# EDGAR Filing Document

**Accession Number:** 0000923601
**File Stem:** 0001493152-26-022876
**Filing Date:** 2026-5
**Character Count:** 142044
**Document Hash:** 32c6952fa98d0bf8723fb198cfa99856
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-26-022876.hdr.sgml**: 20260514

**ACCESSION NUMBER**: 0001493152-26-022876

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 81

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260514

**DATE AS OF CHANGE**: 20260514

**FILER**: 

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

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41405
- **FILM NUMBER:** 26975922

**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 March 31, 2026

**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**

![](form10q_001.jpg)

**ALGORHYTHM HOLDINGS, INC.**

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

---

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

---

---

| | | |
|:---|:---|:---|
| **6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL** | <br> **33309** | **(954) 800-0425** |
| (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, par value $0.01 per share | RIME | The Nasdaq Stock Market LLC<br> (The 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 May 11, 2026, there were 14,651,665 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**](#aq_001) | [**PART I – FINANCIAL INFORMATION**](#aq_001) | 3 |
| Item 1. | [Financial Statements](#aq_002) | 3 |
|  | [Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025](#aq_003) | 3 |
|  | [Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (Unaudited)](#aq_004) | 4 |
|  | <br> [Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2026 and 2025 (Unaudited)](#aq_005)<br>| 5 |
|  | [Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the three months ended March 31, 2026 and 2025 (Unaudited)](#aq_006) | 6 |
|  | [Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (Unaudited)](#aq_007) | 7 |
|  | [Notes to Condensed Consolidated Financial Statements (Unaudited)](#aq_008) | 8 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#aq_009) | 35 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#aq_010) | 42 |
| Item 4. | [Controls and Procedures](#aq_011) | 43 |
| [**PART II – OTHER INFORMATION**](#aq_012) | [**PART II – OTHER INFORMATION**](#aq_012) | 44 |
| Item 1. | [Legal Proceedings](#aq_013) | 44 |
| Item 1A. | [Risk Factors](#aq_014) | 44 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#aq_015) | 44 |
| Item 3. | [Defaults Upon Senior Securities](#aq_016) | 44 |
| Item 4. | [Mine Safety Disclosures](#aq_017) | 44 |
| Item 5. | [Other Information](#aq_018) | 44 |
| Item 6. | [Exhibits](#aq_019) | 45 |

---

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | **March 31, 2026** | **December 31, 2025** |
|  | **(unaudited)** | |
| **<u>Assets</u>** | | |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $7699000 | $1632000 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 3240000 | 4514000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $113,000 and $113,000, respectively | 918000 | 1061000 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 1773000 | 729000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets** | 13630000 | 7936000 |
| **Property and equipment, net** | 34000 | 22000 |
| **Other non-current assets** | 81000 | 79000 |
| **Intangible assets, net** | 2028000 | 2005000 |
| **Goodwill** | 2682000 | 2682000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $18455000 | $12724000 |
| **<u>Liabilities and Shareholders' Equity</u>** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $984000 | $1413000 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 1691000 | 1556000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 688000 | 69000 |
| &nbsp;&nbsp;&nbsp;Promissory notes payable, net | 9498000 | 9102000 |
| &nbsp;&nbsp;&nbsp;Notes payable to related parties | 2300000 | 2300000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities** | 15161000 | 14440000 |
| **Long-term provision for employee benefits** | 126000 | 144000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | 15287000 | 14584000 |
| **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 March 31, 2026 and December 31, 2025 |  |  |
| &nbsp;&nbsp;&nbsp; Common stock, $0.01 par value; 800,000,000 and 100,000,000 shares authorized; 14,651,665 and 3,414,542 shares issued and outstanding at March 31, 2026 and December 31, 2025 | 147000 | 35000 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 75979000 | 65674000 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (32000) | (25000) |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (70149000) | (65043000) |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | (2019000) | (1743000) |
| &nbsp;&nbsp;&nbsp;Treasury stock, 10,990 shares reserved at March 31, 2026 and December 31, 2025 | (758000) | (758000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Shareholders' Equity (Deficit)** | 3168000 | (1860000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Shareholders' Equity/ (Deficit)** | $18455000 | $12724000 |

---

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

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31, 2026** | **March 31, 2025** |
| **Net Sales** | $2400000 | $123000 |
| **Cost of Sales** | 3077000 | 129000 |
| **Gross Loss** | (677000) | (6000) |
| **Operating Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 33000 |  |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 3634000 | 1056000 |
| **Total Operating Expenses** | 3667000 | 1056000 |
| **Loss From Operations** | (4344000) | (1062000) |
| **Other Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liability |  | (6468000) |
| &nbsp;&nbsp;&nbsp;Interest expense, net | (1036000) | (16000) |
| **Total Other Expenses** | (1036000) | (6484000) |
| **Loss From Continuing Operations Before Income Tax** | (5380000) | (7546000) |
| Income tax loss attributable to continuing operations | - | - |
| **Net Loss From Continuing Operations** | (5380000) | (7546000) |
| Net loss from discontinued operations |  | (1748000) |
| **Net Loss** | (5380000) | (9294000) |
| Net loss attributable to non-controlling interest | 274000 | 103000 |
| **Net Loss Available to Common Shareholders** | $(5106000) | $(9191000) |
| **Loss Per Common Share** |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted from continuing operations | $(0.52) | $(3.77) |
| &nbsp;&nbsp;&nbsp;Basic and diluted from discontinued operations | - | (0.89) |
| &nbsp;&nbsp;&nbsp;Basic and diluted | $(0.52) | $(4.66) |
| **Weighted Average Common and Common Equivalent Shares:** |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | 9897743 | 1972869 |

