What changed in this filing

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Item 1. Financial Statements

2025-11-19 compared with 2025-08-19 · 538 added, 389 removed, 697 unchanged (57% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2025

December 31, 2024

September 30,

Current Assets

2 unchanged sentences

Accounts receivable

Note receivable - related party

Returns asset

Prepaid expenses and other current assets

Current assets of discontinued operations

Total Current Assets

2 unchanged sentences

Intangible assets, net

Non-current assets of discontinued operations

Liabilities and Shareholders’ Equity

3 unchanged sentences

Refund due to customer

Reserve for sales returns

Warrant liability

Promissory notes payable, net

Current portion of promissory note payable - SemiCab, Inc.

Promissory note payable

Current portion of notes payable to related parties

Other current liabilities

Current liabilities of discontinued operations

Total Current Liabilities

Notes payable to related parties, net of current portion

Promoissory note payable - SemiCab, Inc., net of current portion

Total Liabilities

3 unchanged sentences

1,000,000 shares authorized;

no shares issued and outstanding at

June 30, 2025 and December 31, 2024

no shares issued and

outstanding at September 30, 2025 and December 31, 2024

Common stock, $ 0.01 par value;

800,000,000 and 100,000,000 shares authorized;

2,514,571 and 470,825

shares issued and outstanding at June 30, 2025 and December 31, 2024

stock, $0.01 par value;

800,000,000 and 100,000,000 shares authorized;

2,641,778 and 470,825 shares issued and outstanding

at September 30, 2025 and December 31, 2024

Additional paid-in capital

5 unchanged sentences

( 1,036,000 )

Treasury stock, 10,990 and 0 shares reserved at June 30, 2025 and December 31, 2024

Total Algorhythm Holdings Shareholders’ Equity (Deficit)

Treasury stock, 10,990 and 0 shares reserved at September 30, 2025 and December 31, 2024

Total Shareholders’ Equity (Deficit)

( 10,521,000 )

Total Liabilities and Shareholders’ Equity (Deficit)

notes to the condensed consolidated financial statements

Holdings, Inc.

See notes to the condensed consolidated financial statements

Algorhythm Holdings, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Cost of Goods Sold

For the Nine Months Ended

September 30,

Cost of Sales

Operating Expenses

1 unchanged sentence

General and administrative expenses

Operating lease impairment expense

Total Operating Expenses

3 unchanged sentences

( 3,885,000 )

( 2,862,000 )

Other Expenses

4 unchanged sentences

( 6,804,000 )

Loss Before Income Tax Benefit

Loss From Continuing Operations Before Income Tax

( 1,858,000 )

1 unchanged sentence

( 10,689,000 )

Income Tax Benefit

( 3,190,000 )

Income tax loss attributable to continuing operations

Net Loss From Continuing Operations

( 1,882,000 )

( 2,106,000 )

Net loss attributable to non-controlling interest

Net Loss Available to Common Shareholders

( 10,713,000 )

( 3,190,000 )

Net gain (loss) from discontinued operations

( 1,100,000 )

( 2,372,000 )

( 4,323,000 )

Net Income (Loss)

( 2,982,000 )

( 13,085,000 )

( 7,513,000 )

Net loss attributable to non-controlling interest

Net Income (Loss) Available to Common Shareholders

$ ( 2,962,000 )

$ ( 12,738,000 )

$ ( 7,292,000 )

Income (Loss) Per Common Share

Basic and diluted from continuing operations

Basic and diluted from discontinued operations

Basic and diluted

Weighted Average Common and Common

Equivalent Shares:

Weighted Average Common and Common Equivalent Shares:

Basic and diluted

notes to the condensed consolidated financial statements

Holdings, Inc.

See notes to the condensed consolidated financial statements

Algorhythm Holdings, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

the Three Months Ended June 30, 2025 and 2024 (Unaudited)

Additional Paid-in

Balance at March 31, 2025

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

For the Three Months

Ended September 30, 2025 and 2024 (Unaudited)

Balance at June 30, 2025

$ ( 1,363,000 )

1 unchanged sentence

$ ( 58,948,000 )

Stock-based compensation

Common stock issued for acquisition of SMCB

Balance at June 30, 2025

( 2,962,000 )

( 2,982,000 )

Stock-based compensation

Common stock issued as commitment fee to investor

Common stock issued for services

Balance at September 30, 2025

$ ( 1,383,000 )

Balance at March 31, 2024

$ ( 758,000 )

$ ( 61,910,000 )

Balance at June 30, 2024

$ ( 34,401,000 )

$ ( 872,000 )

Net (loss) income

Sale of common stock, net of offering costs

Stock-based compensation

Balance at June 30, 2024

Common stock issued for acquisition of SemiCab assets

Issuance of subsidiary stock to non-controlling interest

Balance at September 30, 2024

$ ( 148,000 )

$ ( 33,206,000 )

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

Additional Paid-in

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

Balance at December 31, 2024

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Repurchase of common stock from related parties

Balance at June 30, 2025

$ ( 1,363,000 )

$ ( 758,000 )

$ ( 58,948,000 )

Common stock issued as commitment fee to investor

Common stock issued for services

Balance at September 30, 2025

$ ( 1,383,000 )

9 unchanged sentences

( 7,513,000 )

Sale of common stock, net of offering costs

Stock-based compensation

Balance at June 30, 2024

Common stock issued for acquisition of SemiCab assets

Issuance of subsidiary stock to non-controlling interest

Balance at September 30, 2024

$ ( 148,000 )

2 unchanged sentences

$ ( 33,206,000 )

notes to the condensed consolidated financial statements

Holdings, Inc.

to the condensed consolidated financial statements

Algorhythm Holdings, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

June 30, 2025

June 30, 2024

For the Six Months Ended

June 30, 2025

June 30, 2024

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

Cash flows from operating activities

Net loss from continuing operations

$ ( 10,713,000 )

5 unchanged sentences

Change in fair value of warrant liability

Provision for estimated cost of returns

Provision for inventory obsolescence

Credit losses

Impairment expense

Reserve for sales returns

( 2,834,000 )

( 1,217,000 )

Stock-based compensation

Payment of early termination fee on operating lease termination settlement

Changes in operating assets and liabilities:

Accounts receivable

Due from banks

Accounts receivable - related parties

( 1,376,000 )

