared to $17,000 for the three-month period ended June 30, 2024. We terminated the loan agreement and security agreement on October 17, 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 our SemiCab business.

 

*Net Loss Attributable to Non-Controlling Interests*

Net loss attributable to non-controlling interests 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 $224,000 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 April 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 June 30, 2025. 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 Six-Month Periods Ended June 30, 2025 and 2024**

 

*Net Sales*

Net sales decreased $157,000 to $4,709,000 for the six-month period ended June 30, 2025, compared to $4,866,000 for the six-month period ended June 30, 2024. The decrease in net sales was due primarily to a decrease in net sales of our Singing Machine karaoke products due to the negative impact on our business from recently implemented tariffs on our products manufactured in China. This was partially offset by the increase in net sales that we generated from our SemiCab business.

 

*Cost of Goods Sold*

Cost of goods sold decreased $785,000 to $3,255,000 for the six-month period ended June 30, 2025, compared to $4,040,000 for the six-month period ended June 30, 2024. The decrease in cost of goods sold was due primarily to our decrease in net sales of our karaoke products and the corresponding decrease in karaoke products manufactured, resulting in lower manufacturing costs. We incurred only a minimal amount of costs in connection with our SemiCab business. This was partially offset by an increase in cost of goods sold associated with the increase in net sales that we generated from our SemiCab business.

 

 

*Operating Expenses*

Selling Expenses

Selling expenses decreased $179,000 to $998,000 for the six-month period ended June 30, 2025, from $1,177,000 for the six-month period ended June 30, 2024. The decrease was due primarily to a decrease in marketing and advertising expenses commensurate with the decrease in sales of our Singing Machine karaoke products. We did not incur any selling expenses in connection with our SemiCab business.

General and Administrative Expenses

General and administrative expenses decreased $164,000 to $4,048,000 for the six-month period ended June 30, 2025, compared to $4,212,000 for the six-month period ended June 30, 2024. The decrease was due primarily to decreases in general and administrative expenses incurred by our Singing Machine business, partially offset by increases in general and administrative expenses incurred in the growth and development of our SemiCab business.

Operating Lease Impairment Expense

Operating lease impairment expense was $3,878,000 for the six months ended June 30, 2024. We did not incur any operating lease impairment expense for the three months ended June 30, 2025.

 

*Other Expenses*

Other expenses consists primarily of a non-cash loss that we incurred for the change in fair value of the warrants in connection with the public offering of securities that we completed on December 6, 2024. Other expenses increased $6,466,000 to $6,511,000 for the six-month period ended June 30, 2025, compared to $45,000 for the six-month period ended June 30, 2024. The increase was due primarily to an increase of $6,468,000 for the change in fair value of warrants. We incurred only a minimal amount of other expenses in connection with our SemiCab business.

 

*Net Loss Attributable to Non-Controlling Interests*

The net loss attributable to non-controlling interest of $327,000 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 June 30, 2025.

**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 June 30, 2025, our cash balance was $1,134,000.

Net cash used by operating activities was $5,436,000 during the six-month period ended June 30, 2025, compared to $5,410,000 during the six-month period ended June 30, 2024. The increase of $26,000 was due primarily to an increase of $6,468,000 for change in fair value of warrants that we incurred in connection with the public offering of securities that we completed on December 6, 2024. This was partially offset by a decrease of $3,878,000 for impairment expense and an increase of $1,617,000 for net loss.

Net cash used by investing activities was $1,359,000 during the six-month period ended June 30, 2025, compared to $6,000 during the six-month period ended June 30, 2024. The increase of $1,353,000 was due primarily to increases of $758,000 for repurchases of shares of our common stock and $1,172,000 for advances to SMCB under out loan agreement with them, 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 was $379,000 for the six-month period ended June 30, 2025, compared to net cash used in financing activities of $42,000 for the six-month period ended June 30, 2024. The difference of $421,000 was due primarily to an increase of $379,000 for proceeds from the issuance of promissory notes payable.

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 June 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2.* We lacked sufficient resources in our accounting department, which resulted in our 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 June 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. Leal Proceedings of our Quarterly Report on Form 10-Q for our fiscal quarter ended March 31, 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 May 2, 2025, we and SemiCab Holdings entered into an equity purchase agreement with SemiCab Inc. pursuant to which: (i) SemiCab Holdings purchased 9,999 shares of the issued and outstanding equity shares, Rs. 10 par value, of SMCB, representing 99.99% of the issued and outstanding equity shares of SMCB, for $1,750,000, the payment of which amount was evidenced by the issuance of a promissory note by us to SemiCab, Inc., and (ii) we purchased the 20% membership interest in SemiCab Holdings then held by SemiCab, Inc. for aggregate consideration consisting of 119,742 shares of our common stock. The acquisition was completed on May 2, 2025. The shares of common stock were issued to SemiCab, Inc. 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 directly by us without engaging in any advertising or general solicitation of any kind and without payment of underwriting discounts or commissions to any person.

**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 June 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 | [Equity Purchase Agreement, dated May 2, 2025, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC and SemiCab, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225009278/ex10-1.htm) |
| 10.2 | [Promissory Note, dated May 2, 2025, issued by Algorhythm Holdings, Inc. in favor of SemiCab, Inc. (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 May 8, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225009278/ex10-2.htm) |
| 10.3 | [Amended and Restated Limited Liability Company Agreement of SemiCab Holdings, LLC, dated May 2, 2025, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC, Ajesh Kapoor and Vivek Sehgal (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2025)](https://www.sec.gov/Archives/edgar/data/923601/000164117225009278/ex10-3.htm) |
| 10.4 | [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) |
| 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 <br> \*\* 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: August 19, 2025 | By: | */s/ Gary Atkinson* |
|  |  | Gary Atkinson |
|  |  | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
| Date: August 19, 2025 | By: | */s/ Alex Andre* |
|  |  | Alex Andre |
|  |  | Chief Financial Officer & General Counsel |
|  |  | (Principal Financial and Accounting Officer) |

---

## 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 June 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: August 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 June 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.

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

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## 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 June 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.

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

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