---

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

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31, 2026** | **March 31, 2025** |
| **Net Loss** | $(5380000) | $(9294000) |
| Other comprehensive loss |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (9000) | - |
| **Total Comprehensive Loss** | (5389000) | (9294000) |
| Total comprehensive loss attributable to non-controlling interest | 276000 | 103000 |
| **Total Comprehensive Loss Available to Common Shareholders** | $(5113000) | $(9191000) |

---

***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 March 31, 2026 and 2025 (Unaudited)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | | |
|  | **Shares** | **Amount** | **Additional Paid-in**<br>**Capital** | **Treasury**<br>**Stock** | **Accumulated Other Comprehensive**<br> **Loss** | **Accumulated**<br>**Deficit** | **Non-Controlling**<br>**Interest** |<br>**Total** |
| **Balance at December 31, 2024** | **470825** | $**5000** | $**39682000** | $**-** | $**-** | $**(49172000)** | $**(1036000)** | $**(10521000)** |
| Net loss |  |  |  |  |  | (9191000) | (103000) | (9294000) |
| Exercise of Series B warrants | 1910975 | 19000 | 15195000 |  |  |  |  | 15214000 |
| Stock-based compensation | 23818 |  | 85000 |  |  |  |  | 85000 |
| Reclassification of Series A warrants to equity |  |  | 7857000 |  |  |  |  | 7857000 |
| Repurchase of common stock from related parties | (10990) |  | 758000 | (758000) |  |  |  |  |
| Other | 201 | - | - | - | - | - | - | - |
| **Balance at March 31, 2025** | **2394829** | $**24000** | $**63577000** | $**(758000)** | $**-** | $**(58363000)** | $**(1139000)** | $**3341000** |
| **Balance at December 31, 2025** | **3414542** | $**35000** | $**65674000** | $**(758000)** | $**(25000)** | $**(65043000)** | $**(1743000)** | $**(1860000)** |
| Net loss |  |  |  |  |  | (5106000) | (274000) | (5380000) |
| Foreign currency translation adjustment |  |  |  |  | (7000) |  | (2000) | (9000) |
| Stock-based compensation | 439530 | 4000 | 919000 |  |  |  |  | 923000 |
| Common stock issued upon settlement of prepaid purchases | 10797593 | 108000 | 9386000 | - | - | - | - | 9494000 |
| **Balance at March 31, 2026** | **14651665** | $**147000** | $**75979000** | $**(758000)** | $**(32000)** | $**(70149000)** | $**(2019000)** | $**3168000** |

---

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

**Algorhythm Holdings, Inc. and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31, 2026** | **March 31, 2025** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss from continuing operations | $(5380000) | $(7546000) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net foreign currency translation adjustment | (9000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization of property and equipment and intangible assets | 93000 | 15000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount and issuance cost | 762000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability |  | 6468000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 923000 | 85000 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 143000 | 27000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (1044000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | (2000) | 43000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (429000) | (230000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 420000 | (1236000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 619000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for employee benefits | (18000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities attributable to continuing operations | (3922000) | (2374000) |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (14000) |  |
| &nbsp;&nbsp;&nbsp;Capitalization of internal use software costs | (114000) |  |
| &nbsp;&nbsp;&nbsp;Advances to SMCB | - | (672000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities attributable to continuing operations | (128000) | (672000) |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of promissory notes, net of offering costs and discounts | 9020000 |  |
| &nbsp;&nbsp;&nbsp;Payment of promissory notes | (177000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities attributable to continuing operations | 8843000 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities attributable to discontinued operations |  | (921000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities attributable to discontinued operations |  | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities attributable to discontinued operations | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash used in discontinued operations | - | (920000) |
| **Net change in cash** | 4793000 | (3966000) |
| **Cash and restricted cash at beginning of period** | 6146000 | 7233000 |
| **Cash and restricted cash at end of period** | $10939000 | $3267000 |
| **Supplemental disclosures of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $14000 | $17000 |
| **Non-cash investing and financing cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;Common stock issued upon settlement of prepaid purchases | $9494000 | $- |
| &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;Repurchase of common stock - related parties | $- | 758000 |

---

***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 company focused on the growth and development of SemiCab. SemiCab is an AI-enabled software logistics and distribution business that utilizes the Company's SemiCab technology platform to enable retailers, brands and transportation providers to address common supply chain problems globally. The Company operates its SemiCab business through its subsidiary, SemiCab Holdings, LLC.

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

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

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

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

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

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

The Company determined that the sale of the Singing Machine business met the criteria under Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements – Discontinued Operations ("ASC 205-20"), to be classified as a discontinued operation as the sale represented a strategic shift that will have a significant effect on the Company's operations and financial results. Accordingly, the Company has presented the results of the Singing Machine business as discontinued operations for all periods presented in this Quarterly Report on Form 10-Q. All amounts and disclosures included in these condensed consolidated financial statements reflect the Company's continuing operations unless otherwise noted. Additional information is presented in *Note 17 – Discontinued Operations*.

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

**Going Concern Analysis**

As of March 31, 2026, the Company's cash and restricted cash balance was $10,939,000. This will not be sufficient to fund its planned operations for at least one year after the date the condensed consolidated financial statements are issued. The Company has a recent history of recurring operating losses and decreases in working capital. These factors create substantial doubt about the Company's ability to continue as a going concern for at least one year after the date that the Company's condensed consolidated financial statements are issued.

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

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

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

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

**Basis of Presentation**

The accompanying unaudited financial statements for the three months ended March 31, 2026 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States of America ("US 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 March 31, 2026 and condensed financial statement information for the three months ended March 31, 2026 and 2025 are unaudited whereas the condensed consolidated balance sheet as of December 31, 2025 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, 2025. 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, 2025.