Accounts receivable, related party

Accounts receivable

2 unchanged sentences

Accounts payable

( 2,184,000 )

( 3,940,000 )

Accrued expenses

( 1,147,000 )

Refunds due to customers

Other liabilities

Net cash used in operating activities

Net cash used in operating activities attributable to continuing operations

( 4,343,000 )

2 unchanged sentences

Purchase of property and equipment

Capitalization of internal use software costs

Repurchase of shares of common stock

Cash received from acquisition of SemiCab assets

Cash received from acquisition of SMCB

1 unchanged sentence

( 1,172,000 )

Net cash used in investing activities

Net cash provided by (used in) investing activities attributable to continuing operations

( 1,888,000 )

1 unchanged sentence

Proceeds from issuance of promissory notes, net

Net cash provided by (used in) financing activities

Net change in cash

Payment of promissory notes

Proceeds from sale of stock, net of offering costs

Payments on merchant cash advances payable

Net cash provided by financing activities attributable to continuing operations

Net cash provided by (used in) operating activities attributable to discontinued operations

( 3,123,000 )

Net cash provided by (used in) investing activities attributable to discontinued operations

Net cash used in financing activities attributable to discontinued operations

Total cash provided by (used in) discontinued operations

( 2,278,000 )

Cash at beginning of year

Net change in cash

( 4,394,000 )

Cash at beginning of period

Cash at end of period

6 unchanged sentences

Promissory note issued for acquisition of SMCB

Common stock issued for services

Common stock issued as commitment fee to investor

Common stock issued for acquisition of SemiCab assets

notes to the condensed consolidated financial statements

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(f/k/a The Singing Machine Company, Inc.) (the “Company”) is an artificial intelligence (“AI”)

technology and consumer electronics holding company with two primary business units – SemiCab and Singing Machine.

SemiCab is an

AI-enabled software logistics business operated through the Company’s subsidiary, SemiCab Holdings, LLC.

Singing Machine is a home

karaoke consumer products business that designs and distributes karaoke products globally to retailers and ecommerce partners through

the Company’s subsidiary, The Singing Machine Company, Inc.

Company’s operations include its wholly-owned subsidiaries, SMC Logistics, Inc., a California corporation (“SMCL”),

SMC-Music, Inc., a Florida corporation (“SMCM”), SMC (HK) Limited, a Hong Kong company (“SMH”), The Singing Machine

Company, Inc., a Delaware corporation (“SMC”), MICS Hospitality Holdings, Inc., a Delaware corporation (“MICS Hospitality”),

MICS Hospitality Management, LLC, a Delaware limited liability company (“MICS Hospitality Management”), and MICS Nomad, LLC,

a Delaware limited liability company (“MICS NY”), and its 80 %-owned subsidiaries, SemiCab Holdings, LLC, a Nevada limited

liability company (“SemiCab Holdings”) and SMCB Solutions Private Limited, an Indian Company (“SMCB”).

technology holding company that currently has one business unit, which is SemiCab.

SemiCab is an AI-enabled software logistics and distribution

business operated through the Company’s subsidiary, SemiCab Holdings, LLC.

Prior to August 1, 2025, the Company had a second business

unit, which was Singing Machine.

Singing Machine was a home karaoke consumer products business that designed and distributed karaoke

products globally to retailers and ecommerce partners through the Company’s subsidiary, The Singing Machine Company, Inc.

sold its Singing Machine business on August 1, 2025.

Accordingly, the Company no longer owns or operates the Singing Machine business

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.

September 5, 2024, the Company’s Certificate of Incorporation was amended to change the name of the Company from “The Singing

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All current and prior year balances have been adjusted to reflect the reverse stock split.

May 2, 2025, the Company and SemiCab Holdings entered into an equity purchase agreement with SemiCab Inc.

pursuant to which:

Holdings purchased 9,999 shares of the issued and outstanding equity shares, Rs.

10 par value, of SMCB, representing 99.99% of the issued

and outstanding equity shares of SMCB, for $ 1,750,000 , the payment of which was evidenced by the issuance of a promissory note by the

Company to the SemiCab, Inc., and (ii) the Company purchased the 20 % membership interest in SemiCab Holdings then held by SemiCab, Inc.

for aggregate consideration consisting of 119,742 shares of the Company’s common stock.

The acquisition was completed on May 2,

2 – Sale of Singing Machine Business

August 1, 2025, the Company entered into an asset purchase agreement with SMC and Stingray Music USA, Inc.

(“Stingray USA”)

pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with the Company’s

Singing Machine business for $500,000.

The transaction closed on August 1, 2025.

Mathieu Peloquin is the Senior Vice-President, Marketing

and Communications of Stingray Group and served as a member of the Company’s board of directors until October 3, 2025.

Company determined that the sale of the Singing Machine business met the criteria under Accounting Standards Codification (“ASC”)

205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”), to be classified as a

discontinued operation as the sale represented a strategic shift that will have a significant effect on the Company’s operations and financial results.

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

All amounts and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted.

information is presented in Note 19 – Discontinued Operations .

3 – Liquidity, Going Concern and Management Plans

Concern Analysis

of June 30, 2025, the Company’s cash balance was $ 1,134,000 .

This will not be sufficient to fund the Company’s planned operations

for at least one year after the date the condensed consolidated financial statements are issued.

The Company has a recent history of

recurring operating losses and decreases in working capital.

These factors create substantial doubt about the Company’s ability

to continue as a going concern for at least one year after the date that the Company’s condensed consolidated financial statements

of September 30, 2025, the Company’s cash balance was $ 2,839,000 .

This will not be sufficient to fund the Company’s planned

operations for at least one year after the date the condensed consolidated financial statements are issued.

The Company has a recent

history of recurring operating losses and decreases in working capital.

These factors create substantial doubt about the Company’s

ability to continue as a going concern for at least one year after the date that the Company’s condensed consolidated financial

statements are issued.

condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue

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the ordinary course of business.

Company plans to finance operations by obtaining additional capital through external sources of financing.

It may attempt to obtain additional

capital through the sale of equity securities or the issuance of debt securities.

The Company has not made arrangements to obtain additional

capital and can provide no assurance that additional financing will be available in an amount or on terms acceptable to the Company,

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.

making this assessment, management performed a comprehensive analysis of the Company’s current circumstances, including its financial

position, cash flow and outflow forecasts, and obligations and debts.

position, cash flow forecasts, and obligations and debts.