**Segment Reporting**

Pursuant to ASC Topic 280, Segment Reporting ("ASC 280"), the Company's Chief Executive Officer serves as the Company's Chief Operating Decision Maker ("CODM"). Prior to August 1, 2025, the CODM determined that the Company operated in two reportable segments: (i) the SemiCab business, and (ii) the Singing Machine business. On August 1, 2025, the Company completed the sale of its Singing Machine business. Upon the completion of this transaction, the Company began operating as a single reportable segment consisting of its SemiCab business. The CODM evaluates and manages the Company's operations using net loss as the primary measure to allocate resources, make operating decisions, and assess financial performance. In addition, the CODM considers non-financial information and other qualitative factors when evaluating performance, establishing compensation, monitoring budget-to-actual results, and making capital allocation decisions. Additional information is presented in *Note 13 – Segment Information and Revenue Disaggregation.*

 

**Recent Accounting Pronouncements**

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

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326), which provides a practical expedient for measuring expected credit losses on current receivables and contract assets arising under Topic 606, Revenue from Contracts with Customers. The ASU allows entities to assume that the macroeconomic conditions existing at the balance sheet date will remain unchanged over the remaining life of those assets. The Company adopted this ASU on January 1, 2026, and the adoption did not have a material impact on its condensed consolidated financial statements.

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

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

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

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

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

A summary of the Company's property and equipment at March 31, 2026 and December 31, 2025 is as follows:

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| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | March 31,<br>2026 | December 31,<br>2025 |
| Computer and office equipment | 3-5 years | $78000 | $64000 |
| Less: accumulated depreciation |  | (44000) | (42000) |
|  |  | $34000 | $22000 |

---

Depreciation expense was $2,000 and $0 for the three months ended March 31, 2026 and 2025, respectively.

A summary of the Company's intangible assets at March 31, 2026 and December 31, 2025 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Useful<br>Life | March 31,<br>2026 | December 31,<br>2025 |
| Customer relationships of SemiCab, Inc. | 9 years | $25000 | $25000 |
| Trade name of SemiCab, Inc. | 9 years | 25000 | 25000 |
| Developed technology of SemiCab, Inc. | 6 years | 325000 | 325000 |
| Customer relationships of SMCB | 9 years | 1008000 | 1008000 |
| Reacquired rights of SMCB | 5 years | 294000 | 294000 |
| Trade name of SMCB | 5 years | 180000 | 180000 |
| Internal use software | 5 years | 533000 | 419000 |
|  |  | 2390000 | 2276000 |
| Less: accumulated amortization |  | (362000) | (271000) |
|  |  | $2028000 | $2005000 |

---

Amortization expense was $91,000 and $15,000 for the three months ended March 31, 2026 and 2025, respectively.

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

During the year ended on December 31, 2025, the Company tested the recorded amount of goodwill from the acquisition of SemiCab, Inc.'s business on July 3, 2024 and SMCB on May 2, 2025 for impairment to see if the carrying amount of goodwill exceeded its carried value as of December 31, 2025. As a result of this test, the Company determined that no impairment of goodwill was needed to be recorded as of December 31, 2025.

During the three months ended March 31, 2026, the Company evaluated whether any events or changes in circumstances indicated that it is more likely than not that the fair value of its reporting unit was less than its carrying amount. The Company determined that no such triggering events occurred, and therefore, no interim goodwill impairment test was required.

The following table presents the changes in the value of the goodwill recognized in connection with the acquisition of SemiCab, Inc. business on July 3, 2024 and SMCB on May 2, 2025:

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| | |
|:---|:---|
| Balance at January 1, 2024 | $-0- |
| Goodwill from acquisition of SemiCab, Inc.'s business on July 3, 2024 | 4378000 |
| Impairment of goodwill | (3592000) |
| Balance at December 31, 2024 | 786000 |
| Goodwill from acquisition of SMCB on May 2, 2025 | 1896000 |
| Impairment of goodwill | -0- |
| Balance at December 31, 2025 | 2682000 |
| Impairment of goodwill | -0- |
| Balance at March 31, 2026 | $2682000 |

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**Note 6 – Notes Payable to Related Parties**

Notes payable to related parties consist of the following:

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| | | |
|:---|:---|:---|
|  | March 31,<br>2026 | December 31,<br>2025 |
| Loans assumed in acquisition of SemiCab, Inc.'s business | $550000 | $550000 |
| Promissory note issued for acquisition of SMCB | 1750000 | 1750000 |
| Total | $2300000 | $2300000 |

---

**Loans With Related Parties Assumed in Acquisition of SemiCab, Inc.'s Business**

SemiCab Holdings assumed several unsecured loans from Ajesh Kapoor and Vivek Sehgal in the acquisition of SemiCab, Inc.'s business. The Company incurred interest expense on these loans of $13,000 and $15,000 for the three months ended March 31, 2026, and March 31, 2025, respectively. In relation to these loans, the Company had accrued interest payable of $4,000 as of March 31, 2026 that was included within accounts payables in the Company's condensed consolidated balance sheets. The Company did not have any accrued interest payable as of December 31, 2025.

The terms of each loan and the balances as of March 31, 2026 and December 31, 2025 are summarized in the table below:

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

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

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

**Promissory Note Issued for Acquisition of SMCB**

On May 2, 2025, the Company and SemiCab Holdings acquired 99.99% of the equity shares of SMCB from SemiCab, Inc. pursuant to which, in part, the Company issued a promissory note to SemiCab, Inc. in the principal amount of $1,750,000. A discussion of this transaction and the terms of the promissory note is set forth herein in *Note 16 – Acquisition of SMCB*.

**Note 7 – Commitments and Contingencies**

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

**Efficient Capital Labs Settlement Agreement**

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

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

In connection with the acquisition of the SemiCab, Inc.'s business, the Company assumed this settlement liability. The final payment of the settlement was made during the year ended December 31, 2025. Accordingly, there was no unpaid balance at March 31, 2026 or December 31, 2025.

**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.

**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 $506,000 was recorded within accrued expenses on the accompanying condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025.

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

**Note 8 – 2022 Equity Incentive Plan**

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

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

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

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

On January 1, 2026, the number of shares available for issuance under the plan increased to 5,710,066 in accordance with the terms of the plan. As of March 31, 2026, 3,919,911 shares remained available for issuance under the plan.

The Company granted awards representing 1,506,489 shares of common stock during the three months ended March 31, 2026. The Company did not grant any share-based awards during the three months ended March 31, 2025. No awards were forfeited during the three months ended March 31, 2026 and 2025.

As of March 31, 2026 and December 31, 2025, 1,790,155 and 283,666 shares, respectively, were subject to outstanding awards under the plan.

Stock-based compensation expense represents the grant-date fair value of awards, recognized on a straight-line basis over the requisite service period. For the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation expense related to stock options and restricted stock awards of $923,000 and $85,000, respectively.

As of March 31, 2026, there was $2,098,000 of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average remaining vesting period of approximately three years and six months. Stock options vested as of March 31, 2026 had no intrinsic value.

As of March 31, 2026, there was $114,000 of unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average remaining vesting period of approximately one year and two months.

**Note 9 – Net Loss Per Share**

The computations of basic and dilutive loss per share of common stock outstanding for the three months ended March 31, 2026 and 2025 are as follows:

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| | | |
|:---|:---|:---|
|  | For the Three Months Ended | For the Three Months Ended |
|  | March 31, 2026 | March 31, 2025 |
| Net loss available to common shareholders | $(5106000) | $(9191000) |
| Basic and diluted weighted average of common stock outstanding | 9897743 | 1972869 |
| Loss per common share | $(0.52) | $(4.66) |

---

The computation of the fully diluted weighted average number of shares of common stock outstanding for the three months ended March 31, 2026 and 2025 is as follows:

---

| | | |
|:---|:---|:---|
|  | For the Three Months Ended | For the Three Months Ended |
|  | March 31, 2026 | March 31, 2025 |
| Basic weighted average common shares outstanding | 9897743 | 1972869 |
| Effect of dilutive stock options and warrants | - | - |
| Diluted weighted average of common shares outstanding | 9897743 | 1972869 |

---

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 months ended March 31, 2026, 1,248,008 shares of common stock underlying stock options and 1,138,163 shares of common stock underlying warrants were excluded from the calculation of diluted net loss per share as the result would have been anti-dilutive. For the three months ended March 31, 2025, 488 shares of common stock underlying stock options and 1,138,163 shares of common stock underlying warrants were excluded from the calculation of diluted net loss per share as the result would have been anti-dilutive.

**Note 10 – 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 three months ended March 31, 2025 related to this promissory note. On February 27, 2025, the Company paid off the note in full. Regalia Ventures is owned and controlled by Jay B. Foreman, who served as a member of the Company's board of directors until November 14, 2025.

**Stingray Group Stock Repurchase Transaction**

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

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 three months ended March 31, 2025 related to this promissory note. On April 3, 2025, the Company paid off the note in full. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of the Company's board of directors until October 6, 2025.

**December 2024 Public Offering**

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

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

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

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

The Company assessed the Series A and B warrants under ASC 480 and ASC 815 and determined that the Series A and B warrants needed to be classified as liabilities as they did not meet the requirements to be considered indexed to the Company's own stock, due to (a) the adjustment to the exercise price tied to shareholder approval, and (b) the potential change in the settlement amount of the Series B warrants upon an alternative cashless exercise election. Additionally, the Company concluded at issuance that it would not have sufficient authorized and available shares of common stock to settle the Series A and B warrants. See *Note 11 – Derivative Liability.*

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

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

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

**1800 Diagonal Financing Transactions**

1800 Diagonal Loan #1

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

The Company incurred and paid $3,000 of interest expense under the promissory note during the three months ended March 31, 2026. The outstanding balance of this note was $32,000 as of March 31, 2026. This amount is presented in the Company's condensed consolidated balance sheets net of unamortized issuance costs of $7,000 as of March 31, 2026.

1800 Diagonal Loan #2

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

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

The Company incurred $5,000 of interest expense under the promissory note during the three months ended March 31, 2026. The outstanding balance of this note was $60,000 as of March 31, 2026. This amount is presented in the Company's condensed consolidated balance sheets net of unamortized issuance costs of $13,000 as of March 31, 2026.

**Boot Capital Financing Transaction**

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

The Company incurred and paid $3,000 of interest expense under the promissory note during the three months ended March 31, 2026. The outstanding balance of this note was $32,000 as of March 31, 2026. This amount is presented in the Company's condensed consolidated balance sheets net of unamortized issuance costs of $4,000 as of March 31, 2026.

**Agile Capital Financing Transaction**

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

The Company incurred and paid $3,000 of interest expense under the promissory note during three months ended March 31, 2026. The promissory note was paid in full during the three months ended March 31, 2026.

**Streeterville Capital Transaction**

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

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

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

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

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

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

Pre-Paid Purchase #1

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

During the three months ended March 31, 2026, the Company repaid an aggregate principal amount of $3,305,000 under the First Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 3,218,166 shares of the Company's common stock, and recognized $69,000 of interest expense associated with the First Pre-Paid Purchase. As of March 31, 2026, the outstanding principal balance of the First Pre-Paid Purchase was $1,085,000, which is reflected in the condensed consolidated balance sheets net of unamortized issuance costs of $671,000.

Pre-Paid Purchase #2

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

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

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

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

During the three months ended March 31, 2026, the Company repaid an aggregate principal amount of $4,913,000 under the Second Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 6,447,017 shares of the Company's common stock, and recognized $45,000 of interest expense associated with the Second Pre-Paid Purchase. The Second Pre-Paid Purchase was repaid in full on February 13, 2026.