Although management has a recent history of successful capital

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of Presentation

accompanying unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024 have been

prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

accompanying unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025 and 2024 have

been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) applicable

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for the full year.

The condensed consolidated balance sheet as of June 30, 2025 and condensed financial statement information for the

three and six months ended June 30, 2025 and 2024 are unaudited, whereas the condensed consolidated balance sheet as of December 31,

The condensed consolidated balance sheet as of September 30, 2025 and condensed financial statement information for

the three and nine months ended September 30, 2025 and 2024 are unaudited, whereas the condensed consolidated balance sheet as of December

31, 2024 is derived from the audited consolidated balance sheet as of that date.

The condensed consolidated financial statements and notes

hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual

report on Form 10-K for the year ended December 31, 2024.

There have been no changes to the Company’s significant accounting policies

as disclosed on the Company’s annual report on Form 10-K for the year ended December 31, 2024.

The condensed consolidated financial statements and

notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s

annual report on Form 10-K for the year ended December 31, 2024.

There have been no changes to the Company’s significant accounting

policies as disclosed on the Company’s annual report on Form 10-K for the year ended December 31, 2024.

to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment

Reporting (“ASC 280”), the Company’s Chief Executive Officer serves as the Company’s Chief Operating Decision

Maker (“CODM”) for the purposes of ASC 280.

The CODM concluded that the Company operates two reportable segments.

consists of its SemiCab business and the other segment consists of its Singing Machine business.

The CODM manages the Company’s

operations and business separately for each operating segment and uses net loss to allocate resources, making operating decisions and

evaluating financial performance.

The CODM also uses net loss, along with non-financial inputs and qualitative information, to evaluate

the Company’s performance, establish compensation, monitor budget versus actual results, and decide the level of investment in

various operating activities and other capital allocation activities.

See Note 14 – Segment Information and Revenue Disaggregation

– Segment Information .

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.

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.

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

Accounting Pronouncements

December 2023, the FASB issued

Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 is intended to enhance the usefulness of income tax disclosures by requiring entities to disclose specific rate reconciliations,

the amount of income taxes separated by federal and individual tax jurisdictions, and the amount of income (loss) from continuing operations

before income tax expense (benefit) disaggregated among federal, state and foreign.

ASU 2023-09 is effective for the Company for its

fiscal year beginning January 1, 2025.

The adoption of ASU 2023-09 did not have a material impact on the

Company’s consolidated financial statements and related disclosures.

November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic 220-40) .

This ASU requires disclosure on an annual and interim basis, in the notes to the financial statements, of disaggregated

information about specific categories underlying certain income statement expense line items.

The guidance is effective for annual periods

beginning after December 15, 2026, and interim periods with annual reporting periods beginning after December 15, 2027, on a retrospective

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20) .

This ASU clarifies

the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting

Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06.

Adoption can be on a prospective

or retrospective basis.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and

related disclosures.

May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810).

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the impact of this standard on its consolidated financial statements and related disclosures.

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

The ASU allows entities to assume that the macroeconomic conditions existing at the balance-sheet date will remain unchanged

over the remaining life of those assets.

The amendments are effective for fiscal years beginning after December 15, 2025, including interim

periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard on its

consolidated financial statements and related disclosures.

August 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40).

This ASU simplifies the accounting for costs incurred in the development of internal-use software by removing the concept of multiple

project stages.

Under the new guidance, capitalization begins when management authorizes and commits funding to the project and it is

probable that the project will be completed and the software placed into service.

The amendments are effective for annual reporting periods

beginning after December 15, 2027, and interim periods within those years.

Early adoption is permitted.

The Company is currently evaluating

the impact of this standard on its consolidated financial statements and related disclosures.

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

The amendments expand a scope exception for contracts whose underlying is based on an entity’s own operations or

activities, reducing the number of arrangements that qualify as derivatives.

The ASU also clarifies the accounting for share-based

consideration received from a customer.

The amendments are effective for fiscal years beginning after December 15, 2026,

including interim periods within those years.

Early adoption is permitted.

The Company is currently evaluating the impact of this

standard on its consolidated financial statements and related disclosures.

5 – Variable Interest Entities

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The Company further determined that it was not the primary beneficiary of SMCB because the Company did not have

the power to direct or control SMCB’s significant activities related to its business.

Accordingly, the Company had not consolidated

the power to direct or control’s significant activities related to its business.

Accordingly, the Company did not consolidate

SMCB’s results of operations and financial position in its condensed consolidated financial statements prior to May 2, 2025.

May 2, 2025, the Company and SemiCab Holdings acquired 99.99 % of the equity shares of SMCB from SemiCab, Inc.

May 2, 2025, SemiCab Holdings acquired 99.99 % of the equity shares of SMCB from SemiCab, Inc.

As a result, on May 2,

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6 – Property and Equipment, Intangible Assets and Goodwill

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

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

of Property and Equipment

September 30,

Computer and office equipment

Furniture and fixtures

Molds and tooling

Property and equipment gross

accumulated depreciation

Property and equipment

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

and six months ended June 30, 2024, respectively.

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

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

ended September 30, 2024.

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

of Intangible Assets

September 30,

Customer relationships

Developed technology

Internal use software

Intangible assets gross

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Intangible assets net

expense was $ 17,000 and $ 32,000 for the three and six months ended June 30, 2025, respectively.

The Company did not have any intangible

assets or goodwill during the six months ended June 30, 2024.

June 30, 2025, the Company tested the amount of goodwill that it recorded in connection with the acquisition of SemiCab, Inc.’s

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

months ended September 30, 2024.

the three and nine months ended September 30, 2025, the Company capitalized costs related to the development of internal-use software

in accordance with ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software .

Capitalized costs primarily

consist of personnel and third-party fees incurred during the application development stage for software that support the Company’s

Software as a Service (“SaaS”) operations.

Costs incurred during the preliminary project and post-implementation stages are

expensed as incurred.

The capitalized internal-use software is amortized on a straight-line basis over its estimated useful life, which

is 5 years , beginning when the software is ready for its intended use.

September 30, 2025, the Company tested the amount of goodwill that it recorded in connection with the acquisition of SemiCab, Inc.’s

business on July 3, 2024 for impairment to see if the carrying amount of goodwill exceeded its carried value.