Pre-Paid Purchase #3

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

During the three months ended March 31, 2026, the Company repaid an aggregate principal amount of $991,000 under the Third Pre-Paid Purchase as a result of Streeterville exercising its right to purchase an aggregate of 1,132,410 shares of the Company's common stock, and recognized $2,000 of interest expense associated with the Third Pre-Paid Purchase. The Third Pre-Paid Purchase was repaid in full on January 7, 2026.

Pre-Paid Purchase #4

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

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

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

During the three months ended March 31, 2026, the Company recognized $109,000 of interest expense associated with the Fourth Pre-Paid Purchase. The Company has not repaid any of the principal outstanding under the Fourth Pre-Paid Purchase. As of March 31, 2026, the outstanding principal balance of the Fourth Pre-Paid Purchase was $10,355,000, which is reflected in the condensed consolidated balance sheets net of unamortized issuance costs of $1,288,000.

**Note 11 – Derivative Liability**

During the three months ended March 31, 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 and Series B warrant liabilities were as follows:

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| | | | |
|:---|:---|:---|:---|
| Warrant Liability – Series A Warrants | Issuance Date | December 31, 2024 | January 13, 2025 |
| Stock price on valuation date | $18.00 | $18.00 | $8.38 |
| Exercise price | $34.00 | $34.00 | $8.38 |
| Number of shares of common stock | 279412 | 279412 | 1133652 |
| Remaining term (years) | 5.00 | 4.93 | 4.88 |
| Annual equity volatility | 113.0% | 114.0% | 126.00% |
| Annual volume volatility | 377.0% | 379.0% | 377.00% |
| Risk-free interest rate | 3.95% | 4.29% | 4.32% |
| Expected stockholder approval date | January 14, 2025 | January 14, 2025 | January 13, 2025 |
| Expected stockholder approval probability | 50% | 50% | 100% |

---

---

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

---

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

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 three months ended March 31, 2025.

The Company did not have any warrant liabilities outstanding at March 31, 2026 and December 31, 2025.

The following table provides a roll-forward of the fair value of the derivative liabilities described above during the three months ended March 31, 2025:

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| | | | |
|:---|:---|:---|:---|
|  | Series A Warrants | Series B Warrants | Total |
| 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 March 31, 2025 |  |  |  |

---

The Company did not have any derivative liabilities outstanding during the three months ended March 31, 2026.

The following table provides a roll-forward of the number of warrants exercised during the three months ended March 31, 2026 and 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Series A Warrants | Series B Warrants | Other Warrants | Total |
| Balance at December 31, 2024 | 279412 | 279412 | 4511 | 563335 |
| Exercises |  | (279412) |  | (279412) |
| Balance at March 31, 2025 | 279412 |  | 4511 | 283923 |
| Balance at December 31, 2025 | 279412 |  | 4511 | 283923 |
| Exercises |  |  |  |  |
| Balance at March 31, 2026 | 279412 |  | 4511 | 283923 |

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The Company did not issue any warrants during the three months ended March 31, 2026 and 2025.

**Note 12 – Income Taxes**

The Company did not have any provision for income taxes for the three months ended March 31, 2026 and 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 months ended March 31, 2026 and 2025.

**Note 13 – Segment Information and Revenue Disaggregation**

**Segment Information**

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

Prior to August 1, 2025, the CODM determined that the Company operated in two reportable segments: (i) the SemiCab business, and (ii) the Singing Machine business. On August 1, 2025, the Company completed the sale of its Singing Machine business. Upon the completion of this transaction, the Company began operating as a single reportable segment consisting of its SemiCab business. As a result of the sale, the operating results and cash flows of the Singing Machine business have been reclassified as discontinued operations for all periods presented in the consolidated financial statements. Additional information regarding the discontinued operations is provided in *Note 17 – Discontinued Operations.*

The Company's CODM reviews consolidated operating results including net sales, gross profit, loss from operations, and net loss from continuing operations, as presented in the consolidated statements of operations. The CODM also considers consolidated operating expenses, non-financial information, and qualitative factors in evaluating performance, monitoring budgeted to actual results, and making decisions regarding capital allocation and levels of investment in operating activities. The CODM does not review segment asset information for purposes of allocating resources.

**Geographic Information**

Revenue is attributed to geographic areas based on the location where services are rendered. For the three months ended March 31, 2026, all of the Company's revenues were generated from customers located in India. For the three months ended March 31, 2025, all of the Company's revenues were generated from customers located in the United States.

**Note 14 – Concentrations, Risks and Uncertainties**

**Bank Liquidity and Financial Stability**

At times, the Company maintains cash in United States bank accounts that are more than the Federal Deposit Insurance Corporation insured amounts. The Company maintains cash balances in foreign financial institutions. The Company regularly monitors the financial stability of this financial institution and believes that it is not exposed to any significant credit risk in cash and cash equivalents. However, in March and April 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on the Company's operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the Company's ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.

**Revenue Concentration**

The Company derives a majority of its revenue from sales of its AI-enabled software logistics services in India. The Company's allowance for credit losses is based upon management's estimates and historical experience and reflects the fact that accounts receivable is concentrated with several large customers. As of March 31, 2026, 47% of accounts receivable were due from two customers in India that each individually owed more than 10% of the Company's total accounts receivable. As of December 31, 2025, 58% of accounts receivable were due from three customers in India that each individually owed more than 10% of the Company's total accounts receivable.

Revenue derived from the Company's largest customer and three largest customers collectively as a percentage of total net sales was 25% and 74% of the Company's revenue, respectively, for the three months ended March 31, 2026. The loss of any of these customers could have an adverse impact on the Company.

**Note 15 – Related Party Transactions**

**Stingray Holdings Music Subscription Agreement**

The Company had a music subscription sharing agreement with Stingray Group under which the Company generated music subscription revenue of $264,000 during the three months ended March 31, 2025. This revenue was included in net loss from discontinued operations on the Company's condensed consolidated statements of operations for the three months ended March 31, 2025. The Company did not generate any music subscription revenue under this agreement during the three months ended March 31, 2026 as the Company sold its Singing Machine business to Stingray Group on August 1, 2025. Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of the Company's board of directors until October 6, 2025.

**SMCB**

*VIE Analysis*

 

The Company determined that SMCB, which was a subsidiary of SemiCab, Inc. prior to SemiCab Holdings' acquisition of 99.99% of the equity shares of SMCB on May 2, 2025, is a VIE as the Company provides financial support to SMCB. While not contractually obligated, SMCB currently relies on the Company's reimbursement of certain costs under an intercompany services agreement ("MSA") whereby SMCB agrees to provide IT software development services to SemiCab, Inc. In exchange, under the MSA, the Company grants intellectual property rights to SMCB to use the software platform in India. Compensation for services is invoiced and paid on a monthly or quarterly basis as agreed by both parties, with rates subject to periodic review and revision. The agreement is for a term of two years ending on April 1, 2025 and automatically renews for additional 12-month periods unless prior notice is given by the terminating party. The agreement automatically renewed for an additional 12-month period on April 1, 2025. As a result of this relationship and the financial support provided by the Company to SMCB under the loan agreement described below to fund SMCB's operations, SMCB has been determined to be a VIE prior to May 2, 2025.

The Company further determined that it was not the primary beneficiary of SMCB because the Company did not have the power to direct or control SMCB's significant activities related to its business. Accordingly, the Company has not consolidated SMCB's results of operations and financial position in its condensed consolidated financial statements prior to May 2, 2025.

*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 December 31, 2025. Also on May 2, 2025, revenue generated by SMCB for services performed by SMCB under the MSA of $304,000, and expenses for the Company for services performed by SMCB under the MSA of $304,000, during the period commencing January 1, 2025 and ending May 2, 2025 were eliminated in consolidation on May 2, 2025. As a result, no such revenue and expenses were reflected on the Company's condensed consolidated statements of operations for the three months ended March 31, 2025.

**Note 16 – Acquisition of SMCB**

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

On the Closing Date, the Company and SemiCab Holdings entered into an amended and restated employment agreement with each of Ajesh Kapoor and Vivek Sehgal pursuant to which Mr. Kapoor agreed to serve as the Chief Executive Officer and Chief Technology Officer of SemiCab Holdings and Mr. Sehgal agreed to serve as the Chief Product Officer of SemiCab Holdings. Pursuant to the terms of the employment agreements, SemiCab Holdings granted Messrs. Kapoor and Sehgal a membership interest in SemiCab Holdings of 15% and five percent, respectively. Of these amounts, one quarter of each such grant vested in full on the date of grant, and the remaining amounts vest evenly over three years.

The following table summarizes the allocation of the purchase price as May 2, 2025, the date the acquisition was completed:

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| | |
|:---|:---|
| **Consideration:** | |
| Promissory note | $1750000 |
| 119,742 shares of common stock | 316000 |
| Assumption of debt | 2008000 |
| Total | $4074000 |
| **Identifiable net tangible assets acquired:** |  |
| Cash and cash equivalents | $593000 |
| Accounts receivable, net | 319000 |
| Prepaid expenses and other current assets | 377000 |
| Property and equipment, net | 11000 |
| Other non-current assets | 128000 |
| Accounts payable, accrued expenses and other liabilites | (731000) |
| Net tangible assets acquired | $697000 |
| **Identifiable intangible assets acquired:** |  |
| Customer relationships | $1007000 |
| Reacquired rights | 294000 |
| Trade name | 180000 |
| Net intangible assets acquired | $1481000 |
| **Net assets acquired** | $2178000 |
| **Goodwill** | $1896000 |

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

*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, 2025. 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 three months ended March 31, 2026 and 2025 reflect the combined performance of the Company and the SMCB business for those periods. 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 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, 2025, nor does it attempt to forecast future consolidated results of operations.

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| | | |
|:---|:---|:---|
|  | Three Months Ended | Three Months Ended |
|  | March 31, 2026 | March 31, 2025 |
| Net revenue | $2400000 | $2776000 |
| Operating loss from continuing operations | (5380000) | (8436000) |
| Net loss | $(5380000) | $(10184000) |

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**Note 17 – Discontinued Operations**

On August 1, 2025, the Company entered into an asset purchase agreement with SMC and Stingray USA pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with the Company's Singing Machine business for $500,000. The transaction closed on August 1, 2025.

The Company determined that the sale of the Singing Machine business met the criteria under ASC 205-20, to be classified as a discontinued operation as the sale represented a strategic shift that will have a significant effect on the Company's operations and financial results. Accordingly, the condensed consolidated balance sheets, the condensed consolidated statements of operations and the condensed consolidated statement of cash flows have been adjusted for prior periods to reflect the Singing Machine business as a discontinued operation.

The following table summarizes the results of the Singing Machine business as a discontinued operation in the consolidated statements of operations for the three months ended March 31, 2025:

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| | |
|:---|:---|
|  | **For the Three Months Ended**<br>**March 31, 2025** |
| **Net Sales** | $1870000 |
| **Cost of Goods Sold** | 1364000 |
| **Gross Profit** | 506000 |
| **Operating Expenses** |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 764000 |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 1490000 |
| **Total Operating Expenses** | 2254000 |
| **Loss From Operations** | (1748000) |
| **Income Tax** | - |
| **Net Loss From Discontinued Operations** | $(1748000) |

---

There were no results of the Singing Machine business as a discontinued operation in the consolidated statements of operations for the three months ended March 31, 2026, and there were no assets and liabilities of the Singing Machine business as a discontinued operation in the condensed consolidated balance sheet as of March 31, 2026 and December 31, 2025, as the business had been sold on August 1, 2025.