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The Company determined that no impairment of goodwill needed to be recorded with respect to that goodwill during

the six months ended June 30, 2025.

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

May 2, 2025, the Company and SemiCab Holdings acquired 99.99 % of the equity shares of SMCB from SemiCab, Inc.

the nine months ended September 30, 2025.

Accordingly, the balance of that goodwill was $ 786,000 on September 30, 2025.

May 2, 2025, SemiCab Holdings acquired 99.99 % of the equity shares of SMCB from SemiCab, Inc.

In connection with the

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As a result, the balance of the Company’s goodwill

was $ 4,418,000 on June 30, 2025.

was $ 4,418,000 on September 30, 2025.

7 – Notes Payable to Related Parties

Holdings assumed several unsecured loans from Ajesh Kapoor and Vivek Sehgal in the acquisition of SemiCab, Inc.’s business.

Company had accrued interest payable of $ 5,000 as of June 30, 2025 that was included as a component of accrued expenses on the Company’s

condensed consolidated balance sheets.

The Company incurred interest expense on these loans of $ 15,000 and $ 31,000 for the three and

six months ended June 30, 2025, respectively.

SemiCab Holdings assumed

several unsecured loans from Ajesh Kapoor and Vivek Sehgal in the acquisition of SemiCab, Inc.’s business.

The Company incurred

interest expense on these loans of $ 15,000 and $ 46,000 for the three and nine months ended September 30, 2025, respectively.

did no t have any accrued interest payable as of September 30, 2025.

terms of each loan are summarized in the table below:

of Notes Payable to Related Parties Loan

Balance as of June 30, 2025

Balance as of September 30, 2025

current portion of notes payable to related parties

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of December 31, 2024, the loans described above that were issued between April 17, 2023 and May 17, 2023 were in default.

to December 31, 2024, the Company entered into waivers and amendments with each of the note holders who are parties to those loans to

extend the maturity dates of the loans to February 1, 2026.

to December 31, 2024, the Company entered into waivers and amendments with each of the note holders who are parties to those loans

to extend the maturity dates of the loans to February 1, 2026.

Additional information about these loans is presented in Note 20

– Subsequent Events.

February 18, 2025, the Company issued a promissory note to each of Stingray Group and Regalia Ventures in the amount of $ 286,000 and

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The final payment of

the settlement was made during the six months ended June 30, 2025.

Accordingly, there was no unpaid balance at June 30, 2025.

As of December

31, 2024, the remaining unpaid balance of the settlement was $ 325,000 and was included as a component of accrued expenses on the Company’s

condensed consolidated balance sheets.

the settlement was made during the nine months ended September 30, 2025.

Accordingly, there was no unpaid balance at September 30, 2025.

As of December 31, 2024, the remaining unpaid balance of the settlement was $ 325,000 and was included as a component of accrued expenses

on the Company’s condensed consolidated balance sheets.

December 21, 2023, Ault Lending, LLC (“Ault Lending”), a wholly-owned subsidiary of Ault Alliance, Inc., a former shareholder

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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.

The first milestone payment for $ 175,000 was

due on July 1, 2024 and was not made.

In the event this payment is made, the remaining settlement shall be deemed satisfied.

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agents, advisors and independent contractors.

of June 30, 2025, there were 1,667 shares of common stock authorized for issuance under the plan.

of September 30, 2025, there were 1,667 shares of common stock authorized for issuance under the plan.

Of this amount, awards representing

1,183 shares of common stock had been granted under the plan and 484 shares remained available for issuance under the plan.

did not issue any share-based awards under the plan during the six months ended June 30, 2025 and 2024, and no shares were forfeited

during the three and six months ended June 30, 2025.

of June 30, 2025, there was an unrecognized expense of $ 60,000 remaining on stock options currently vesting over time with an approximate

weighted average of three years and nine months remaining until the options would be fully vested.

did not issue any share-based awards under the plan during the nine months ended September 30, 2025 and 2024, and no shares were forfeited

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

of September 30, 2025, there was an unrecognized expense of $ 96,150 remaining on stock options currently vesting over time with an approximate

weighted average of three years and eight months remaining until the options would be fully vested.

The vested options outstanding as

of June 30, 2025, had no intrinsic value.

10 – Net Loss Per Share

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

are as follows:

of Basic and Diluted Loss Per Share

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Net loss available to common shareholders

$ ( 585,000 )

of September 30, 2025, had no intrinsic value.

11 – Net Income (Loss) Per Share

computations of basic and dilutive income (loss) per share of commons stock outstanding for the three and nine months ended September 30,

2025 and 2024 are as follows:

of Basic and Diluted Income (Loss) Per Share

Three Months Ended

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Net income (loss) available to common shareholders

$ ( 2,962,000 )

2 unchanged sentences

Basic and diluted weighted average of common stock outstanding

Loss per common share

computation of the fully diluted weighted average number of shares of common stock outstanding for the three and six months ended June

Income (loss) per common share

computation of the fully diluted weighted average number of shares of common stock outstanding for the three and nine months ended September

30, 2025 and 2024 is as follows:

Diluted Weighted Average Number of Shares

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Three Months Ended

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Basic weighted average common shares outstanding

1 unchanged sentence

Diluted weighted average of common shares outstanding

net loss per share is based on the weighted average number of shares of common stock outstanding during the period.

Diluted net loss

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

Diluted net income (loss)

per share reflects the potential dilution assuming shares of common stock underlying in-the-money options and warrants have been issued

1 unchanged sentence

at the average market price during the period using the treasury stock method.

the three and six months ended June 30, 2025, 484 shares of common stock underlying stock options, respectively, and 1,138,163 shares

of common stock underlying warrants were excluded from the calculation of diluted net loss per share as the result would have been anti-dilutive.

For the three and six months ended June 30, 2024, 543 shares of common stock underlying stock options and 4,511 shares of common stock

underlying warrants were excluded from the calculation of diluted net loss per share as the result would have been anti-dilutive.

For the three and nine months ended September 30, 2025,

of common stock underlying stock options,

respectively, and 1,138,163

shares of common stock underlying

warrants were excluded from the calculation of diluted net income (loss) per share as the result would have been anti-dilutive.

For the three

and nine months ended September 30, 2024, 543

shares of common stock underlying

stock options and 4,511

shares of common stock underlying

warrants were excluded from the calculation of diluted net income (loss) per share as the result would have been anti-dilutive.