The following table summarizes the cash flows of the Singing Machine business as a discontinued operation in the condensed consolidated statements of cash flows for the three months ended March 31, 2025:

---

| | |
|:---|:---|
|  | **For the Three Months Ended**<br>**March 31, 2025** |
| Net cash used in operating activities attributable to discontinued operations | $(921000) |
| Net cash provided by investing activities attributable to discontinued operations | 1000 |
| Net cash provided by financing activities attributable to discontinued operations | - |
| &nbsp;&nbsp;&nbsp;Total cash used in discontinued operations | $(920000) |

---

There were no cash flows of the Singing Machine business as a discontinued operation in the condensed consolidated statements of cash flows for the three months ended March 31, 2026 as the business had been sold on August 1, 2025.

**Note 18 – Subsequent Events.**

The Company failed to make the initial payment of $1,500,000 due to SemiCab, Inc. on May 2, 2026 under the promissory note that it issued to SemiCab, Inc. on May 2, 2025. As a result, an event of default was triggered under the promissory note.

On May 9, 2026, the Company and SemiCab, Inc. entered into a forbearance agreement pursuant to which: (i) SemiCab, Inc. irrevocably waived any default or event of default that was or will be caused under the promissory note as a result of the Company's failure to pay the initial payment of $1,500,000 to SemiCab, Inc. on May 2, 2026, and (ii) SemiCab, Inc. will forbear from taking action with respect to any defaults or events of default arising after May 9, 2026 with respect to the Company's failure to make such payment that occur at any time on or prior to June 16, 2026.

**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 regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "momentum," "seeks," "estimates," "continues," "endeavors," "strives," "may," variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements.

Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those set forth under *Item 1A. Risk Factors* of our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere therein and in this report. Our actual results may differ materially from those anticipated in these forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason, except as required by law.

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, 2025.

**Overview**

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

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

 

*SemiCab*

 

SemiCab is an AI-enabled, cloud-based collaborative transportation platform built to achieve the scalability required to predict and optimize loads and the use of trucks. To orchestrate collaboration across manufacturers, retailers, distributors, and their carriers, SemiCab uses real-time data from API-based load tendering and pre-built integrations with TMS and ELD partners. To build fully loaded round trips, SemiCab uses AI/ML techniques and advanced predictive optimization models.

Since 2020, SemiCab has enabled major retailers, brands and transportation providers to address their transportation needs. SemiCab's Orchestrated Collaboration™ AI model has proven to increase transportation capacity, improve asset utilization, reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show that our SemiCab technology has the capability of reducing costs through optimization. Additionally, our SemiCab technology has the potential to play a key role in the improved sustainability model. Based on our proven ability to improve truck utilization rates, this could result in a dramatic reduction in the carbon footprint of the industry. The optimization of existing truck utilization can add trucking capacity without adding more trucks, drivers or driven miles which addresses common problems plaguing the industry like severe driver shortage and road congestion. Trucking optimization could also reduce carbon emissions attributable to road freight.

*Singing Machine*

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

**Strategy**

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

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

**Financial Results**

We generated net sales of $2,400,000 for the three-month period ended March 31, 2026, compared to $123,000 for the three-month period ended March 31, 2025. The increase in net sales was due primarily to the addition of net sales generated by our SemiCab business resulting from our acquisition of SMCB on May 2, 2025. Cost of sales was $3,077,000 for the three months ended March 31, 2026, compared to $129,000 for the three months ended March 31, 2025. The increase in cost of sales was due primarily to the addition of freight, handling and servicing costs incurred by SMCB resulting from our acquisition of SMCB on May 2, 2025. Our operating expenses were $3,667,000 for the three months ended March 31, 2026, compared to $1,056,000 for the three months ended March 31, 2025. The increase in operating expenses was due primarily to the increase in general and administrative expenses incurred in the growth and development of our SemiCab business during the three months ended March 31, 2026.

We generated net loss from continuing operations of $5,380,000, or $0.52 per share of common stock, for the three months ended March 31, 2026, compared to $7,546,000, or $3.77 per share of common stock, for the three months ended March 31, 2025. The most significant contributors to the decrease in the net loss from continuing operations was a decrease of $6,468,000 for a non-cash charge for changes in the fair value of warrants liability partially offset by increases in general and administrative expenses incurred in the growth and development of our SemiCab business. We had total assets of $18,455,000 and $12,724,000 at March 31, 2026 and December 31, 2025, respectively. Net cash used in operating activities attributable to continuing operations was $3,922,000 the three months ended March 31, 2026, compared to $2,374,000 the three months ended March 31, 2025.

**Outlook**

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

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

**Comparison of the Three-Month Periods Ended March 31, 2026 and 2025**

*Net Sales*

 

Net sales consist of sales generated by our SemiCab business. Net sales increased $2,277,000 to $2,400,000 for the three-month period ended March 31, 2026, compared to $123,000 for the three-month period ended March 31, 2025. The increase in net sales was due primarily to the addition of net sales generated by SMCB, which we acquired on May 2, 2025. We expect net sales to increase over the next 12 months as we generate more business through our growing customer base in India and as we begin to generate business in the United States and Europe.

*Cost of Sales*

 

Cost of sales consists primarily of freight, handling and servicing costs that we incur in connection with our SemiCab business. Cost of sales increased $2,948,000 to $3,077,000 for the three-month period ended March 31, 2026, compared to $129,000 for the three-month period ended March 31, 2025. The increase in cost of sales was due primarily to the addition of freight, handling and servicing costs incurred by SMCB, which we acquired on May 2, 2025. We expect costs of sales to increase over the next 12 months in connection with the increase in net sales that we expect to generate from our SemiCab business.