12 – Securities Transactions

15 unchanged sentences

rate of 10 % per year.

The Company incurred $ 1,000 for interest expense for the six months ended June 30, 2025 related to this promissory

The Company incurred $ 1,000 for interest expense for the nine months ended September 30, 2025 related to this promissory

On February 27, 2025, the Company paid off the note in full.

16 unchanged sentences

of 10% per year.

The Company incurred $ 3,000 for interest expense for the six months ended June 30, 2025 related to this promissory note.

The Company incurred $ 3,000 for interest expense for the nine months ended September 30, 2025 related to this promissory

On April 3, 2025, the Company paid off the note in full.

31 unchanged sentences

liability reflected on the Company’s consolidated balance sheet at December 31, 2024 was reclassified to additional paid-in capital

on the Company’s condensed consolidated balance sheet at June 30, 2025.

on the Company’s condensed consolidated balance sheet at September 30, 2025.

Company recognized a loss of $ 6,468,000 for the change in the fair value measurement of the warrant liability as of the date the warrant

28 unchanged sentences

The Company received net proceeds of $ 105,000 after deductions of $ 15,000 for original issue discount.

Capital Financing Transaction

July 3, 2025, the Company entered into a business loan and security agreement with Agile Capital Funding, LLC (“Agile

Funding”) pursuant to which it issued a promissory note to Agile Funding in the

principal amount of $ 368,000 .

The note is subject to a one-time interest charge of $ 162,000

and is payable in 28 weekly installments of $ 19,000

commencing on July 14, 2025.

The Company received net proceeds of $ 350,000

after deductions of $ 18,000

for administrative agent fees.

Streeterville

Capital Securities Purchase Agreement

August 21, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Streeterville

Capital, LLC (“Streeterville”), providing for the issuance and sale of shares of the Company’s common stock in one or more

secured prepaid purchases (the “Pre-Paid Purchases”) for aggregate gross proceeds of up to $ 20,000,000 .

In connection with

the Securities Purchase Agreement, the Company issued 95,694 shares of common stock as a commitment fee to Streeterville.

initial Pre-Paid Purchase was $ 4,390,000 , reduced by an original issue discount of $ 360,000 and transaction expenses of $ 465,000 , resulting

in net proceeds of $ 3,565,000 .

initial Pre-Paid Purchase balance accrues interest at 9 % per annum, matures three years from issuance, and is secured by all assets of

the Company and guaranteed by its subsidiaries.

The Securities Purchase Agreement provides for additional Pre-Paid Purchases over a two-year

period, subject to certain conditions, with each purchase having a 9 % original issue discount and accruing interest at 9 % per annum.

Streeterville has the right,

but not the obligation, to convert the outstanding balances of Pre-Paid Purchases into shares of common stock at a price equal to 90 %

of the lowest daily volume weighted average price during the ten trading days preceding notice, but not less than a stated floor price,

and cannot beneficially own greater than 9.99 % of the Company’s outstanding shares of common stock at any given time.

until the Company obtains the requisite stockholder approval as required by Nasdaq Listing Rule 5635(d), the total cumulative number of

shares of common stock that may be issued to Streeterville under all Pre-Paid Purchases cannot exceed the numerical threshold required

by that rule.

The Company may at any

time prepay all or any portion of the outstanding balance of a Pre-Paid Purchase.

In the event the Company elects to do so, the Company

must pay Streeterville an amount equal to 110 % multiplied by the portion of the outstanding balance the Company has elected to prepay.

If an event of default occurs, the outstanding balance becomes immediately due and payable, increases by 7.5 %, and accrues interest at

a rate of 18 % per annum (or the maximum rate permitted by law).

As of September 30,

2025, the outstanding balance of the Pre-Paid Purchases was $ 4,390,000 .

This amount was presented in the condensed consolidated balance sheets net of the unamortized deferred debt issuance costs of $ 360,000

and transaction expenses of $ 465,000 .

Although the initial Pre-Paid Purchase matures three years from its effective date, the entire outstanding balance has been

classified as a current liability on the Company’s condensed consolidated balance sheet as of September 30, 2025.

terms of the initial Pre-Paid Purchase, Streeterville may, in its sole discretion, deliver purchase notices to the Company at any

time to require the Company to issue shares of common stock to Streeterville equal in value to the outstanding balance of the

initial Pre-Paid Purchase.

Streeterville can then sell such shares, the proceeds of which are applied to the outstanding balance of the initial

Pre-Paid Purchase.

The Company does not have an unconditional right to defer such settlement beyond twelve months from the balance

Accordingly, the Company determined that current liability classification was appropriate.

shares of common stock issued for the commitment fee were valued at $ 2.00

per share, which was the closing price of the Company’s common stock on the measurement date, for aggregate consideration of

Interest expense related to the Pre-Paid Purchases was $ 34,000

for both the three and nine months ended September 30, 2025.

The debt issuance costs and commitment fee incurred under the Securities

Purchase Agreement are being amortized using the effective rate method.

Amortization, which is included in interest expense, was $ 29,000

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

Stock Issued for Services

the nine months ended September 30, 2025, the Company issued an aggregate of 31,513 shares of its common stock to a vendor as consideration

for services rendered.

The shares were issued in a non-cash transaction and were valued at $ 2.38 per share, the closing price of the

Company’s common stock on the measurement date, resulting in a total fair value of $ 75,000 .

The total fair value was recorded as

general and administrative expenses in the accompanying condensed consolidated statement of operation for the period then ended.

13 – Derivative Liability

the six months ended June 30, 2025, the Company had derivative warrant liabilities that were measured at fair value on a recurring basis.

the nine months ended September 30, 2025, the Company had derivative warrant liabilities that were measured at fair value on a recurring

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.

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.

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

5 unchanged sentences

Exercise price

Number of warrants

Number of shares of common stock

Remaining term (years)

20 unchanged sentences

The Company adjusted the Series A Warrants to

fair value upon reclassification and reclassified that value to additional paid-in capital during the six months ended June 30, 2025.

following table provides a roll-forward of the fair value of the derivative liabilities described above during the six months ended June

fair value upon reclassification and reclassified that value to additional paid-in capital during the nine months ended September 30,

following table provides a roll-forward of the fair value of the derivative liabilities described above during the nine months ended

September 30, 2025:

of Fair Value of the Derivative Liabilities

9 unchanged sentences

( 7,857,000 )

Balance at June 30, 2025

following table provides a roll-forward of the number of shares of common stock underlying warrants issued during the six months ended

June 30, 2025:

Balance at September 30, 2025

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

of Shares of Common Stock Underlying Warrants

3 unchanged sentences

Balance at December 31, 2024

Balance at June 30, 2025

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

June 30, 2024.

Balance at September 30, 2025

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

as of September 30, 2024.

14 – Income Taxes

Company’s income tax provision for the three and six months ended June 30, 2024, was approximately $ 52,000 due to income taxes

due on amended federal tax returns filed for 2020 and 2021 which took into account the one-time refunds received from the Employee Retention

Credit program.

The Company did not have any provision for income taxes for the three and six months ended June 30, 2025.

Company’s income tax expense differs from the expected tax expense based on statutory rates primarily due to full valuation allowance

for all of its subsidiaries for the three and six months ended June 30, 2025 and 2024.

14 – Segment Information and Revenue Disaggregation

to ASC 280, the Company’s Chief Executive Officer serves as the Company’s Chief Operating Decision Maker (“CODM”)

for the purposes of ASC 280.

The CODM concluded that the Company operates two reportable segments.

One segment consists of its Singing

Machine business and the other segment consists of its SemiCab business.

The CODM manages the Company’s operations and business

separately for each operating segment and uses net sales and net loss to allocate resources, making operating decisions and evaluating

financial performance.

The CODM also uses net sales and net loss, along with non-financial inputs and qualitative information, to evaluate

the Company’s performance, establish compensation, monitor budget versus actual results, and decide the level of investment in

various operating activities and other capital allocation activities.

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

of Details the Revenue, Significant expenses and Other Segment

Months Ended June 30, 2025

Months Ended June 30, 2024

Six Months Ended June 30,

Adjusted cost of revenues

Adjusted sales and marketing

Adjusted general and administrative

Adjusted depreciation and amortization

Adjusted impairement of ROU lease

Share based compensation

Change in fair value of warrant liability

Gain on disposal of fixed assets

Loss on issuance of warrants

Interest expense

Other income (expense), net

Income tax provision

Segment net loss

$ ( 1,119,000 )

$ ( 809,000 )

$ ( 6,119,000 )

$ ( 8,467,000 )

$ ( 1,636,000 )

$ ( 10,103,000 )

$ ( 8,486,000 )

Total segment assets

(1) Excludes depreciation

and amortization, share-based compensation, impairment of goodwill and impairment of a note receivable.

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

Schedule of Reconcilation of Segment Assets to Consolidated

Total segment assets

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

for the SemiCab segment.

Disaggregation

Company disaggregates revenues by product line and major geographic region.

Company’s product lines consist of AI-enabled software logistics services and home karaoke consumer products.

Revenue by product

line for the three and six months ended June 30, 2025 and 2024 was as follows:

of Revenue by Product Line

Three Months Ended

Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Karaoke machines

Licensed products

Kids youth electronics

Microphones and accessories

Music subscriptions

Logistics services

Total revenue

geographic region of sales is based primarily on where the product and services were delivered.

Revenue by geographic region for the

three and six months ended June 30, 2025 and 2024 was:

of Revenue by Revenue by Geographic Region

Geographic Area

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Three Months Ended

Six Months Ended

Geographic Area

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

North America

The Company’s income tax provision for the nine months ended September 30, 2024, was approximately $ 52,000 due

to income taxes due on amended federal tax returns filed for 2020 and 2021 which took into account the one-time refunds received from

the Employee Retention Credit program.

Company did not have any provision for income taxes for the three and nine months ended September 30, 2025 and 2024.

Company tax loss for income taxes for the three and nine months ended September 30, 2025 was $ 24,000 and $ 0 for the three and nine months

ended September 30, 2024.

The Company’s income tax expense differs from the expected tax expense based on statutory rates primarily

due to full valuation allowance for all of its subsidiaries for the three and nine months ended September 30, 2025 and 2024.

15 – Segment Information

On August 1, 2025, the

Company sold its Singing Machine business to Stingray USA.

Prior to this transaction, the Company operated two

reportable segments:

(i) the Singing Machine business, a home karaoke consumer products business, and (ii) the SemiCab business, an

AI-enabled software logistics and distribution platform.

Following the sale, the Company’s operations consist solely of its

SemiCab business.

The Company is therefore managed on a consolidated basis and now has a single operating and reportable segment.

a result of the sale, the operating results and cash flows of the Singing Machine business have been reclassified as discontinued

operations for all periods presented.

Additional information regarding the discontinued operations is provided in Note 19 –

Discontinued Operations .

In accordance with ASC

280, Segment Reporting, an operating segment is defined as a component of an enterprise that engages in business activities from which

it may earn revenues and incur expenses, for which discrete financial information is available, and whose operating results are regularly

reviewed by the CODM in allocating resources and assessing performance.

The Company’s

CODM, its Chief Executive Officer, reviews consolidated operating results including net sales, gross profit, loss from operations,

and net loss from continuing operations, as presented in the consolidated statements of operations.

The CODM also considers

consolidated operating expenses, non-financial information, and qualitative factors in evaluating performance, monitoring budgeted

to actual results, and making decisions regarding capital allocation and levels of investment in operating activities.

The CODM does not review segment asset information for purposes of allocating resources.

is attributed to geographic areas based on the location where services are rendered.

For the three and nine months ended September

30, 2025 and September 30, 2024, substantially all of the Company’s revenues were generated from customers located

16 – Concentrations, Risks and Uncertainties

11 unchanged sentences

arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.

Trade Policies

government administration and members of the U.S.

Congress have recently implemented significant changes in U.S.

trade policy and taken

certain actions that are impacting the Company’s business, including imposing tariffs on certain goods imported into the United

Some of these changes have triggered retaliatory actions by affected countries and may result in “trade wars” and

increased costs for goods imported into the United States.

All of the Company’s products are manufactured and imported from China

and the Company sells its products in Canada and other countries.

The implementation of tariffs has resulted in an increase in the cost

of the Company’s products.

If the Company is unable to mitigate these increased costs through price increases, it may experience

lower sales which would negatively impact its revenue, gross profit margin and results of operations.

Concentration

Company derives a majority of its revenue from sales by retailers of its home karaoke consumer products in North America sales of its

AI-enabled software logistics services in India.