*Operating Expenses*

 

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

Selling Expenses

Selling expenses consist primarily of marketing and advertising activities that we engage in from time to time in connection with our SemiCab business. Selling expenses were $33,000 for the three-month period ended March 31, 2026. We did not incur any selling expenses for the three-month period ended March 31, 2025. We expect selling expenses to increase substantially over the next 12 months as we begin to devote more resources to marketing and advertising activities to support the growth of our SemiCab business in India, the United States and Europe.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation expense, legal and accounting expenses, and other corporate expenses. General and administrative expenses increased $2,578,000 to $3,634,000 for the three-month period ended March 31, 2026, compared to $1,056,000 for the three-month period ended March 31, 2025. The increase was due primarily to increases in expenses incurred in connection with the operation of our SemiCab business and stock-based compensation expense. We expect general and administrative expenses to decrease over the next 12 months as we incur less stock-based compensation expense. This decrease will be partially offset by an increase in general and administrative expenses associated with the growth and development of our SemiCab business.

 

*Other Expenses*

Other expenses consist primarily of the loss on the change in fair value of warrants that we incurred in connection with the public offering of securities that we completed on December 6, 2024, and interest expense that we incurred in connection with other financing transactions that we have completed. Other expenses decreased $5,448,000 to $1,036,000 for the three-month period ended March 31, 2026, compared to $6,484,000 for the three-month period ended March 31, 2025. The decrease was due primarily to the loss of $6,468,000 on the change in fair value of warrants that we incurred during the three-month period ended March 31, 2025 in connection with the public offering of securities that we completed on December 6, 2024, partially offset by an increase of $1,020,000 related to interest expense, including amortization of deferred debt costs, incurred in connection with financing transactions that we incurred during the three-month period ended March 31, 2026. We expect other expenses to remain at similar levels over the next 12 months as we continue to incur interest expense in connection with the financing transactions that we have completed.

*Net Loss Attributable to Non-Controlling Interest*

SemiCab Holdings owns our SemiCab business. Net loss attributable to non-controlling interest consists of the loss allocated to SemiCab, Inc., which owned a 20% of the outstanding membership interests of SemiCab Holdings until May 2, 2025, and Ajesh Kapoor and Vivek Sehgal, who collectively owned 20% of the outstanding membership interests of SemiCab Holdings beginning May 2, 2025. The net loss attributable to non-controlling interest of $274,000 for the three-month period ended March 31, 2026 represents the amount of loss incurred by SemiCab Holdings that was allocated to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest in SemiCab Holdings. The net loss attributable to non-controlling interest of $103,000 for the three-month period ended March 31, 2025 represents the amount of loss incurred by SemiCab Holdings that was allocated to SemiCab, Inc. between January 1, 2025 and March 31, 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 our SemiCab business.

**Liquidity And Capital Resources**

Since our inception, we have funded our operations primarily through cash generated by our operations, private sales of equity securities and the use of short- and long-term debt. As of March 31, 2026, our cash and restricted cash balance was $10,939,000.

Net cash used in operating activities attributable to continuing operations was $3,922,000 during the three-month period ended March 31, 2026, compared to $2,374,000 during the three-month period ended March 31, 2025. The increase of $1,548,000 was due primarily to a decrease of $6,468,000 for loss on change in fair value of warrants that we incurred in connection with the public offering of securities that we completed on December 6, 2024, partially offset by a decrease of $2,166,000 for net loss and an increase of $1,655,000 for accrued expenses.

Net cash used in investing activities attributable to continuing operations was $128,000 during the three-month period ended March 31, 2026, compared to $672,000 during the three-month period ended March 31, 2025. The decrease of $544,000 was due primarily to a decrease of $672,000 for advances to SMCB under our loan agreement with them, partially offset by an increase of $114,000 for the capitalization of internal use software costs.

Net cash provided by financing activities attributable to continuing operations was $8,843,000 for the three-month period ended March 31, 2026. We did not have any cash flows from financing activities attributable to continuing operations during the three-month period ended March 31, 2025. The increase of $8,843,000 was due primarily to net proceeds of $9,020,000 that we received from Streeterville under the Fourth Pre-Paid Purchase.

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

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

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

**Nasdaq Compliance**

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

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

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

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

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

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

In this Quarterly Report on Form 10-Q for our fiscal quarter ended March 31, 2026, we reported stockholders' equity of approximately $3,168,000. We intend to file a Form 8-K with the SEC stating that we believe we have regained compliance with the stockholders' equity requirement.

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

**Off-Balance Sheet Arrangements**

As of March 31, 2026, 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, 2025.

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

Not required for smaller 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, 2025 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 Control over Financial Reporting**

During our fiscal quarter ended March 31, 2026, 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.**

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, 2025 regarding these matters.

 

**Item 1A. Risk Factors**

Not required for smaller reporting companies.

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

None.

**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 March 31, 2026, 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 No. | Description |
| 10.1 | [Forbearance Agreement, dated May 9, 2026, by and between Algorhythm Holdings, Inc. and SemiCab, Inc. (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 11, 2026).](https://www.sec.gov/Archives/edgar/data/923601/000149315226022135/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 |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

\* Filed herewith

\*\* Furnished herewith.

**SIGNATURES**

Pursuant to the requirements of the Securities 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: May 14, 2026 | By: | */s/ Gary Atkinson* |
|  |  | Gary Atkinson |
|  |  | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
| Date: May 14, 2026 | 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 March 31, 2026;

&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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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: May 14, 2026 | */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 March 31, 2026;

&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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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: May 14, 2026 | */s/ Alex Andre* |
|  | Alex Andre |
|  | Chief Financial Officer |
|  | (Principal Financial and Accounting Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906**

**OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Algorhythm Holdings, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2026, 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 results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: May 14, 2026 | By: | */s/ Gary Atkinson* |
|  | Name: | Gary Atkinson |
|  | Title: | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
| Date: May 14, 2026 | By: | */s/ Alex Andre* |
|  | Name: | Alex Andre |
|  | Title: | Chief Financial Officer |
|  |  | (Principal Financial and Accounting Officer) |

---