The Company’s allowance for credit losses is based upon management’s estimates

and historical experience and reflects the fact that accounts receivable is concentrated with several large customers.

As of June 30,

2025, 17 % of accounts receivable were due from one customer in North America and 16 % of accounts receivable were due from one customer

in India that each individually owed more than 10% of the Company’s total accounts receivable.

At December 31, 2024, 68 % of accounts

receivable were due from three customers in North America that each individually owed more than 10% of the Company’s total accounts

derived from the Company’s top customer and top three customers collectively as a percentage of total net sales was 11 % and 66 %

of the Company’s revenue, respectively, for the three months ended June 30, 2025 and 2024, respectively.

Company derives a majority of its revenue from sales of its AI-enabled software logistics services in India.

The Company’s allowance

for credit losses is based upon management’s estimates and historical experience and reflects the fact that accounts receivable

is concentrated with several large customers.

As of September 30, 2025, 56 % of accounts receivable were due from two customers in India

that each individually owed more than 10% of the Company’s total accounts receivable.

At December 31, 2024, no customer individually

owed more than 10% of the Company’s total accounts receivable.

derived from the Company’s largest customer and three largest customers collectively as a percentage of total net sales was

31 % and 72 % of the Company’s revenue, respectively, for the three months ended September 30, 2025.

Revenue derived from the

Company’s top three customers collectively as a percentage of total net sales was 37 % and 71 % of the Company’s revenue, respectively,

for the six months ended June 30, 2025 and 2024, respectively.

The loss of any of these customers could have an adverse impact on the

from customers representing greater than 10% of total net sales that were derived from the Company’s top customer as a percentage

of total net sales for the three months ended June 30, 2025 was 11%.

Revenue from customers representing greater than 10% of total net

sales that were derived from the Company’s top three customers as a percentage of total net sales for the three months ended June

30, 2024 was 39 %, 14 %, and 13 %.

Revenue from customers representing greater than 10% of total net sales that were derived from the Company’s

top three customers as a percentage of total net sales for the six months ended June 30, 2025 was 10 %, 11 % and 16 %.

Company’s largest customer and three largest customers collectively as a percentage of total net sales was 31 % and 73 % of the

Company’s revenue, respectively, for the nine months ended September 30, 2025.

The loss of any of these customers could have

an adverse impact on the Company.

from customers representing greater than 10% of total net sales that were derived from the Company’s three largest customers

as a percentage of total net sales for the three months ended September 30, 2025 was 31 %, 30 % and 12 %.

Revenue from customers

representing greater than 10% of total net sales that were derived from the Company’s top three customers as a percentage of total

net sales for the six months ended June 30, 2024 was 50 %, 11 %, and 10 %.

The loss of any of these customers could have an adverse impact

on the Company.

representing greater than 10% of total net sales that were derived from the Company’s three largest customers as a percentage

of total net sales for the nine months ended September 30, 2025 was 32 %, 28 % and 13 %.

The loss of any of these customers could have

an adverse impact on the Company.

17 – Related Party Transactions

1 unchanged sentence

Company has a music subscription sharing agreement with Stingray Group.

For the three and six months ended June 30, 2025, the Company

For the three and nine months ended September 30, 2025, the Company

received music subscription revenue of $ 64,000 and $ 515,000 , respectively, from Stingray Group.

For the three and six months ended June

For the three and nine months ended September

30, 2024, the Company received music subscription revenue of $ 218,000 and $ 567,000 , respectively, from Stingray Group.

As of June 30,

As of September

30, 2025 and December 31, 2024, the Company had $ 0 and $ 212,000 , respectively, due from Stingray Group for music subscription reimbursement.

Company determined that SMCB, which was a subsidiary of SemiCab, Inc.

prior to the SemiCab Holdings’ acquisition of 99.99 % of the

prior to SemiCab Holdings’ acquisition of 99.99 % of the

equity shares of SMCB on May 2, 2025, was a VIE as the Company provides financial support to SMCB.

15 unchanged sentences

Accordingly, the Company has not consolidated SMCB’s results of operations

and financial position in its condensed consolidated financial statements.

and financial position in its condensed consolidated financial statements prior to May 2, 2025.

to the terms of the asset purchase agreement that the Company entered into on June 11, 2024, the Company entered into an option agreement

21 unchanged sentences

As a result, no such loans payable and loans receivable were outstanding on the Company’s condensed consolidated balance sheet

at June 30, 2025.

at September 30, 2025.

Also on May 2, 2025, revenue generated by SMCB for services performed by SMCB under the MSA of $ 304,000 , and expenses

2 unchanged sentences

As a result, no such revenue and expenses were reflected on the Company’s

condensed consolidated statements of operations for the three and six months ended June 30, 2025.

condensed consolidated statements of operations for the three and nine months ended September 30, 2025.

18 – Acquisition of SMCB

57 unchanged sentences

do not include anticipated combined effects or other expected benefits of the acquisition.

The pro forma results for the six months ended

June 30, 2025 and 2024 reflect the combined performance of the Company and the SMCB business for that period.

The unaudited pro forma

information is based on available data and certain assumptions that the Company believes are reasonable given the circumstances.

actual results may differ materially from the assumptions used in the accompanying unaudited pro forma financial information.

This selected

unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not intended to represent

what the actual consolidated results of operations would have been had the acquisition date occurred on January 1, 2024, nor does it

attempt to forecast future consolidated results of operations.

The pro forma results for the nine months

ended September 30, 2025 and 2024 reflect the combined performance of the Company and the SMCB business for that period.

The unaudited

pro forma information is based on available data and certain assumptions that the Company believes are reasonable given the circumstances.

However, actual results may differ materially from the assumptions used in the accompanying unaudited pro forma financial information.

This selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not intended

to represent what the actual consolidated results of operations would have been had the acquisition date occurred on January 1, 2024,

nor does it attempt to forecast future consolidated results of operations.

of Pro Forma Financial Information

June 30, 2025

June 30, 2024

Six Months Ended

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 30, 2024

Operating loss from continuing operations

3 unchanged sentences

$ ( 10,841,000 )

Subsequent Events

Capital Financing Transaction

July 2025, the Company entered into a business loan and security agreement with Agile Capital Funding, LLC (“Agile Funding”)

pursuant to which it issued a promissory note to Agile Funding in the principal amount of $ 368,000 .

The note is subject to a one-time interest charge of $ 162,000 and is payable in 28 weekly installments of $ 19,000 commencing on July

The Company received net proceeds of $ 350,000 after deductions of $ 18,000 for administrative agent fees.

of Singing Machine Business

19 – Discontinued Operations

August 1, 2025, the Company entered into an asset purchase agreement with SMC and Stingray Music USA, Inc.

3 unchanged sentences

The transaction closed on August 1, 2025.

The Company determined that

the sale of the Singing Machine business met the criteria under Accounting Standards Codification (“ASC”) 205-20, Presentation

of Financial Statements – Discontinued Operations (“ASC 205-20”), to be classified as a discontinued operation

as the sale represented a strategic shift that will have a significant effect on the Company’s operations and financial results.

Accordingly, the condensed consolidated balance sheets, the condensed consolidated statements of operations and the condensed consolidated

statement of cash flows have been adjusted for prior periods to reflect the Singing Machine business as a discontinued operation.

The following table summarizes

the results of the Singing Machine business as a discontinued operation in the condensed consolidated statements of operations for the

three and nine months ended September 30, 2025 and 2024:

Holdings, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

of Discontinued Operation Income Statement, Assets and Liabilities in the Condensed Consolidated Statements of

For the Three Months Ended

For the Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Cost of Goods Sold

Operating Expenses

Selling expenses

General and administrative expenses

Net (gain) loss on early termination of operating lease

( 3,874,000 )

Total Operating Expenses

Income (Loss) from Operations

( 2,268,000 )

( 4,323,000 )

Other Expenses

Interest expense

Loss on sale of Singing Machine business

Total Other Expenses

Income (Loss) Before Income Tax Benefit

( 1,100,000 )

( 2,372,000 )

( 4,323,000 )

Net Income (Loss) from Discontinued Operations

$ ( 1,100,000 )

$ ( 2,372,000 )

$ ( 4,323,000 )

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

September 30, 2025

December 31, 2024

Current Assets

Accounts receivable, net

Accounts receivable, related party

Accounts receivable

Returns asset

Prepaid expenses and other current assets

Total Current Assets of Discontinued Operations

Property and equipment, net

Other non-current assets

Total Non-Current Assets of Discontinued Operations

Current Liabilities

Accounts payable

Accrued expenses

Refund due to customer

Reserve for sales returns

Other current liabilities

Total Current Liabilities of Discontinued Operations

20 – Subsequent Events

Repayment of Notes Payable to Related Parties

On October 8, 2025, the Company

repaid two unsecured loans that it had assumed in connection with the acquisition of SemiCab, Inc.’s business on July 3, 2024.

The repaid loans consisted of:

(i) a loan made to SemiCab, Inc.

by Vivek Sehgal on April 17, 2023, and (ii) a loan made to SemiCab, Inc.

by Ajesh Kapoor on May 5, 2023, each in the original principal amount of $ 50,000 .

Kapoor serves as the Chief Executive Officer and

Chief Technology Officer of SemiCab Holdings and as a member of the Board of Directors of the Company, and Mr.

Sehgal serves as the Chief

Product Officer of SemiCab Holdings.

Streeterville Capital Financing

On November 13, 2025, the Company

entered into Secured Pre-Paid Purchase #2 with Streeterville Capital, LLC, a Utah limited liability company (“Streeterville”),

under that certain securities purchase agreement (the “Securities Purchase Agreement”), dated August 21, 2025, between us

and Streeterville.

Under the Securities Purchase Agreement, the Company agreed to issue and sell shares of its common stock to Streeterville

in one or more pre-paid purchases (each, a “Pre-Paid Purchase” and collectively, the “Pre-Paid Purchases”) for

an aggregate purchase price of up to $ 20,000,000 .

Secured Pre-Paid Purchase #2 provides for a second Pre-Paid Purchase in the principal

amount of $ 5,450,000 , before deducting an original issue discount of $ 450,000 (the “Second Pre-Paid Purchase”).

Pre-Paid Purchase accrues interest at the rate of nine percent ( 9 % ) per annum and has a maturity date of three years.

The Second Pre-Paid Purchase is

similar to the first Pre-Paid Purchase that the Company completed on August 21, 2025, however the Second Pre-Paid Purchase is secured

by cash in an amount not less than the lesser of:

(i) $ 4,500,000 , and (ii) 90 % of the then-current outstanding balance of the Second Pre-Paid

Purchase (the “Minimum Balance Amount”).

The Minimum Balance Amount is being held in a deposit account (the “DACA Account”)

held by RIME Holdings, LLC, a Utah limited liability company and wholly-owned subsidiary of the Company that the Company formed in connection

with this transaction (“RIME Holdings”), pursuant to a Deposit Account Control Agreement, dated November 13, 2025, by and

among RIME Holdings, Lakeside Bank, an Illinois banking company, and Streeterville (the “DACA Agreement”).

Accordingly, of

the $ 5,000,000 proceeds that the Company received from the Second Pre-Paid Purchase, $ 4,500,000 were placed in the DACA Account.

The Company has the right to use

funds in the DACA Account to repay any portion of the outstanding balance of the Second Pre-Paid Purchase, but only so long as the payment

does not cause the outstanding balance to drop below the Minimum Balance Amount.

As long as no event of default has occurred, the Company

may withdraw from the Deposit Account any funds in excess of the Minimum Balance Amount.

The Second Pre-Paid Purchase is secured by the

Guaranty, the Security Agreement, and the IP Security Agreement (each as defined in the Securities Purchase Agreement).

In addition, RIME

Holdings executed a guaranty of the obligations outstanding under the Second Pre-Paid Purchase for the benefit of Streeterville.

The Company entered into a new

placement agency agreement with Univest Securities, LLC to serve as the placement agent in the offering (the “Placement Agent”)

that supersedes the placement agency agreement that the Company previously entered into with them on August 21, 2025 in connection with

the offering.

The Company agreed to pay the Placement Agent a cash fee equal to eight percent ( 8 % ) of the aggregate gross proceeds received

by the Company from any Pre-Paid Purchases that it completes and reimburse the Placement Agent for legal fees in the amount of $ 50,000 .

The cash fee for the Second Pre-Paid Purchase must be paid on February 28, 2026;

provided, however , that the Company may request

that the payment date be extended by 90 days.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements