What changed in this filing

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Item 9A. Controls and Procedures

2026-04-02 compared with 2025-04-15 · 2060 added, 1342 removed, 1060 unchanged (76% of the section changed)

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Internal control over financial reporting includes policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect

the transactions and dispositions of our assets;

reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance

with GAAP, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors;

reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could

have a material effect on our consolidated financial statements.

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our

provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements

in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorization of our management

and directors;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets

that could have a material effect on our consolidated financial statements.

control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent

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existed in the following areas as of December 31, 2025:

lacked sufficient resources in our accounting department restricting our ability to review and approve certain material journal entries

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.

lacked sufficient resources in our accounting department, which resulted in our ability to have proper segregation of duties between

We lacked sufficient resources in our accounting department, which resulted in our ability to have proper segregation of duties between

the preparation, review and approval certain material reconciliations related to financial reporting in a timely manner.

to our lack of sufficient resource restrictions in our accounting department, we have not established a three-way match of documents

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.

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the existence of these material weaknesses in our internal controls, we believe that our consolidated financial statements fairly present,

in all material respects, our balance sheets at December 31, 2024 and 2023, our statements of operations, stockholders’ deficit

and cash flows for the year ended December 31, 2024, and our statements of operations, stockholders’ equity and cash flows the nine-month period ended December 31, 2023 in conformity with GAAP.

in all material respects, our balance sheets at December 31, 2025 and 2024, and our statements of operations, stockholders’ deficit

and cash flows for the years ended December 31, 2025 and 2024.

annual report does not include an attestation report of our independent registered public accounting firm regarding internal control

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

Positions Held

Gary Atkinson

Chief Financial Officer, Secretary and Director

Chief Financial Officer and General Counsel

Bernardo Melo

Chief Revenue Officer and Director

Harvey Judkowitz

Mathieu Peloquin

Executive Officer, Secretary and Chairman of the Board of Directors

Financial Officer and General Counsel

believe that our board of directors should be composed of individuals with sophistication and experience in many substantive areas that

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(ii) strategic, financial and operational planning;

(iii) AI technology and consumer electronics industry experience;

(iii) AI technology and freight, logistics and distribution

industry experience;

(iv) corporate restructuring and performance enhancement;

(v) corporate finance;

and (vi) experience as a board member of other corporations.

and (vi) experience as a board

member of other corporations.

These areas are in addition to the personal qualifications described in this section.

We believe that our current board members possess

the professional and personal qualifications necessary for board service and have highlighted particularly noteworthy attributes for

these board members below.

We believe that our

current board members possess the professional and personal qualifications necessary for board service and have highlighted particularly

noteworthy attributes for these board members below.

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

Atkinson has served as our Chief Executive Officer since May 2012 and as a member of our board of directors since August 2022.

Atkinson served as our Interim Chief Executive Officer from November 2009 to May 2012 and as our General Counsel from January

2008 to November 2009.

Atkinson has served as our Chief Executive Officer since May 2012, as our Secretary since January 2008, and as a member of our board

of directors since August 2022.

Prior to that, Mr.

Atkinson served as our Interim Chief Executive Officer from November 2009 to May 2012

and as our General Counsel from January 2008 to November 2009.

Atkinson is a licensed attorney in Florida and Georgia.

He graduated from the University of Rochester with

a bachelor’s degree in economics and received a Juris Doctorate and Masters in Business Administration from Case Western Reserve

University School of Law and Weatherhead School of Management.

from the University of Rochester with a bachelor’s degree in economics and received a Juris Doctorate and Masters in Business Administration

from Case Western Reserve University School of Law and Weatherhead School of Management.

believe that Mr.

Atkinson is qualified to serve on our board of directors because of his strong leadership, business acumen and analytical

skills along with his extensive experience in the consumer electronics industry.

Melo has served as our Chief Revenue Officer since April 2022 and served as our Vice President of Global Sales and Marketing from

2008 to April 2022.

He has also served as a member of our board of directors since July 2022.

skills along with his extensive experience with capital markets.

Melo has served as a member of our board of directors since July 2022.

He has also served as our Chief Revenue Officer from April

2022 to August 2025 and as our Vice President of Global Sales and Marketing from 2008 to April 2022.

He has also served as a member of

our board of directors since July 2022.

Prior to that, Mr.

Melo held dual roles

with us managing the operations, licensing and sales of the music division while concentrating on hardware sales for the Latin America

and Canadian market as well as key U.S.

accounts such as Walmart.

Melo held dual roles with us managing the operations, licensing and sales

of the music division while concentrating on hardware sales for the Latin America and Canadian market as well as key U.S.

accounts such

believe that Mr.

Melo is qualified to serve as a member of our board of directors because of his sales and marketing expertise as well

as his significant experience in the consumer electronics industry.

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

Judkowitz has served as a member of our board of directors since March 2004 and serves as the Chairman of our Audit Committee.

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skills and his accounting expertise.

Kling has served as a member of our board of directors since May 2017.

Kling has spent his entire career in the toy industry.

Kling most recently served as an M&A consultant and served as a member of the board of directors of Russ Berrie & Co (currently

known as Kids Brands, Inc.), a designer, importer, marketer and distributor of infant and juvenile consumer products, for 21 years advising

on the acquisition of several toy companies.

Kling also served as a member of the board of directors of Crown Crafts, a large distributor

of infant, toddler, and juvenile consumer products, and Lancit Media Entertainment, a children’s, and family media production company

that was formerly listed on the Nasdaq.

Prior to that, he served as the Chief Executive Officer of View-Master Ideal, an iconic stereoscopic

toy company that was publicly traded on the Nasdaq and which was later acquired by Tyco Toys in 1989.

Kling has been involved

in many major toy company acquisitions of brands such as Melissa & Doug and Brio.

Kapoor has served as the Chief Executive Officer of SemiCab Holdings, a subsidiary of ours that owns and operates our SemiCab AI

logistics and distribution business, since July 2024 and is the Founder and Chief Executive Officer of SemiCab, Inc., a company that

he founded in July 2018 that previously owned our SemiCab AI logistics and distribution business.

He has also served as a member of

our board of directors since May 2025.

From April 2015 to July 2018, Mr.

Kapoor served as the Vice President of Product Management

of GT Nexus, a division of Infor, the world’s largest cloud-based B2B multi-enterprise network and execution platform for

global trade and supply chain management, and from April 2012 to March 2015, served as a Senior Director of GT Nexus.

Earlier in his

Kapoor served as Global Head of Supply Chain Advisory Services of the Retail, CPG and Transportation Industry segments

of Wipro Technologies, a multi-national technology company that provides information technology, consulting and business process

He was also the Co-Founder and Chief Technology Officer of GEOCOMtms, a division of Blue Yonder Group, Inc.

that provides

optimization software to manage multiple-stop daily delivery fleet routing and scheduling.

Kapoor received a BE in Mechanical

Engineering from the Indian Institute of Technology, Roorkee, an MBA from Panjab University, and an MS in Operations Research from

the Georgia Institute of Technology.

believe that Mr.

Kling is qualified to serve as a member of our board of directors because of his success and relationships in the toy

industry, his deep understanding of consumer products, and his experience with mergers and acquisitions in the toy industry.

Peloquin has served as a member of our board of directors since December 2021.

Peloquin has served as the Senior Vice-President,

Marketing and Communications at Stingray Group since 2013 and oversees marketing, communication strategies, content and investor relations.

Prior to joining Stingray Group, Mr.

Peloquin served as the Vice President of Marketing at Transcontinental Media Inc.

and Vice President

of Transcontinental Media Inc.’s Digital Marketing Solutions Group from 2010 to 2013.

He also held several executive positions

at Reader’s Digest Magazines Canada Limited and co-founded Equinox Marketing Services.

Peloquin is a certified public account,

certified management accountant, and holds a Bachelor of Commerce from the School of Management of the Université du Québec

Kapoor is qualified to serve a member of our board of directors because of his extensive logistics and supply chain

technology innovation and leadership experience.

Thorn has served as a member of our board of directors since October 2025.

Thorn has served as the President and Chief Operating

Officer of InvitedHome, a leading luxury hospitality and real estate services company operating in premier U.S.

ski destinations, since

October 2024.

Prior to that, he served as the Co-Founder and Chief Strategy Officer of Open Book Extracts, a cGMP-certified manufacturer

of premium federally legal hemp-derived cannabinoid ingredients and wellness products, from February 2019 to October 2024.

his career, Scott served as a Managing Director of Douglas Wilson Companies, a leading provider of specialized business, receivership,

and real estate services.

believe that Mr.

Peloquin is qualified to serve as a member of our board of directors because of his more than 20 years of experience

as an expert marketer, strategist, and inspiring leader.

Foreman has served as a member of our board of directors since May 2022.

Foreman has served as the Chief Executive Officer

of Basic Fun!, which sells children’s toys under the Tonka™, Carebears™, K’NEX™, Lincoln Logs™, and

Playhut™ brands, since he founded the company in 2009.

Prior to that, he founded several toy companies, including Play-By-Play

Toy’s and Novelties, a designer and distributor of stuffed toys, and more recently Play Along Toys, a leading toy company which

was subsequently sold to Jakks Pacific in 2004.

He currently chairs the Toy Industry trade show committee which is responsible for the

world-famous NY Toy Fair, and has also served on the boards of directors of the Toy Association and Licensing Merchandisers association.

Thorn is qualified to serve as a member of our board of directors because of his substantial experience as a strategic

thought leader executing aggressive business and revenue growth strategies for early-stage, high-growth companies.

Gupta has served as a member of our board of directors since October 2025.

Gupta is a seasoned global technology and business

leader with more than 20 years of experience driving innovation, operational excellence, and large-scale digital transformation across

the public and private sectors.

He has served as the Service Line Leader for Application Operations – Public Markets (US) at IBM,

a global technology innovator, since April 2025.

He has also served as a Project Executive for California’s Medicaid Program since

Earlier in his career, Mr.

Gupta held senior leadership roles at Cambridge Solutions, a leading provider of software solutions

for supply chain, purchasing, and performance management, and Talisma Corporation, a leading provider of a digital customer engagement

platform, and served as a Manager at KPMG LLP, a leading global provider of audit, tax, and advisory services.

believe that Mr.

Foreman is qualified to serve as a member of our board of directors because of his extensive history and experience

in the toy business, including his deep knowledge of licensing, operations, sales and marketing, M&A, and capital markets.

Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become directors.

The Nominating

and Corporate Governance Committee seeks to identify director candidates based on input provided by several sources, including:

of our Nominating and Corporate Governance Committee, (ii) our other directors, (iii) our stockholders, (iv) our Chief Executive Officer

and Chairman of our board of directors, and (v) third parties such as professional search firms.

In evaluating potential candidates for

director, the Nominating Committee considers the entirety of each candidate’s credentials.

Qualifications for consideration as

a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of

our board of directors.

Gupta is qualified to serve as a member of our board of directors because of his extensive experience as a global technology

leader offering deep technical expertise and strategic business acumen.

Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things:

(i) identifying

and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors,

(ii) recommending to the Board the approval of nominees for director, (iii) developing and recommending to our board of directors a set

of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.

evaluating potential candidates for director, the Nominating Committee considers the entirety of each candidate’s credentials.

Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement

to the existing composition of our board of directors.

However, at a minimum, candidates for director must possess:

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of the Board of Directors

Board has established an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.

Each of these committees

operates pursuant to a formal written charter.

The charters for these committees, which have been adopted by our Board, contain a detailed

description of the respective committee’s duties and responsibilities and are available on our website at https://algoholdings.com/governance.

is a description of each committee of the Board.

Each of the committees has authority to engage legal counsel or other experts or consultants

as it deems appropriate to carry out its responsibilities.

The Board has determined that each member of the Audit Committee, Compensation

Committee and Nominating and Corporate Governance Committee meet the independence requirements under the Nasdaq’s current listing

standards and each member is free of any relationship that would interfere with his individual exercise of independent judgment.

members of our Audit Committee are Messrs.

Judkowitz, Kling and Foreman.

Judkowitz serves as the Chairperson of our Audit Committee.

Judkowitz, Thorn, and Gupta.

Judkowitz serves as the Chairman of our Audit Committee.

Each of Messrs.

Judkowitz, Kling and Foreman is independent under the rules and regulations of the SEC and the listing standards of the

Judkowitz, Thorn, and Gupta is independent under the rules and regulations of the SEC and the listing standards of the

Nasdaq applicable to audit committee members.

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of concerns regarding questionable accounting or auditing matters.

The Audit Committee charter can be found online at https://ir.algoholdings.com/investor-governance.

The Audit Committee charter can be found online at https://algoholdings.com/governance.

members of our Compensation Committee are Messrs.

Judkowitz, Kling and Foreman.

Kling serving as the Chairman of our Compensation

Our Compensation Committee has the responsibility for, among other things, (i) reviewing and approving the chief executive

officer’s compensation based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the

Board the compensation of all other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and

equity plans, (iv) reviewing and discussing with management compensation information and related information to be included in this report

and proxy statements, and (v) reviewing and recommending to the board of directors for approval procedures relating to say on pay votes.

The Compensation Committee charter can be found online at https://ir.algoholdings.com/investor-governance.

Judkowitz, Thorn and Gupta.

Judkowitz serves as the Chairman of our Compensation

Each of Messrs.

Judkowitz, Thorn and Gupta is independent under the rules and regulations of the SEC and the listing standards

of the Nasdaq applicable to compensation committee members.

Our Compensation Committee has the responsibility for, among other things:

(i) reviewing and approving the chief executive officer’s compensation based on an evaluation in light of corporate goals and objectives,

(ii) reviewing and recommending to the Board the compensation of all other executive officers, (iii) reviewing and recommending to the

Board incentive compensation plans and equity plans, (iv) reviewing and discussing with management compensation information and related

information to be included in this report and proxy statements, and (v) reviewing and recommending to the board of directors for approval

procedures relating to say on pay votes.

The Compensation Committee charter can be found online at https://algoholdings.com/governance.

and Corporate Governance Committee

members of our Nominating and Corporate Governance Committee are Messrs.

Judkowitz, Kling and Foreman.

Foreman serves as the Chairman

Judkowitz, Gupta and Thorn.

Thorn serves as the Chairman

of our Nominating and Corporate Governance Committee.

Our Nominating and Corporate Governance Committee has the responsibility relating

to assisting the Board in, among other things, (i) identifying and screening individuals qualified to become members of our board of

directors, consistent with criteria approved by our board of directors, (ii) recommending to the Board the approval of nominees for director,

(ii) developing and recommending to our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation

of our board of director.

The Nominating and Corporate Governance Committee charter can be found online at https://ir.algoholdings.com/investor-governance.

members of our Executive Committee are Messrs.

Foreman, Judkowitz, Peloquin and Atkinson.

Atkinson serves as the Chairman of

our Executive Committee.

Our Executive Committee has the responsibility for evaluating critical matters on behalf of our full board of

This includes but is not limited to:

(i) reviewing our monthly financial and operational performance, (ii) reviewing and recommending

prospective capital markets activities, including equity offerings, debt issuances, and other financings, (iii) evaluating and recommending

potential business development activities such as strategic partnerships, joint ventures, mergers, acquisitions, and divestitures, and

(iv) other strategic initiatives.

Atkinson has served as our Chief Executive Officer since May 2012 and as a member of our board of directors since August 2022.

background appears above under “ – Board of Directors” .

Each of Messrs.

Judkowitz, Gupta and Thorn is independent under the rules and regulations

of the SEC and the listing standards of the Nasdaq applicable to nominating committee members.

Our Nominating and Corporate Governance

Committee has the responsibility relating to assisting the Board in, among other things:

(i) identifying and screening individuals qualified

to become members of our board of directors, consistent with criteria approved by our board of directors, (ii) recommending to the Board

the approval of nominees for director, (iii) developing and recommending to our board of directors a set of corporate governance guidelines,

and (iv) overseeing the evaluation of our board of director.

The Nominating and Corporate Governance Committee charter can be found online

at https://algoholdings.com/governance.

Atkinson has served as our Chief Executive Officer since May 2012, as our Secretary since January 2008, and as a member of our board

of directors since August 2022.

His background appears above under “ – Board of Directors” .

Andre has served as our Chief Financial Officer and General Counsel since February 2025.

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as a corporate & securities attorney for regional and international law firms.

Melo has served as our Chief Revenue Officer since April 2022 and as a member of our board of directors since July 2022.

His background

appears above under “ – Board of Directors” .

Family Relationships

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and (v) accountability for adherence

Our Code of Ethics is available on our website at https://ir.algoholdings.com/investor-governance.

Our Code of Ethics is available on our website at https://algoholdings.com/governance.

16(a) Beneficial Ownership Reporting Compliance

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all such forms required to be filed pursuant to Section 16(a) of the Exchange Act during the year ended December 31, 2024 were timely

filed by the officers, directors, and security holders required to file such forms.

filed by the officers, directors, and security holders required to file such forms, with the exception of the following:

(i) Harvey Judkowitz

failed to file a Form 4 for the receipt of a stock option for 19,532 shares of our common stock and a restricted stock award for 19,532

shares of our common stock on November 20, 2025;

(ii) Bernardo Melo failed to file a Form 4 for the receipt of a stock option for 39,063 shares of our common stock

and a restricted stock award for 19,532 shares of our common stock on November 20, 2025;

(iii) Scott Thorn failed to file a Form 4 for

the receipt of a stock option for 39,063 shares of our common stock and a restricted stock award for 19,532 shares of our common stock

on November 20, 2025, and (iv) Kapil Gupta failed to file a Form 4 for the receipt of a stock option for 39,063 shares of our common

stock and a restricted stock award for 19,532 shares of our common stock on November 20, 2025.

Judkowitz, Melo and Thorn each

subsequently filed a Form 4 to disclose these transactions.

Trading Policy and Procedures

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following table provides information regarding the compensation earned by or paid to our named executive officers during our fiscal years

ended December 31, 2024 and the nine-month transition period ended December 31, 2023.

and Principal Position

ended December 31, 2025 and 2024.

Name and Principal Position

Year / Period

Chief Executive Officer

Alex Andre (3)

Chief Financial Officer & General Counsel

Richard Perez (4)

Chief Financial Officer

Lionel Marquis (3)

Former Chief Financial Officer

Bernardo Melo (5)

Chief Revenue Officer

the grant date fair value of the awards calculated in accordance with ASC Topic 718, Compensation – Stock Compensation .

A summary of the assumptions made in the valuation of these awards is provided in our consolidated financial statements beginning

on page F-1 of this report.

of 401(k) matching contributions that we made during the respective years.

Andre was appointed as our Chief Financial Officer and General Counsel on February 13, 2025.

Perez was appointed as our Chief Financial Officer on January 3, 2024 and was terminated as our Chief Financial Officer on February

Marquis resigned as our Chief Financial Officer on December 31, 2023.

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

Option and Stock Awards

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(i) a base salary per annum of $215,000 that automatically increases to $225,000 on the first anniversary of the effective

date (the “Base Salary”);

(ii) eligibility to earn an annual bonus (the “Annual Bonus”);

(iii) eligibility to

participate in our 2022 Equity Incentive Plan, or any successor plan.

(ii) eligibility to earn an annual bonus;

and (iii) eligibility to participate in our 2022 Equity Incentive Plan, or any successor

the event the employment of the executives is terminated by us without “Cause” or by the executives for “Good Reason”

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The employment

Agreements also provides for payments to the executive of certain amounts in the event of the executive’s death or disability (as

defined in the Employment Agreement).

agreements also provide for payments to the executive of certain amounts in the event of the executive’s death or disability (as

defined in the employment agreements).

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

February 13, 2025, we entered into an employment agreement with Alex Andre to serve as our Chief Financial Officer and General Counsel.

Under the terms of the agreement, we agreed to pay Mr.

Andre an annual base salary of $275,000 which automatically increases to $300,000

on the six-month anniversary of the effective date.

Andre is eligible to receive an annual bonus of up to 30% of his annual base

The agreement is for a term of three years with automatic renewals for successive one-year terms, unless either party provides at least

90 days’ notice of its intention not to extend.

the terms of the agreement, we agreed to pay Mr.

Andre an annual base salary of $275,000 which automatically increases to $300,000 on

the six-month anniversary of the effective date.

Andre is eligible to receive an annual bonus of up to 30% of his annual base salary.

Andre received a non-qualified stock option to purchase 23,818 shares of our common stock and a restricted stock award for 23,818

shares of our common stock on February 13, 2025.

The option has a ten-year term, subject to any earlier termination following

cessation of Mr.

Andre’s service with us, and an exercise price per share equal to the closing price of our common stock as reported

by the Nasdaq on February 13, 2025.

The restricted stock award and option shall each vest over four years as follows:

(a) 25% of the

shares underlying the restricted stock award and option shall vest on the first anniversary of the grant date;

and (b) six and one-quarter

percent (6.25%) of the shares underlying the restricted stock award and option shall vest each quarter thereafter, subject to Mr.

continued service with us through each applicable vesting date.

The option has a ten-year term, subject to any earlier termination following cessation

Andre’s service with us, and an exercise price per share equal to the closing price of our common stock as reported by the

Nasdaq on February 13, 2025.

The restricted stock award and option vest over four years as follows:

(a) 25% of the shares underlying

the restricted stock award and option shall vest on the first anniversary of the grant date;

and (b) six and one-quarter percent (6.25%)

of the shares underlying the restricted stock award and option shall vest each quarter thereafter, subject to Mr.

Andre’s continued

service with us through each applicable vesting date.

February 23, 2026, we entered into an amended and restated employment agreement with Gary Atkinson to continue serving as our Chief Executive

The agreement supersedes and replaces the employment agreement that we entered into with Mr.

Atkinson on April 22, 2022.

agreement is for a term of three years with automatic renewals for successive one-year terms, unless either party provides at least 90

days’ notice of its intention not to extend.

the terms of the agreement, we agreed to pay Mr.

Atkinson an annual a base salary of $360,000 per year.

Atkinson has the right to

earn an annual bonus of up to 50% of the base salary, of which amount 50% will be subject to his continued employment with us and the

remaining 50% will be subject to the satisfaction of certain performance objectives.

Atkinson also has the right to receive a bonus

if, and each time, a change of control occurs during the term of his employment in a lump sum payment equal to his base salary and annual

bonus for the year in which the change of control occurs.

to the terms of the Agreement, on February 23, 2026, we granted Mr.

Atkinson a stock option to purchase 740,597 shares of our common

stock under the 2022 Plan.

The stock option has an exercise price per share of $1.84 and vests in equal quarterly installments over a

period of four years commencing on February 23, 2026.

April 22, 2022, our Board of Directors approved a bonus plan for our executive officers.

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

Awards ($) (1)

Harvey Judkowitz

Mathieu Peloquin

Gary Atkinson

Ajesh Kapoor (2)

Bernardo Melo

James Turner (2)

Kenneth Cragun (2)

Henry Nisser (2)

Scott Thorn (3)

Kapil Gupta (3)

Mathieu Peloquin (3)

Jay Foreman (4)

Joe Kling (5)

the grant date fair value of the awards calculated in accordance with ASC Topic 718, Compensation – Stock Compensation .

A summary of the assumptions made in the valuation of these awards is provided herein under Item 7.

Management’s Discussion

and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and in our consolidated financial

statements beginning on page F-1 of this report.

September 5, 2024, Messrs.

Turner, Cragun and Nisser resigned from our board of directors.

compensate the members of our board of directors as follows:

A summary of the assumptions made in the valuation of these awards is provided in our consolidated financial statements beginning

on page F-1 of this report.

Kapoor was appointed to our board of directors on May 19, 2025.

Thorn and Gupta were appointed to our board of directors on October 6, 2025, and Mr.

Peloquin resigned from our board of directors

on October 6, 2025.

Foreman resigned from our board of directors on November 14, 2025.

Kling resigned from our board of directors on August 21, 2025.

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

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

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

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

of our board of directors as follows:

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

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

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

An annual cash retainer of $5,000 for each committee of the board of directors upon which the board member serves, payable in quarterly

installments on the first day of each quarter in advance of service for such quarter.

An initial grant of a stock option with a value at the time of issuance of $25,000 for each individual who becomes a non-employee

director due to either:

(i) the initial appointment or election to the board of directors, or (ii) a change in status that the board

of directors determines results in a previously ineligible director qualifying as a non-employee director.

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

is requested.

February 23, 2026, our board of directors amended the director compensation policy to provide that, with respect to the annual grants

of a restricted stock award and a stock option each having a value at the time of issuance of $25,000, non-employee directors would instead

be given an annual grant of equity having a value at the time of issuance of $50,000 and that they would have the right to choose what

amount, if any, they would like to receive in the form of a restricted stock award and/or a stock option.

January 1, 2001, we adopted a voluntary 401(k) plan.

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The matching contributions that we make are vested in full immediately.

Board has adopted a clawback policy relating to recovery of erroneously awarded compensation that complies with the Nasdaq clawback rules

which are required by SEC Rule 10D-1.

Under this policy, in the event that we are required to prepare an accounting restatement of our

financial statements due to our material noncompliance with any financial reporting requirement under the securities laws, the policy

requires that the administrator of the policy, to the extent legally permitted and pursuant to the terms of the policy, recover from

current and former Section 16 officers any incentive-based compensation, as defined in Nasdaq’s clawback rules, received by such

officers that exceeds the amount of incentive-based compensation that otherwise would have been received had such incentive based compensation

been determined according to the applicable accounting restatement.

A copy of our clawback policy is attached hereto as Exhibit 97.

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

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and compensation committee to prevent the improper use of material nonpublic information in connection with the granting of equity awards

include consultation with legal counsel and, where appropriate, the delay of the grant of applicable equity awards until the public

disclosure of such material nonpublic information has been completed.

are committed to maintaining transparency in its executive compensation practices and to making equity awards in a manner that is not

include consultation with legal counsel and, where appropriate, the delay of the grant of applicable equity awards until the public disclosure

of such material nonpublic information has been completed.

are committed to maintaining transparency in our executive compensation practices and to making equity awards in a manner that is not

influenced by the timing of the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

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

following table and the notes thereto set forth, as of April 14, 2025, certain information with respect to the beneficial ownership of:

following table and the notes thereto set forth, as of March 27, 2026, certain information with respect to the beneficial ownership of:

(i) each of our named executive officers, (ii) each of our directors, (iii) each of our named executive officers and directors as a group,

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and, in accordance therewith, includes all shares of our common stock that may be acquired by such beneficial owners within 60 days of

April 14, 2025 upon the exercise or conversion of any options, warrants or other convertible securities.

March 27, 2026 upon the exercise or conversion of any options, warrants or other convertible securities.

Unless otherwise indicated and

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Fort Lauderdale, FL 33309.

Name and Address of Beneficial Owner

and Address of Beneficial Owner

Amount and Nature

of Beneficial

Ownership (1)

Gary Atkinson (2)

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Harvey Judkowitz (5)

Joseph Kling (2)

Mathieu Peloquin (2)

Jay Foreman (2)

Scott Thorn (6)

Kapil Gupta (7)

All officers and directors as a group (7 persons)

Less than one percent.

This table has been prepared based on 2,394,829 shares of our common stock outstanding on April 14, 2025.

Includes for the applicable person the following outstanding stock options to purchase shares of our common stock that are underlying

stock option awards issued under the 2022 Plan and other stock option awards which will be vested and exercisable within 60 days of April

(i) 101 shares of common stock underlying stock options held by Gary Atkinson, (ii) 118 shares of common stock underlying stock

options held by Bernardo Melo, (iii) 29 shares of common stock underlying stock options held by Harvey Judkowitz, (iv) 22 shares of common

stock underlying stock options held by Joseph Kling, and (v) 83 shares of common stock underlying stock options held by each of Mathieu

Peloquin and Jay Foreman.

This table has been prepared based on 14,651,665 shares of our common stock outstanding on March 27, 2026.

Includes 46,388 shares of common stock underlying stock options issued under the 2022 Plan.

Includes a restricted stock award for 23,818 shares of common stock for which Mr.

Andre holds the voting rights.

Andre holds the voting rights and 22,055 shares of

common stock underlying stock options, all of which were issued under the 2022 Plan.

Includes a restricted stock award for 9,766 shares of common stock for which Mr.

Melo holds the voting rights and 19,768 shares of common

stock underlying stock options, all of which were issued under the 2022 Plan.

Includes a restricted stock award for 9,766 shares of common stock for which Mr.

Judkowitz holds the voting rights and 9,795 shares of

common stock underlying stock options, all of which were issued under the 2022 Plan.

Includes a restricted stock award for 9,766 shares of common stock for which Mr.

Thorn holds the voting rights and 19,532 shares of common

stock underlying stock options, all of which were issued under the 2022 Plan.

Includes a restricted stock award for 9,766 shares of common stock for which Mr.

Gupta holds the voting rights and 19,532 shares of common

stock underlying stock options, all of which were issued under the 2022 Plan.

Equity Incentive Plan

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awards and other stock or cash-based awards, to our employees, officers, directors, consultants, agents, advisors, and independent contractors.

maximum number of shares of common stock that was initially available for issuance under the plan was 1,167 shares of common stock.

the first day of each of our fiscal years thereafter, this number is increased by the lesser of:

(i) five percent of the number of shares

of our common stock that were outstanding on the last day of our immediately preceding fiscal year, calculated on a fully diluted, (ii)

number of shares of common stock that was initially available for issuance under the plan was 1,167 shares of common stock.

day of each of our fiscal years thereafter, this number is increased by the lesser of:

(i) five percent of the number of shares of our

common stock that were outstanding on the last day of our immediately preceding fiscal year, calculated on a fully diluted, (ii) 167

shares, and (iii) such lesser number as our board of directors may determine.

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under the plan.

of December 31, 2024, there were 1,500 shares of common stock authorized for issuance under the plan.

November 20, 2025, the plan was amended to provide that the number of shares of common stock available for issuance under the plan is

5,000,000 and that, commencing January 1, 2025, on the first day of each of our fiscal years thereafter, this number will be increased

by the lesser of:

(i) 15% of the outstanding common stock on a fully diluted basis as of the end of our immediately preceding fiscal

year, or (ii) an amount determined by the board of directors, provided that any shares from any such increases in previous years that

are not actually issued shall continue to be available for issuance under the plan.

as of December 31, 2025, there were 5,000,000 shares of common stock authorized for issuance under the plan.

Of this amount, awards representing

1,183 shares of common stock had been granted under the plan and 317 shares remained available for issuance under the plan.

283,666 shares of common stock were outstanding as of December 31, 2025 and 4,716,334 shares remained available for issuance as of December

On January 1, 2026, the number of shares available for issuance under the plan increased to 5,750,000 in accordance with the

terms of the plan.

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

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

average exercise price of outstanding options, warrants and rights

securities to be

options, warrants

average exercise

options, warrants

available for

future issuance

under equity compensation

plans (excluding securities reflected in column (a))

plans (excluding securities reflected in column

Equity compensation plans approved by security holders:

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exceeds the lesser of $120,000 or one percent of the average of our total assets at the end of our last two completed fiscal years.

engaged in the following related persons transactions since the beginning of our last fiscal year or any currently proposed transaction.

engaged in the following related persons transactions since the beginning of our last fiscal year.

Ventures Stock Transactions

November 20, 2023, we entered into a stock purchase agreement with Regalia Ventures pursuant

to which we sold 5,495 shares of our common stock to Stingray Group at a purchase price

of $182 per share.

Net proceeds from the transaction were approximately $950,000, net of transaction fees of approximately $50,000 .

On November 1, 2024, we entered into a stock repurchase agreement with Regalia Ventures pursuant to which we agreed to repurchase

the 5,495 shares for $472,527.

On February 18, 2025, the date of the closing of the transaction, we issued a promissory note to Stingray

Group in the amount of $472,527.

November 20, 2023, we entered into a stock purchase agreement with Regalia Ventures pursuant to which we sold 5,495 shares of our common

stock to Regalia Ventures at a purchase price of $182 per share.

Net proceeds from the transaction were approximately $950,000, net of

transaction fees of approximately $50,000.

On November 1, 2024, we entered into a stock repurchase agreement with Regalia Ventures pursuant

to which we agreed to repurchase the 5,495 shares for $472,527.

On February 18, 2025, the date of the closing of the transaction, we

issued a promissory note to Regalia Ventures in the amount of $472,527.

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

Regalia Ventures is owned and controlled by Jay

Foreman, who serves as a member of our board of directors.

Regalia Ventures

is owned and controlled by Jay B.

Foreman, who served as a member of our board of directors until November

Group Stock Transactions

November 20, 2023, we entered into a stock purchase agreement with Stingray Group pursuant

to which we sold 5,495 shares of our common stock to Stingray Group at a purchase price

of $182 per share.

Net proceeds from the transaction were approximately $950,000, net of transaction fees of approximately $50,000 .

On December 3, 2024, we entered into a stock repurchase agreement with Stingray Group

pursuant to which we agreed to repurchase the 5,495 shares for $285,714.

We agreed to issue a promissory note to Stingray Group in the

principal amount of the purchase price of the shares at the closing of the transaction.

On February 18, 2025, the date of the closing

of the transaction, we issued a promissory note to Stingray Group in the amount of $285,714.

On April 3, 2025, we paid off the note in

Mathieu Peloquin is the Senior Vice-President, Marketing and Communications of Stingray Group and serves as a member of our board

of directors.

November 20, 2023, we entered into a stock purchase agreement with Stingray Group pursuant to which we sold 5,495 shares of our common

stock to Stingray Group at a purchase price of $182 per share.

Net proceeds from the transaction were approximately $950,000, net of

transaction fees of approximately $50,000.

On December 3, 2024, we entered into a stock repurchase agreement with Stingray Group pursuant

to which we agreed to repurchase the 5,495 shares for $285,714.

We agreed to issue a promissory note to Stingray Group in the principal

amount of the purchase price of the shares at the closing of the transaction.

On February 18, 2025, the date of the closing of the transaction,

we issued a promissory note to Stingray Group in the amount of $285,714.

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

Mathieu Peloquin

is the Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of our board of directors until October

Holdings Music Subscription Agreement

have a music subscription sharing agreement with Stingray Group.

For the year ended December 31, 2024 and the nine-month transition period

ended December 31, 2023, we received music subscription revenue of 780,000 and $602,000, respectively.

As of December 31, 2024 and 2023,

we had $212,000 and $269,000, respectively, due from Stingray Group for music subscription reimbursement.

Mathieu Peloquin is the Senior

Vice-President, Marketing and Communications of Stingray Group and serves as a member of our board of directors.

We determined that SMCB, which

is a subsidiary of SemiCab, Inc., is a VIE as we provide financial support to SMCB.

While not contractually obligated, SMCB currently

relies on our reimbursement of certain costs under a intercompany services agreement (“MSA”) whereby SMCB agrees to provide

IT software development services to SemiCab, Inc.

US operations.

In exchange, under the MSA, we grant intellectual property rights to

SMCB to use the software platform in India.

Compensation for services is invoiced and paid on a monthly or quarterly basis as agreed

by both parties, with rates subject to periodic review and revision.

The agreement is for a term of two years ending on April 1, 2025

and automatically renews for additional 12-month periods unless prior notice is given by the terminating party.

The agreement automatically

renewed for an additional 12-month period on April 1, 2025.

As a result of this relationship and the financial support provided by us

under the loan agreement described below, SMCB has been determined to be a VIE.

We further determined that we

are not the primary beneficiary of SMCB because we do not have the power to direct or control SMCB’s significant activities related

to its business.

Accordingly, we have not consolidated SMCB’s results of operations and financial position in our consolidated financial

Pursuant to the terms of the asset

purchase agreement that we entered into on June 11, 2024, we entered into an option agreement that granted SemiCab Holdings the right

to acquire all of the issued and outstanding equity securities of SMCB for 1,605 shares of our common stock.

We did not exercise this

right and the option agreement expired on August 31, 2024.

Loan Agreement

We are a party to a loan

agreement with SMCB dated March 22, 2024.

have a music subscription sharing agreement with Stingray Group under which we generated music subscription revenue of $64,000 and $780,000

during the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, we had $0 and $212,000, respectively,

due from Stingray Group for music subscription reimbursement.

Mathieu Peloquin is the Senior Vice-President, Marketing and Communications

of Stingray Group and served as a member of our board of directors until October

This revenue was included in net loss from discontinued operations on our consolidated

statements of operations for the years ended December 31, 2025 and 2024, and the accounts receivable was included in current assets of

discontinued operations in our consolidated balance sheets as of December 31, 2024.

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

until SemiCab Holdings acquired it on May 2, 2025, was a VIE as we provided

financial support to SMCB.

While not contractually obligated, SMCB relied on our reimbursement of certain costs under a intercompany

services agreement (“MSA”) whereby SMCB agreed to provide IT software development services to us.

In exchange, under the

MSA, we granted intellectual property rights to SMCB to use the software platform in India.

Compensation for services is invoiced and

paid on a monthly or quarterly basis as agreed by both parties, with rates subject to periodic review and revision.

The agreement is

for a term of two years ending on April 1, 2025 and automatically renews for additional 12-month periods unless prior notice is given

by the terminating party.

The agreement automatically renewed for an additional 12-month period on April 1, 2025.

As a result of this

relationship and the financial support provided by us under the loan agreement described below, SMCB has been determined to be a VIE

prior to May 2, 2025.

further determined that were are not the primary beneficiary of SMCB because we did not have the power to direct or control SMCB’s

significant activities related to its business prior to May 2, 2025.

Accordingly, we have not consolidated SMCB’s results of operations

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

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

SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB for 1,605 shares of our common stock.

We did not exercise this right and the option agreement expired on August 31, 2024.

are a party to a loan agreement with SMCB dated March 22, 2024.

Under the loan agreement, we agreed to loan up to $2,500,000 to SMCB.

The loans are anticipated to be made in tranches.

Disbursements

of any tranches are fully at our discretion.

Each tranche has a repayment period of

Disbursements of any tranches are fully at our discretion.

Each tranche has a repayment

period of five years.

The loans can be repaid at any time prior to the five- year maturity date without penalty.

Interest on the loans accrues

at a rate of six percent per year and is payable quarterly.

As of December 31, 2024, we

had made aggregate advances to SMCB in the amount of $1,777,000.

During the year ended December 31, 2024, SMCB charged

$637,000 for services to us that were performed under the MSA, which charges offset amounts due under the loan with SMCB.

As a result, as of December 31, 2024, a total of $1,140,000 of loans were outstanding under the loan agreement, and a total of $1,360,000 remained available for future borrowings under the loan agreement as of December 31, 2024.

As of December 31,

2024, SMCB had not made any interest payments due under the loan agreement.

As a result, the loans were in default as of December

performed the credit risk assessment of the collectability of the notes receivable from SMCB at December 31, 2024 pursuant to ASC 326-20.

Due to uncertainties associated with the loans, we accrued a reserve in the amount of $439,000 as of December 31,

Interest on the loans

accrues at a rate of six percent per year and is payable quarterly.

December 31, 2024, a total of $1,140,000 was outstanding under the loan agreement.

During the period beginning January 1, 2025 and ending

May 2, 2025, the date we acquired 99.99% of the equity shares of SMCB, we made advances to SMCB in the amount of $1,172,000.

same period, SMCB charged $304,000 for services to us that were performed under the MSA, which charges offset amounts due under the loan

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.

May 2, 2025, the loan payable of $2,008,000 of SMCB and our loan receivable of $2,008,000 were eliminated in consolidation.

no such loans payable and loans receivable were outstanding on our condensed consolidated balance sheet at June 30, 2025.

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

by SMCB under the MSA of $304,000 during the period commencing January 1, 2025 and ending May 2, 2025 were eliminated in consolidation

on May 2, 2025.

As a result, no such revenue and expenses were reflected on our consolidated statements of operations for the years ended

December 31, 2025 and 2024.

of Singing Machine to Stingray USA

August 1, 2025, we entered into an asset purchase agreement with Stingray USA, a related party and subsidiary of the Stingray Group,

pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with our Singing

Machine business for $500,000.

The transaction closed on August 1, 2025.

Mathieu Peloquin is the

Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of our board of directors until October

The gain on sale that we recognized in connection with the completion of this transaction

was included in net gain (loss) from discontinued operations on our consolidated statements of operations for the years ended

December 31, 2025 and 2024.

Approval or Ratification of Transactions With Related Persons

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Principal Accountant Fees and Services.

LLP served as our independent registered public accounting firm for the year ended December 31, 2024 and for part of our nine-month

transition period ended December 31, 2023.

EisnerAmper LLP served as our independent registered public accounting firm for part of

our nine-month transition period ended December 31, 2023.

We paid audit fees of

$ 404,000 to Marcum LLP for services

performed for the year ended December 31, 2024, and $215,000 for services performed for our nine-month transition period ended December 31, 2023.

We paid audit fees of $31,000 to EisnerAmper LLP for services

performed for our nine- month transition period ended December 31, 2023.

Audit Fees consist of

fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual

consolidated financial statements, the review of our interim consolidated financial statements included in our quarterly reports,

the review of our registration statements and services that are normally provided by our principal accountant in connection with

statutory and regulatory filings or engagements.

M&K CPAs PLLC has served as our independent registered public accounting

firm since October 6, 2025.

Berkowitz Pollack Brant, Advisors + CPAs served as our independent registered public accounting firm for the

period commencing June 2, 2025, and ending October 6, 2025.

CBIZ CPAs P.C.

served as our independent registered public accounting firm

for the period commencing April 25, 2025, and ending June 2, 2025.

Marcum LLP served as our independent registered public accounting firm

for the year ended December 31, 2024 and continuing through April 25, 2025.

We paid audit fees of $32,000 to M&K CPAS PLLC for services

performed during the year ended December 31, 2025.

We paid audit fees of $25,000 to Berkowitz Pollack Brant, Advisors + CPAs for services

performed during the year ended December 31, 2025.

We paid audit fees of $37,000 to CBIZ CPAs P.C.

for services performed during the year

ended December 31, 2025.

We paid audit fees of $50,000 and $483,000 to Marcum LLP for services performed during the years ended December

31, 2025 and 2024, respectively.

Audit-related fees

All other fees

fees consist of fees billed for professional services rendered by our independent registered public accounting firm for the audit of

our annual consolidated financial statements, the review of our interim consolidated financial statements included in our quarterly reports,

the review of our registration statements and services that are normally provided by our principal accountant in connection with statutory

and regulatory filings or engagements.

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

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Financial Statements and Supplementary Data of this report:

of Independent Registered Public Accounting Firm.

● Consolidated

Balance Sheets at December 31, 2024 and 2023.

● Consolidated

Statements of Operations for the Year Ended December 31, 2024 and the Nine-Month Period Ended

December 31, 2023.

● Consolidated

Statements of Stockholders’ Deficit for the Year Ended December 31, 2024 and the Nine-Month

Period Ended December 31, 2023.

● Consolidated

Statements of Cash Flows for the Year Ended December 31, 2024 and the Nine-Month Period Ended

December 31, 2023.

to Consolidated Financial Statements.

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets at December 31, 2025 and 2024.

Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024.

Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and 2024.

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024.

Notes to Consolidated Financial Statements.

Statement Schedules

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are incorporated by reference herein.

Underwriting Agreement, dated May 23, 2022, by and between Algorhythm Holdings and Aegis Capital Corp.

(incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on May 27, 2022)

At-The-Market Issuance Sales Agreement, dated February 15, 2023, by and between Algorhythm Holdings and Aegis Capital Corp.

(incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on February 17, 2023).

Asset Purchase Agreement dated June 11, 2024, between Algorhythm Holdings, SemiCab, Inc.

and SemiCab Holdings, LLC (incorporated by reference to Exhibit 2.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on June 12, 2024).

Amendment No.

1 to Asset Purchase Agreement dated July 1, 2024, among Algorhythm Holdings, SemiCab, Inc.

and SemiCab Holdings LLC (incorporated by reference to Exhibit 2.2 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on July 5, 2024).

Certificate of Incorporation of Algorhythm Holdings filed with the Delaware Secretary of State on February 15, 1994 and amendments through April 14, 1999 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings’ registration statement on Form SB-2 filed with the SEC on March 7, 2000).

Certificate of Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on September 29, 2000 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings’ Quarterly Report on Form 10-QSB for the period ended September 30, 1999 filed with the SEC on November 14, 2000).

Corrected Certificate of Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on March 27, 2001 (incorporated by reference to Exhibit 3.13 in Algorhythm Holdings’ registration statement on Form SB-2 filed with the SEC on April 11, 2001).

Corrected Certificate of Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on April 4, 2001 (incorporated by referenced to Exhibit 3.12 in Algorhythm Holdings’ registration statement on Form SB-2 filed with the SEC on April 11, 2001) .

Certificate of Correction to Corrected Certificate of Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on April 20, 2001 (incorporated by reference to Algorhythm Holdings’ Transition Report on Form 10-KT filed with the SEC on July 14, 2022).

Certificate of Amendment to the Certificate of Incorporation filed with the Delaware Secretary of State on January 27, 2006 (incorporated by reference to Algorhythm Holdings’ Transition Report on Form 10-KT filed with the SEC on July 14, 2022).

Certificate for Renewal and Revival of Charter filed with Delaware Secretary of State on September 25, 2012 (incorporated by reference to Algorhythm Holdings’ Transition Report on Form 10-KT filed with the SEC on July 14, 2022).

Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on May 19, 2022 (incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on May 25, 2022).

Amended By-Laws of Algorhythm Holdings (incorporated by reference to Exhibit 3.14 in Algorhythm Holdings’ Transition Report on Form 10-KTSB for the year ended March 31, 2001 filed with the SEC on June 29, 2001).

Certificate of Amendment of Certificate of Incorporation dated August 27, 2024 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on September 6, 2024).

Amendment No.

1 to Amended By-laws, effective October 18, 2024 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on October 21, 2024).

Certificate of Amendment to the Certificate of Incorporation filed with the Delaware Secretary of State on January 14, 2025 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on January 17, 2025).

Description of Registrant’s Securities (incorporated by reference to Algorhythm Holdings’ Transition Report on Form 10-KT filed with the SEC on July 14, 2022).

Lease for Lakeside Plaza executive offices dated July 31, 2011 by and between Algorhythm Holdings and Lakeside IV, LLC (incorporated by reference to Algorhythm Holdings’ Current Report on Form 10-KT filed with the SEC on June 29, 2011).

Lease for Ontario, CA warehouse dated January 31, 2013 by and among Algorhythm Holdings, Majestic-CCCIV Partners and NM Majestic Holdings, LLC (incorporated by reference to Algorhythm Holdings’ Current Report on Form 10-KT filed with the SEC on June 28, 2013).

First Amendment to Standard Industrial Lease dated June 15, 2020 by and among Algorhythm Holdings, Majestic-CCCIV Partners and NM Majestic Holdings, LLC (incorporated by reference to Algorhythm Holdings’ Transition Report on Form 10-KT filed with the SEC on August 13, 2020).

The Singing Machine 2022 Equity Incentive Plan (incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on April 18, 2022)

Employment Agreement by and between Algorhythm Holdings and Gary Atkinson (incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on April 22, 2022).

Employment Agreement by and between Algorhythm Holdings and Bernardo Melo (incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on April 22, 2022).

Form of Indemnification Agreement to be entered into with the Registrant and each of its officers and directors (incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on May 27, 2022).

Amended and Restated Employment Agreement by and between Algorhythm Holdings and Lionel Marquis (incorporated by reference to Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on January 6, 2023).

Agreement of Lease by and between MICS Nomad, LLC and OAC 111 Flatiron, LLC and OAC Adelphi, LLC, dated August 1, 2023 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on August 24, 2023).

Form of Stock Purchase Agreement dated November 20, 2023 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on November 22, 2023).

Loan Agreement by and between Algorhythm Holdings and Oxford Commercial Finance dated March 28, 2024 (incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2024).

Revolving Credit Note dated March 28, 2024 (incorporated by reference to Exhibit 10.2 in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2024).

Security Agreement by and between Algorhythm Holdings and Oxford Commercial Finance dated March 28, 2024 (incorporated by reference to Exhibit 10.3 in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2024).

Operating Agreement between Algorhythm Holdings, SemiCab Holdings, LLC and SemiCab, Inc.

(incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on June 12, 2024).

At-The-Market Issuance Sales Agreement by and between Algorhythm Holdings and Ascendiant Capital Markets, LLC, dated June 26, 2024 (incorporated by reference to Exhibit 1.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on June 27, 2024).

Amendment to At-The-Market Issuance Sales Agreement by and between Algorhythm Holdings and Ascendiant Capital Markets, LLC, dated July 8, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on July 9, 2024).

Purchase Agreement, dated June 11, 2024, by and among Algorhythm Holdings, Inc., SemiCab, Inc.

and SemiCab Holdings, LLC

(incorporated by reference to Exhibit 2.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June

1 to Asset Purchase Agreement dated July 1, 2024, by and among Algorhythm Holdings, Inc., SemiCab, Inc.

and SemiCab Holdings LLC

(incorporated by reference to Exhibit 2.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on July

Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on February 15, 1994 and amendments through April 14, 1999 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.’s Registration Statement on Form SB-2 filed with the SEC on March 7, 2000).

of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on September

29, 2000 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.’s Quarterly Report on Form 10-QSB for the period

ended September 30, 1999 filed with the SEC on November 14, 2000).

Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on

March 27, 2001 (incorporated by reference to Exhibit 3.13 in Algorhythm Holdings, Inc.’s Registration Statement on Form SB-2 filed

with the SEC on April 11, 2001).

Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on

April 4, 2001 (incorporated by referenced to Exhibit 3.12 in Algorhythm Holdings, Inc.’s Registration Statement on Form SB-2 filed

with the SEC on April 11, 2001).

of Correction to Corrected Certificate of Amendment to Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the

Delaware Secretary of State on April 20, 2001 (incorporated by reference to Algorhythm Holdings, Inc.’s Transition Report on Form

10-KT filed with the SEC on July 14, 2022).

of Amendment to the Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on January

27, 2006 (incorporated by reference to Algorhythm Holdings, Inc.’s Transition Report on Form 10-KT filed with the SEC on July 14,

for Renewal and Revival of Charter of Algorhythm Holdings, Inc.

filed with Delaware Secretary of State on September 25, 2012

(incorporated by reference to Algorhythm Holdings, Inc.’s Transition Report on Form 10-KT filed with the SEC on July 14,

of Amendment of Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on May 19, 2022

(incorporated by reference to Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on May 25,

Amended By-Laws of Algorhythm Holdings, Inc.

(incorporated by reference to Exhibit 3.14 in Algorhythm Holdings, Inc.’s Transition Report on Form 10-KTSB for the year ended March 31, 2001 filed with the SEC on June 29, 2001).

of Amendment of Certificate of Incorporation of Algorhythm Holdings, Inc.

dated August 27, 2024 (incorporated by reference to

Exhibit 3.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on September 6, 2024).

1 to Amended By-laws of Algorhythm Holdings, Inc., effective October 18, 2024 (incorporated by reference to Exhibit 3.1 in

Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on October 21, 2024).

of Amendment to the Certificate of Incorporation of Algorhythm Holdings, Inc.

filed with the Delaware Secretary of State on January

14, 2025 (incorporated by reference to Exhibit 3.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on

January 17, 2025).

Description of Securities (incorporated by reference to Algorhythm Holdings, Inc.’s Transition Report on Form 10-KT filed with the SEC on July 14, 2022).

Lease, dated July 31, 2011, by and between Algorhythm Holdings, Inc.

and Lakeside IV, LLC (incorporated by reference to Algorhythm Holdings, Inc.’s Current Report on Form 10-KT filed with the SEC on June 29, 2011).

The Singing Machine 2022 Equity Incentive Plan (incorporated by reference to Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on April 18, 2022).

Form of Indemnification Agreement to be entered into with Algorhythm Holdings, Inc.

and each of its officers and directors (incorporated by reference to Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on May 27, 2022).

Loan Agreement, dated March 28, 2024, by and between Algorhythm Holdings, Inc.

and Oxford Commercial Finance (incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2024).

Revolving Credit Note, dated March 28, 2024, issued by Algorhythm Holdings, Inc.

in favor of Oxford Commercial Finance (incorporated by reference to Exhibit 10.2 in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2024).

Agreement, dated March 28, 2024, by and between Algorhythm Holdings, Inc.

and Oxford Commercial Finance (incorporated by reference to Exhibit 10.3 in the Company’s Current Report on Form 8-K filed with the SEC on April 3,

Agreement, dated July 3, 2024, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC and SemiCab, Inc.

(incorporated by

reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June 12,

At-The-Market

Issuance Sales Agreement, dated June 26, 2024, by and between Algorhythm Holdings, Inc.

and Ascendiant Capital Markets, LLC

(incorporated by reference to Exhibit 1.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June

to At-The-Market Issuance Sales Agreement, dated July 8, 2024, by and between Algorhythm Holdings, Inc.

and Ascendiant Capital

Markets, LLC (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on

Form 8-K filed with the SEC on July 9, 2024).

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 in the Company’s Form 8-K filed with the SEC on October 24, 2024).

1 unchanged sentence

Form of Guarantee (incorporated by reference to Exhibit 10.3 in the Company’s Form 8-K filed with the SEC on October 24, 2024).

Stock Repurchase Agreement dated November 1, 2024 (incorporated by reference to Exhibit 10.1 in the Company’s Form 8-K filed with the SEC on November 7, 2024)

Form of Series A Warrant dated December 4, 2024 (incorporated by reference to Exhibit 4.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Series B Warrant dated December 4, 2024 (incorporated by reference to Exhibit 4.2 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Pre-Funded Warrant dated December 4, 2024 (incorporated by reference to Exhibit 4.3 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Securities Purchase Agreement dated December 4, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 6, 2024).

Placement Agency Agreement dated December 4, 2024 (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 6, 2024).

Stock Repurchase Agreement dated December 3, 2024 (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Securities Purchase Agreement dated December 17, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 18, 2024).

Placement Agency Agreement dated December 17, 2024 (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on December 18, 2024).

Repurchase Agreement, dated November 1, 2024, by and between Algorhythm Holdings, Inc.

and Regalia Ventures, LLC (incorporated by

reference to Exhibit 10.1 in the Company’s Form 8-K filed with the SEC on November 7, 2024).

Stock Repurchase Agreement, dated December 3, 2024, by and between Algorhythm Holdings, Inc.

and Stingray Group, Inc.

(incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Series A Warrant, dated December 4, 2024 (incorporated by reference to Exhibit 4.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Series B Warrant, dated December 4, 2024 (incorporated by reference to Exhibit 4.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Pre-Funded Warrant, dated December 4, 2024 (incorporated by reference to Exhibit 4.3 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Securities Purchase Agreement, dated December 4, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 6, 2024).

Placement Agency Agreement, dated December 4, 2024, between Algorhythm Holdings, Inc.

and Univest Securities, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 6, 2024).

Form of Securities Purchase Agreement dated December 17, 2024 (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 18, 2024).

Agency Agreement, dated December 17, 2024, between Algorhythm Holdings, Inc.

and Univest Securities, LLC (incorporated by reference

to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 18,

Employment Agreement, dated February 12, 2025, between Algorhythm Holdings, Inc.

and Alex Andre (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on February 18, 2025).

and Alex Andre (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 18, 2025).

Stock Option, dated February 13, 2025, issued by Algorhythm Holdings, Inc.

to Alex Andre (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on February 18, 2025).

to Alex Andre (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 18, 2025).

Restricted Stock Award, dated February 13, 2025, issued by Algorhythm Holdings, Inc.

to Alex Andre (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings’ Current Report on Form 8-K filed with the SEC on February 18, 2025).

Algorhythm Holdings Insider Trading Policy

List of subsidiaries of Algorhythm Holdings (incorporated by reference to Exhibit 21 in the Company’s Registration Statement on Form S-1 filed with the SEC on November 12, 2024).

to Alex Andre (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 18, 2025).

Equity Purchase Agreement, dated May 2, 2025, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC and SemiCab, Inc.

(incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on May 8, 2025).

Promissory Note, dated May 2, 2025, issued by Algorhythm Holdings, Inc.

in favor of SemiCab, Inc.

(incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on May 8, 2025).

Amended and Restated Limited Liability Company Agreement of SemiCab Holdings, LLC, dated May 2, 2025, by and among Algorhythm Holdings, Inc., SemiCab Holdings, LLC, Ajesh Kapoor and Vivek Sehgal (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on May 8, 2025).

Asset Purchase Agreement, dated August 1, 2025, by and among Algorhythm Holdings, Inc., The Singing Machine Company, Inc.

and Stingray Music USA, Inc.

(incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 7, 2025).

Securities Purchase Agreement, dated August 21, 2025, by and among Algorhythm Holdings, Inc.

and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 27, 2025).

Secured Pre-Paid Purchase #1, dated August 21, 2025, by and among Algorhythm Holdings, Inc.

and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 27, 2025).

Security Agreement, dated August 21, 2025, by and among Algorhythm Holdings, Inc.

and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.3 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 27, 2025).

Guaranty, dated August 21, 2025, by and among SemiCab Holdings, LLC, SMCB Solutions Private Limited, and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.4 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 27, 2025).

Secured Pre-Paid Purchase #2, dated November 13, 2025, by and between Algorhythm Holdings, Inc.

and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.6 in Algorhythm Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on November 19, 2025).

Deposit Account Control Agreement, dated November 13, 2025, by and among RIME Holdings, LLC, Lakeside Bank and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.7 in Algorhythm Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on November 19, 2025).

Guaranty, dated November 13, 2025, issued by RIME Holdings, LLC for the benefit of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.8 in Algorhythm Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on November 19, 2025).

Amendment to the Algorhythm Holdings, Inc.

2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on November 26, 2025).

Secured Pre-Paid Purchase #3, dated December 19, 2025, by and among Algorhythm Holdings, Inc.

and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on December 29, 2025).

Secured Pre-Paid Purchase #4, dated February 17, 2026, by and among Algorhythm Holdings, Inc.

and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 23, 2026).

Guaranty, dated February 17, 2026, issued by RIME Holdings, LLC for the benefit of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.4 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 23, 2026).

Amended and Restated Employment Agreement, dated February 23, 2026, by and between Algorhythm Holdings, Inc.

and Gary Atkinson (incorporated by reference to Exhibit 10.1 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 27, 2026).

Stock Option, dated February 23, 2026, by and between Algorhythm Holdings, Inc.

and Gary Atkinson (incorporated by reference to Exhibit 10.2 in Algorhythm Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on February 27, 2026).

Algorhythm Holdings, Inc.

Insider Trading Policy

List of subsidiaries of Algorhythm Holdings, Inc.

Consent of M&K CPAS PLLC

Consent of Marcum LLP

3 unchanged sentences

Certifying Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

Algorhythm Holdings Clawback Policy (incorporated by reference to Exhibit 97 in Algorhythm Holdings’ Transition Report on Form 10-KT filed with the SEC on April 15, 2024).

Holdings, Inc.

Clawback Policy (incorporated by reference to Exhibit 97 in Algorhythm Holdings, Inc.’s Transition Report on

Form 10-KT filed with the SEC on April 15, 2024).

XBRL Instance Document.

1 unchanged sentence

the Inline XBRL document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Inline XBRL Taxonomy Extension

Schema Document.

Inline XBRL Taxonomy Extension

Calculation Linkbase Document.

Inline XBRL Taxonomy Extension

Definition Linkbase Document.

Inline XBRL Taxonomy Extension

Label Linkbase Document.

Inline XBRL Taxonomy Extension

Presentation Linkbase Document.

Cover Page Interactive

Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed herewith

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Compensatory plan or arrangement

‡ The schedules and exhibits to this agreement

have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

A copy of any omitted schedule and/or exhibit will be furnished to the

SEC upon request.

Form 10-K Summary.

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Executive Officer and Director

April 1, 2026

(Principal Executive Officer)

Financial Officer and General Counsel

April 1, 2026

(Principal Financial Officer)

Harvey Judkowitz

Mathieu Peloquin

April 1, 2026

Bernardo Melo

April 1, 2026

Holdings, Inc.

1 unchanged sentence

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets at December 31, 2025 and 2024

Consolidated Statements of Operations for the Year Ended December 31, 2024 and the Nine-Month Period Ended December 31, 2023

Consolidated Statements of Stockholders’ Deficit for the Year Ended December 31, 2024 and the Nine-Month Period Ended December 31, 2023

Consolidated Statements of Cash Flows for the Year Ended December 31, 2024 and the Nine-Month Period Ended December 31, 2023

Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

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

on the Financial Statements

have audited the accompanying consolidated balance sheet of Algorhythm Holdings, Inc.

(the Company) as of December 31, 2025, and the

related consolidated statements of operations, comprehensive loss, shareholders’ deficit, and cash flows for the year ended December

31, 2025 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated

financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December

31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles

generally accepted in the United States of America.

The consolidated financial statements of Algorhythm Holdings, Inc.

as of December

31, 2024 were audited by other auditors whose report dated April 15, 2025 expressed an unqualified opinion on those statements.

also have audited the adjustments to the 2024 consolidated financial statements to retrospectively apply the discontinued operations

reclassifications related to the disposition of the Singing Machine business, as described in Notes 19, and the retrospective adjustments

to share and per share data as a result of the reverse stock split, as described in Note 11 as well as the change to the segment information

described in Note 15 as a result of the discontinued operations.

In our opinion, such adjustments are appropriate and have been properly

We were not engaged to audit, review, or apply any procedures to the 2024 consolidated financial statements of the Company other

than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 consolidated

financial statements taken as a whole.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 3 to the consolidated financial statements, the Company suffered a net loss from operations and has an accumulated deficit, which

raises substantial doubt about its ability to continue as a going concern.

Management’s plans regarding those matters are discussed

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe our audit provides a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that

were communicated, or required to be communicated, to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical

audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the

critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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

management’s evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates

on future revenues and expenses which are not able to be substantiated.

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

evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’s

plans to mitigate the going concern and management’s disclosure on going concern.

have served as the Company’s auditor since 2025

Woodlands, TX

April 1, 2026

of Independent Registered Public Accounting Firm

the Shareholders and Board of Directors of

1 unchanged sentence

on the Financial Statements

have audited the accompanying consolidated balance sheets of Algorhythm Holdings, Inc.

have audited the accompanying consolidated balance sheet of Algorhythm Holdings, Inc.

(the “Company”) as of December 31,

2024 and 2023, the related consolidated statements of operations, shareholders’ (deficit) equity, and cash flows for the year ended

December 31, 2024 and the nine month transition period from April 1, 2023 through December 31, 2023, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the

year ended December 31, 2024 and the nine month transition period from April 1, 2023 through December 31, 2023, in conformity with accounting

principles generally accepted in the United States of America .

2024, the related consolidated statements of operations, shareholders’ deficit, and cash flows for the year ended December 31,

2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial

statements, before the effects of the adjustments to retrospectively adjust share and per share amounts for the reverse split as

described in Note 1, and to reclassify the operations of the sold Singing Machine business as discontinued operations as described

in Notes 2 and 19 and segment information as described in Note 15, present fairly, in all material respects, the financial position

of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024,

in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments

to retrospectively adjust share and per share amounts for the reverse split as described in Note 1, and to reclassify the operations of

the sold Singing Machine business as discontinued operations as described in Notes 2 and 19 and segment information as described in Note

15, and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have

been properly applied.

Those adjustments were audited by M&K CPAs, PLLC.

Paragraph – Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully

described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and

sustain its operations.

As more fully described

in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

The financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

Management’s plans in regard to

these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

1 unchanged sentence

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit s

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an

opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

for Sales Returns:

discussed in Note 3 to the consolidated financial statements, the Company estimates the sales value of goods to be returned from our

allowance programs for goods returned from the customer for various reasons, whereby a reserve for sales returns is recorded based on

historic return amounts, specific events as identified and management estimates.

identified management’s estimate for sales returns as a critical audit matter due to the fact that there was significant judgment

required by management with respect to measurement uncertainty, as the calculation of estimated sales returns includes assumptions such

as historical product returns and margins experience used to predict future returns.

This in turn led to a high degree of auditor judgment,

subjectivity and effort in applying the procedures related to those assumptions.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial

We obtained an understanding and evaluated the design of controls over the Company’s estimates for variable consideration.

Our procedures also included, among others, (1) evaluating the estimated sales return reserve based on historical sales returns experience;

(2) evaluating the Company’s

ability to accurately estimate the sales return reserve by comparing historically recorded reserves to the actual amount that was ultimately

claimed by the retailers;

and (3) evaluating the impact of returns and notification from customers regarding returns subsequent to year-end

on the estimated sales returns reserve.

have served as the Company’s auditor since 2023.

We believe that our audit provides

a reasonable basis for our opinion.

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

Philadelphia,

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Current Assets

Accounts receivable, net of allowances of $ 274,000 and

Restricted cash

Accounts receivable, net of allowances of $ 113,000 and $ 127,000 , respectively

Accounts receivable, related party

Accounts receivable

Note receivable - related party

Note receivable

Returns asset

Prepaid expenses and other current assets

Current assets of discontinued operations

Total Current Assets

Property and equipment, net

Operating leases - right of use assets

Other non-current assets

Intangible assets, net

Non-current assets of discontinued operations

Liabilities and Shareholders’ Equity

2 unchanged sentences

Accrued expenses

Refund due to customer

Customer prepayments

Reserve for sales returns

Other current liabilities

Warrant liability

Promissory notes payable, net

Current portion of notes payable to related parties

Notes payable

Other current liabilities

Current liabilities of discontinued operations

Total Current Liabilities

Long-term provision for employee benefits

Notes payable to related parties, net of current portion

Operating lease liabilities, net of current portion

Other liabilities

Total Liabilities

Commitments and Contingencies

Shareholders’ (Deficit) Equity

Shareholders’ Equity (Deficit)

Preferred stock, $ 1.00 par value;

1,000,000 shares authorized;

no shares issued and outstanding

no shares issued and outstanding at

December 31, 2025 and December 31, 2024

Common stock, $ 0.01 par value;

100,000,000 shares authorized;

470,825 and 32,090 shares issued and outstanding at December 31, 2024 and 2023.

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

3,414,542 and 470,825

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

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

3 unchanged sentences

( 1,743,000 )

Total Algorhythm Holdings Shareholders’ (Deficit) Equity

( 1,036,000 )

Total Liabilities and Shareholders’ (Deficit) Equity

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

Total Shareholders’ Deficit

( 1,860,000 )

( 10,521,000 )

Total Liabilities and Shareholders’ Deficit

notes to the consolidated financial statements

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STATEMENTS OF OPERATIONS

Nine Months Ended

December 31, 2025

December 31, 2024

Cost of Goods Sold

December 31, 2025

December 31, 2024

Cost of Sales

( 1,315,000 )

Operating Expenses

6 unchanged sentences

( 8,442,000 )

Other (Expense) Income

Other Expenses

Change in fair value of warrant liability

( 6,468,000 )

Loss on issuance of warrants

( 8,889,000 )

Interest expense

Interest expense, net

( 1,887,000 )

Total Other Expense

Total Other Expenses

( 7,215,000 )

Loss Before Income Tax Benefit

( 10,442,000 )

Loss From Continuing Operations Before Income Tax

( 15,163,000 )

Income Tax Provision

( 18,884,000 )

Income tax loss attributable to continuing operations

Net Loss From Continuing Operations

( 15,210,000 )

( 18,884,000 )

Net loss from discontinued operations

( 1,362,000 )

( 5,483,000 )

( 16,572,000 )

( 24,367,000 )

Net loss attributable to non-controlling interest

Net Loss Available to Common Stockholders

Net Loss Available to Common Shareholders

$ ( 15,871,000 )

1 unchanged sentence

Loss Per Common Share

Basic and diluted from continuing operations

Basic and diluted from discontinued operations

Basic and diluted

1 unchanged sentence

Equivalent Shares:

Weighted Average Common and Common Equivalent Shares:

Basic and diluted

2 unchanged sentences

and Subsidiaries

OF SHAREHOLDERS’ (DEFICIT) EQUITY

the Year Ended December 31, 2024 and Nine Months Ended December 31, 2023

Additional Paid in

Non-Controlling

Balance at March 31, 2023

STATEMENTS OF COMPREHENSIVE LOSS

December 31, 2025

December 31, 2024

December 31, 2025

December 31, 2024

$ ( 16,572,000 )

$ ( 24,367,000 )

Other comprehensive loss

Foreign currency translation adjustment

Total Comprehensive Loss

( 16,603,000 )

Sale of common stock, net of offering costs

Stock based compensation

Balance at December 31, 2023

( 24,367,000 )

Total comprehensive loss attributable to non-controlling interest

Total Comprehensive Loss Available to Common Shareholders

$ ( 15,896,000 )

$ ( 24,367,000 )

notes to the consolidated financial statements

Holdings, Inc.

and Subsidiaries

STATEMENTS OF SHAREHOLDERS’ DEFICIT

the Year Ended December 31, 2025 and 2024

Other Comprehensive

Non-Controlling

at December 31, 2023

$ ( 25,915,000 )

( 23,257,000 )

Sale of common stock and pre-funded warrants, net of offering cost

Stock based compensation

Common stock issued for purchase of SemiCab Inc

Subsidiary interests issued for purchase of SemiCab Inc

Repurchase of common shares - related parties

Issuance of common stock with debt

Balance at December 31, 2024

( 1,110,000 )

( 24,367,000 )

of common stock and pre-funded warrants, net of offering costs

based compensation

stock issued for purchase of SemiCab, Inc.

interests issued for purchase of SemiCab, Inc.

of common stock - related parties

of common stock with debt

at December 31, 2024

$ ( 49,172,000 )

2 unchanged sentences

( 15,871,000 )

( 16,572,000 )

currency translation adjustment

of Series B warrants

Reclassification

of Series A warrants to equity

stock issued for acquisition of SMCB

of common stock from related parties

stock issued as commitment fee

stock issued upon settlement of prepaid purchases

of promissory note payable into common stock

at December 31, 2025

$ ( 758,000 )

$ ( 65,043,000 )

$ ( 1,743,000 )

$ ( 1,860,000 )

notes to the consolidated financial statements

2 unchanged sentences

STATEMENTS OF CASH FLOWS

Nine Months Ended

December 31, 2024

December 31, 2023

Cash flows from operating activities

$ ( 24,367,000 )

Cash flows from operating

Net loss from continuing operations

$ ( 15,210,000 )

to reconcile net loss to net cash (used in), provided by operating activities:

Amortization of intangible assets

Impairment of goodwill from purchase of SemiCab Inc

Impairment on note receivable - SCMB

Reduction in SMCB loan in exchange for services

Provision for estimated cost of returns

$ ( 18,884,000 )

Change in fair value of warrant liability

Adjustments to reconcile net loss to net cash

used in operating activities:

Net foreign currency translation

Depreciation and amortization

of property and equipment and intangible assets

Amortization of debt discount

and issuance cost

Reduction in SMCB loan

in exchange for services

Loss on allowance for credit

Impairment of goodwill

from purchase of SemiCab,Inc.

Change in fair value of

warrant liability

Loss on issuance of warrants

Amortization of debt discount and issuance costs

Provision for inventory obsolescence

Reserve for sales returns

Credit losses

Non-cash effect on termination of operating lease

Net gain from disposal of property and equipment

Stock-based compensation

Amortization of right of use assets

Changes in operating assets and liabilities:

Accounts receivable

( 5,241,000 )

Accounts receivable - related parties

Prepaid expenses and other current assets

Prepaid expenses and other

current assets

Other non-current assets

Accounts payable

( 4,540,000 )

Accrued expenses

( 1,076,000 )

Prepaids from customers

Refunds due to customers

Other current liabilities

Provision for employee

Net cash used in operating

activities attributable to continuing operations

( 7,309,000 )

Operating lease liabilities

Net cash (used in) provided by operating activities

( 3,985,000 )

Cash flows from investing activities

Purchase of property and equipment

Pre Acquistion advances to SemiCab

Cash received from purchase of SemiCab Inc

Disposal of property and equipment

Cash flows from investing

Purchase of property and

Capitalization of internal

use software costs

Repurchase of shares of common stock

Pre-acquistion advances

to SemiCab, Inc.

Cash received from acquisition

of SemiCab, Inc.

Cash received from acquisition

Advances to SMCB

( 1,172,000 )

Net cash used in investing activities

( 1,777,000 )

Cash flows from financing activities

Proceeds from sale of common stock and warrants, net of offering costs

Payments on merchant cash advances payable

Proceeds from issuance of senior secured notes, net of discounts

Payment of senior secured notes

Net cash used in investing

activities attributable to continuing operations

( 1,770,000 )

Payment of debt issuance costs

Net cash provided by financing activities

( 2,175,000 )

Cash flows from financing

Proceeds from sale of common

stock and warrants, net of offering costs

Proceeds from issuance

of senior secured notes, net of discounts

Proceeds from issuance

of promissory notes, net of offering costs and discounts

Payment of senior secured

notes and debt issuance costs

( 2,578,000 )

Payment of promissory notes

Payment of promissory notes,

related parties

Payments on merchant cash

advances payable

Net cash provided by financing

activities attributable to continuing operations

Net cash used in operating

activities attributable to discontinued operations

( 2,539,000 )

( 5,080,000 )

Net cash provided by investing

activities attributable to discontinued operations

Net cash provided by financing

activities attributable to discontinued operations

Total cash used in discontinued

( 1,694,000 )

( 4,958,000 )

Net change in cash

Cash at beginning of year

Cash at end of period

Supplemental disclosures of cash flow information:

( 1,087,000 )

Cash and restricted cash

at beginning of period

Cash and restricted cash

at end of period

Supplemental disclosures

of cash flow information:

Cash paid for interest

Non-Cash investing and financing cash flow information:

Common stock and subsidiary interests issued for purchase of SemiCab Inc

Right of use assets exchanged for lease liabilities

Issuance of common stock with debt

Repurchase of common shares - related parties

Effect of extinguishment of advances to SemiCab Inc.

Non-Cash investing and financing

cash flow information:

Reclassification of Series

A warrants to equity

Common stock issued for

exercise of Series B warrants

Issuance of common stock

Repurchase of common shares-

related parties

Effect of extinguishment

of advances to SemiCab, Inc.

Common stock issued for

acquisition of SemiCab, Inc assets

Common stock issued for

acquisition of SMCB

Promissory note issued

for acquisition of SMCB

Common stock issued as

commitment fee

Common stock issued upon

settlement of prepaid purchases

Conversion of promissory

note payable into common stock

notes to the consolidated financial statements

4 unchanged sentences

Holdings, Inc.

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

(“AI”) technology and consumer electronics holding company with two primary business units – SemiCab and Singing

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

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 (“Singing Machine”), 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 subsidiary, SemiCab Holdings, LLC,

a Nevada limited liability company (“SemiCab Holdings”).

During 2023, the Company’s board of directors approved

a change in the Company’s fiscal year end from March 31 to December 31.

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 Monday February 10, 2025.

All current and prior year balances have

been adjusted to reflect the reverse stock split.

(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.

to August 1, 2025, the Company had a second business, which was Singing Machine.

Singing Machine was a home karaoke consumer products

business that designed and distributed karaoke products to retailers and ecommerce partners globally through its subsidiary, The Singing

Machine Company, Inc.

The Company sold its Singing Machine business on August 1, 2025.

Accordingly, the Company no longer owns or operates

the Singing Machine business.

The results of operations, cash flows, and related assets and liabilities of the Singing Machine business have been

classified as discontinued operations in the Company’s consolidated financial statements for all periods presented.

Company’s operations include its 80 %-owned subsidiaries, SemiCab Holdings, LLC, a Nevada limited liability company (“SemiCab

Holdings”), and SMCB Solutions Private Limited, an Indian company (“SMCB”), and its wholly-owned subsidiaries, SMC

Logistics, Inc., a California corporation (“SMCL”), SMC-Music, Inc., a Florida corporation (“SMCM”), SMC (HK)

Limited, a Hong Kong company (“SMH”), The Singing Machine Company, Inc., a Delaware corporation (“SMC”), and

RIME Holdings, LLC (“Rime”).

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.”

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

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

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

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 6, 2025.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

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

Accordingly, the Company accounted for the Singing Machine business as a discontinued operation in this Annual Report on Form

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

Additional information is presented in Note 19 – Discontinued Operations .

3 – Liquidity, Going Concern and Management Plans

of December 31, 2024, the Company’s cash balance was $ 7,550,000 .

This will not be sufficient to fund its planned operations for

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

The Company has a recent history of recurring operating

losses and decreases in working capital.

These factors create substantial doubt about the Company’s ability to continue as a going

concern for at least one year after the date that the Company’s audited consolidated financial statements are issued.

of December 31, 2025, the Company’s cash and restricted cash balance was $ 6,146,000 .

This will not be sufficient to fund its planned

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

The Company has a recent history of

recurring operating losses and decreases in working capital.

These factors create substantial doubt about the Company’s ability

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

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

1 unchanged sentence

a going concern and that the realization of assets and satisfaction of liabilities and commitments will continue in the ordinary course

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.

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.

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.

HOLDINGS, INC AND SUBSIDIARIES

6 unchanged sentences

of Consolidation

accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries SMCL, SMCM, SMH, Singing

Machine”, MICS Hospitality, MICS, MICS Hospitality Management, MICS NY, and its eighty percent ( 80 %)-owned subsidiary, SemiCab

All intercompany accounts and transactions have been eliminated in consolidation for all periods presented.

accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries SMCL, SMCM, SMH, SMC,

Rime and its eighty percent ( 80 %)-owned subsidiaries, SemiCab Holdings and SMCB.

All intercompany accounts and transactions have been

eliminated in consolidation for all periods presented.

Company evaluates its business relationships with related parties to identify potential Variable Interest Entities (“VIEs”)

10 unchanged sentences

financial statements.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

prescribed by ASC 810, if the Company holds a variable interest in an entity that is a VIE, but the Company is not the entity’s primary

beneficiary, then the Company must disclose the methodology (e.g., significant judgments and assumptions made) that it used to determine

that it is not the primary beneficiary of the VIE.

Additional information required includes information about the types of involvement

considered significant, and those considered in the determination of whether the reporting entity is the primary beneficiary.

prescribed by ASC 810, if the Company holds a variable interest in an entity that is a VIE, but the Company is not the entity’s

primary beneficiary, then the Company must disclose the methodology (e.g., significant judgments and assumptions made) that it used to

determine that it is not the primary beneficiary of the VIE.

Additional information required includes information about the types of

involvement considered significant, and those considered in the determination of whether the reporting entity is the primary beneficiary.

if the Company provides or intends to provide financial or other support, whether explicitly or implicitly, to the VIE when not contractually

2 unchanged sentences

purpose, size, and activities of the VIE and how the VIE is financed.

Company determined that SMCB Solutions Private Limited, an Indian Company (“SMCB”), is a VIE because the Company

provides financial support to SMCB in the form of a loan agreement to fund SMCB’s operations.

The Company further determined that it is not the primary beneficiary of SMCB because the

Company does 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 consolidated financial

Company determined that SMCB was a VIE because the Company provided financial support to SMCB in the form of a loan agreement to fund

SMCB’s operations.

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

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

Accordingly, the Company did not consolidate SMCB’s

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

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

As a result, on May 2, 2025, the Company

consolidated SMCB’s results of operations and financial position in its consolidated financial statements.

A discussion of this

transaction is set forth herein in Note 18 – Acquisition of SMCB .

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Reclassification

9 unchanged sentences

Significant estimates include allowance for

credit losses, provision for excess and obsolete inventory, reserve for sales returns, co-op promotion incentives, accruals relating

to litigation, goodwill, share-based compensation expense and warrant liability.

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 15 – Segment Information

and Revenue Disaggregation – Segment Information .

credit losses, accruals relating to litigation, goodwill, share-based compensation expense and warrant liability.

to ASC Topic 280, Segment Reporting (“ASC 280”), the Company’s Chief Executive Officer serves as the Company’s

Chief Operating Decision Maker (“CODM”).

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 .

and Restricted Cash

Company considers cash to include cash in banks and deposits with financial institutions that can be liquidated without prior notice

Cash is maintained with several financial institutions.

Deposits held with banks may exceed the amount of insurance provided

on such deposits.

Company classifies all cash whose use is limited by contractual provisions as restricted cash.

Restricted cash as of December 31, 2025,

consists of cash required under the Streeterville Capital Transaction as detailed in Note 12 – Securities Transactions .

HOLDINGS, INC AND SUBSIDIARIES

2 unchanged sentences

Receivable and Allowances for Expected Credit Losses

Company recognizes credit losses in accordance with Accounting Standards Update 2016-13, Financial Instruments – Credit Losses

(Topic 326) .

The Company recognizes an allowance

for credit losses at the time a receivable is recorded based on its estimate of expected credit losses and adjusts this estimate over

the life of the receivable as needed.

The Company evaluates specific identified risks and the aggregation and risk characteristics of

a receivable pool and develops loss rates that reflect historical collections, current forecasts of future economic conditions over the

time horizon the Company is exposed to credit risk, and payment terms or conditions that may materially affect future forecasts.

amounts are written-off when determined to be uncollectible.

is comprised primarily of electronic karaoke equipment, microphones, and accessories, and are stated at the lower of cost or net realizable

value, as determined using the first in, first out method.

The Company reduces inventory on hand to its net realizable value on an item-by-item

basis when it is apparent that the expected realizable value of an inventory item falls below its original cost.

A charge to cost of

sales results when the estimated net realizable value of specific inventory items declines below cost.

In addition, the Company reports

an estimated amount for the net realizable value of expected future inventory returns (returns asset) related to the Company’s

defective allowance, overstock, and warranty policies.

Substantially

all of the Company’s inventory consists of finished goods.

Company recognizes credit losses in accordance with Accounting Standards Update (“ASU”) 2016-13, Financial Instruments

– Credit Losses (Topic 326) .

The Company recognizes

an allowance for credit losses at the time a receivable is recorded based on its estimate of expected credit losses and adjusts this

estimate over the life of the receivable as needed.

The Company evaluates specific identified risks and the aggregation and risk characteristics

of a receivable pool and develops loss rates that reflect historical collections, current forecasts of future economic conditions over

the time horizon the Company is exposed to credit risk, and payment terms or conditions that may materially affect future forecasts.

As needed, amounts are written-off when determined to be uncollectible.

and Equipment, Net

2 unchanged sentences

Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to their estimated useful lives using straight-line

Company determines if an arrangement contains a lease at the inception of a contract.

Right-of-use assets represent the Company’s

right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments

arising from the lease.

Right-of-use assets and lease liabilities are recognized at the commencement date.

The liability is equal to

the present value of the remaining minimum lease payments.

The asset is based on the liability, subject to certain adjustments.

leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result

in a front-loaded expense pattern (similar to capital leases under the prior accounting standard).

As the interest rate implicit in the

Company’s operating leases is not readily determinable, the Company utilizes its incremental borrowing rate to discount the lease

The Company utilizes the implicit rate for its finance leases.

Company accounts for business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations.

The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed

based upon their estimated fair values on the acquisition date.

Any excess of the purchase price over the fair value of the net assets

acquired is recorded as goodwill.

The purchase price allocation process requires management to make significant estimates and assumptions

at the acquisition date with respect to intangible assets.

The allocation of the consideration transferred in certain cases may be subject

to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition

Direct transaction costs associated with the business combination are expensed as incurred.

The Company includes the results of

operations of the business that it has acquired in its consolidated results prospectively from the date of acquisition.

Company evaluates its goodwill for impairment in accordance with FASB Accounting Standards Update (“ASU”) 350, Intangibles

– Goodwill and Other .

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value

of the net identified tangible and intangible assets acquired.

The Company tests the recorded amount of goodwill for impairment on an

annual basis on December 31 or more frequently if there are indicators that the carrying amount of goodwill exceeds its carried value.

Assets- Internal Use Software

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.

Company evaluates its goodwill for impairment in accordance with ASU 350, Intangibles – Goodwill and Other .

is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible

assets acquired.

The Company tests the recorded amount of goodwill for impairment on an annual basis on December 31 or more frequently

if there are indicators that the carrying amount of goodwill exceeds its carried value.

HOLDINGS, INC AND SUBSIDIARIES

2 unchanged sentences

Lived and Intangible Assets

Company reviews long-lived assets and intangible assets for impairment in accordance with ASC Topic 360, Property, Plant and Equipment

The Company reviews long-lived assets and intangible assets for impairment

whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable.

Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the

business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes

in the use of the assets.

If an impairment review is performed to evaluate a long-lived asset or intangible asset for

recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition

of the asset to its carrying value.

An impairment loss is recognized when the estimated undiscounted future cash flows expected to

result from the use of the asset is less than its carrying amount.

The impairment loss would be based on the excess of the carrying

value of the impaired asset over its fair value, determined based on discounted cash flows.

The Company had no impairment

loss related to long-lived assets or intangible assets for the year ended December 31, 2024 or the nine months ended December 31,

Company reviews long-lived assets and intangible assets for impairment in accordance with ASC Topic 360, Property, Plant and

Equipment (“ASC 360”).

The Company reviews long-lived assets and intangible assets for impairment whenever events

or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable.

Factors that the Company

considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations,

significant negative industry or economic trends, and significant changes or planned changes in the use of the assets.

If an impairment

review is performed to evaluate a long-lived asset or intangible asset for recoverability, the Company compares forecasts of undiscounted

cash flows expected to result from the use and eventual disposition of the asset to its carrying value.

An impairment loss is recognized

when the estimated undiscounted future cash flows expected to result from the use of the asset is less than its carrying amount.

impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted

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

Company accounts for business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business

Combinations.

The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired

and liabilities assumed based upon their estimated fair values on the acquisition date.

Any excess of the purchase price over the fair

value of the net assets acquired is recorded as goodwill.

The purchase price allocation process requires management to make significant

estimates and assumptions at the acquisition date with respect to intangible assets.

The allocation of the consideration transferred

in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may

be up to one year from the acquisition date.

Direct transaction costs associated with the business combination are expensed as incurred.

The Company includes the results of operations of the business that it has acquired in its consolidated results prospectively from the

date of acquisition.

Value Measurements

11 unchanged sentences

Quoted market prices in active markets for identical assets or liabilities.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Inputs other than Level 1 that are observable, either directly or indirectly, such as

10 unchanged sentences

to the fair value of the assets or liabilities.

carrying amounts of financial instruments carried at cost, including cash, accounts receivables and accounts receivable

– related party, trade payables advances and notes payables and notes payable – related party approximate their fair value

due to the short-term maturities of such instruments.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

carrying amounts of financial instruments carried at cost, including cash, accounts receivables and accounts receivable – related

party, trade payables advances and notes payables and notes payable – related party approximate their fair value due to the short-term

maturities of such instruments.

categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to

17 unchanged sentences

the warrants are required to be recorded at their initial fair value on the date of issuance, and at each balance sheet date thereafter.

Changes in the estimated fair value of the liability classified warrants are recognized as a non-cash gain or loss on the consolidated

statements of operations.

Changes in the estimated fair value of the liability classified warrants are recognized as a non-cash gain or loss on the consolidated statements

of operations.

The Company also evaluates if changes in contractual terms or other considerations would result in the reclassification

of outstanding warrants from liabilities to stockholders’ equity (or vice versa).

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Company recognizes revenue in accordance with ASC 606 , Revenue from Contracts with Customers .

1 unchanged sentence

with customers.

The Company recognizes revenue when the control of the goods sold is transferred to the customer, in an amount, referred

to as the transaction price, that reflects the consideration to which the Company expected to be entitled in exchange for those goods.

The Company determines revenue recognition utilizing the following five steps:

The Company recognizes revenue when services are performed for the customer in an amount, referred to as the transaction

price, that reflects the consideration to which the Company is expected to be entitled in exchange for those services.

The Company determines

revenue recognition utilizing the following five steps:

(i) identification of the contract with a customer;

identification of the performance obligations in the contract (promised goods or services that are distinct);

(iii) determination of

the transaction price;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when,

or as, the Company transfers control of the product or service for each performance obligation.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

(ii) identification of the

performance obligations in the contract (promised services that are distinct);

(iii) determination of the transaction price;

(iv) allocation

of the transaction price to the performance obligations;

and (v) recognition of revenue when, or as, the Company transfers control of

the service for each performance obligation.

Company’s performance obligations are established when a customer submits a purchase order notification and the Company accepts

The Company identifies performance obligations as the delivery of the requested product or service in appropriate quantities

and to the location specified in the customer’s contract and/or purchase order.

Revenue from sales of products is recognized at

a point in time when the Company transfers control to the customer, typically at the time when the product is delivered or shipped, at

which time, title passes to the customer and there are no further performance obligations with regard to the product.

Company selectively participates in retailers’ co-op promotion incentives to maximize sales of the Company’s products on

the retail floor and to assist in developing consumer awareness of new product launches by providing marketing fund allowances to its

As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair

value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers

is recorded as a reduction to net sales.

Co-op promotion incentives were $ 2,059,000 during the year ended December 31, 2024 and $ 2,648,000

during the nine months ended December 31, 2023.

Company’s contracts with customers consist of one performance obligation, which is the sale of its products.

The Company identifies performance obligations as the delivery of the requested service at the location specified in the customer’s

contract and/or purchase order.

Revenue from sales of services is recognized at the point in time when the Company transfers control

to the customer, typically at the time when the services are performed in full, at which time there are no further performance obligations

Company’s contracts with customers consist of one performance obligation, which is the performance of services.

The Company’s

contracts have no financing elements.

Payment terms are generally less than 120 days and have no further contract asset or liability

obligations once control of goods is transferred to the customer.

Revenue is recorded in the amount of consideration the Company expects

to receive for the sale of these goods.

incurred in fulfilling contracts with customers include administrative costs associated with the procurement of goods are included in

general and administrative expenses, in-bound freight costs are included in the cost of goods sold and accrued sales representative commissions

are included in selling expenses in the accompanying consolidated statements of operations as the Company’s underlying customer agreements are

less than one year.

for Sales Returns and Returns Asset

the Company has no overstock return privileges in its vendor agreements with its customers, it does accept defective returns, warranty

exchanges and overstock from seasonal customers.

The Company estimates the sales value of goods to be returned from its allowance programs

for goods returned from the customer for various reasons, whereby a reserve for sales returns is recorded based on historic return amounts,

specific events as identified and management estimates.

The Company’s reserve for sales returns was $ 3,355,000 and $ 3,390,000 as

of December 31, 2024 and 2023, respectively.

The Company estimates the net realizable value of these expected future sales returns.

net realizable value of these estimated returns is classified as return assets as part of current assets on the Company’s consolidated

financial statements.

The Company’s return assets were $ 1,621,000 and $ 1,919,000 as of December 31, 2024 and 2023, respectively.

Payment terms are generally less than 90 days and have no further contract asset or liability obligations

once control of the service is transferred to the customer.

Revenue is recorded in the amount of consideration the Company expects to

receive for the sale of the service.

Company utilizes independent contractors and third-party carriers to perform transportation services in connection with its SemiCab business.

In accordance with ASC Topic 606, Revenue Recognition:

Principal Agent Considerations, management evaluates the terms of agreements with

customers and vendors to determine whether it acts as principal or agent in each arrangement.

assessment focuses on whether control of the transportation service is obtained prior to transferring the service to the customer.

on this evaluation of the control model, management has concluded that it acts as the principal and, accordingly recognizes revenue on

a gross basis.

In the event the Company acts as an agent, such revenue will be recognized net of the cost of purchased transportation.

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

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

and Handling Costs

and handling activities are performed before the customer obtains control of the goods sold to them and are considered activities to

fulfill the Company’s promise to transfer the goods.

Shipping and handling expenses were $ 592,000 and $ 561,000 for the year ended

December 31, 2024 and the nine months ended December 31, 2023, respectively.

These expenses are classified as a component of selling

expenses in the Company’s consolidated statements of operations.

Company has granted stock options, warrants, restricted stock awards and restricted stock units to employees, non-employee consultants

26 unchanged sentences

to each category of award.

costs associated with grants of restricted stock awards and restricted stock units are measured at fair value, which has historically

been the closing price of the Company’s common stock on the date of grant.

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

costs associated with grants of restricted stock awards and restricted stock units are measured at fair value, which has historically

been the closing price of the Company’s common stock on the date of grant.

Company recognizes share-based compensation expense over the requisite service period of each individual award, which generally equals

6 unchanged sentences

underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned share-based compensation

Company follows the provisions of FASB ASC 740, Accounting for Income Taxes (“ASC 740”).

Under the asset and liability

method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between

the financial statement carrying amounts of existing assets and liabilities and their respective tax base.

Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected

to be recovered or settled.

Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in

income in the period that includes the enactment date.

If it is more likely than not that some portion of a deferred tax asset will not

be realized, a valuation allowance is recognized.

C o m p a n y

t h e p r o v isi on s

A cc o un t i n g

f o r I n c o m e

T a x es (“ASC 740”).

t h e a ss et

a n d li a b ili t y

740 , d e f erred

t ax a s s e t s

a n d li a b ilit i es

are rec og n i zed

t ax c o n s e q u e n c e s

a tt r i b u t ed

t o d i ff er e n ces

b e t w e e n

t h e f i n a n c i al

st a t e m e n t

o f e x i s ti n g

a n d li a b iliti es

a n d t h e i r

re s p ec t i v e

t ax b a s e.

De f erred t ax a s s e t s

a n d li a b iliti e s

are m ea s u red

t ax ra t es e x p ec t ed

t o t a x a b l e

y ears i n w h i ch

t e m po ra r y

d i ff er e n ces

are e x p ec t ed

t o b e rec o v ered

o r s e t t l e d .

U n d er A S C

ef f ect o n d e f erred

t ax a ss e t s

a n d li a b iliti es

o f a c h a n g e

i n t ax ra t es

i s rec o gn i zed

i n i n c o m e

t h at i n c l u d es

t h e e n ac t m e n t

t h at s o m e

o f a d e f erred

t ax a ss et w i l l

rea li ze d , a v a l u a t i o n

a ll o w a n ce

i s rec og n i ze d .

Company recognizes a liability for uncertain tax positions.

11 unchanged sentences

The Company currently has no liabilities recorded for accrued interest or penalties related to uncertain tax provisions.

In December 2023, the FASB issued

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

Improvements to Income Tax Disclosures , which

is intended to enhance the transparency and decision usefulness of income tax disclosures.

The standard requires, among other things,

enhanced rate reconciliation disclosures, disaggregation of income taxes paid by jurisdiction, and disaggregation of income (loss) from

continuing operations before income tax expense (benefit) between domestic and foreign jurisdictions.

The Company adopted ASU 2023-09

effective January 1, 2025 on a prospective basis.

The adoption of this standard did not have an impact on the Company’s consolidated

financial statements but resulted in expanded income tax disclosures in the accompanying notes.

Loss Per Common Share

8 unchanged sentences

31, 2025 and 2024

Currency Translation

functional currency of the Company and its subsidiaries is the U.S.

dollar, except for SMCB, whose functional currency is the Indian

financial statements of SMCB are translated into U.S.

dollars for consolidation purposes.

Assets and liabilities are translated at the

exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates during the

reporting period.

Equity transactions are translated using historical exchange rates.

Resulting translation adjustments are recorded

in accumulated other comprehensive income (loss) within shareholders’ equity.

Accounting Pronouncements

November 2023, the FASB issued Accounting Standards Update (“ASU ”) 2023- 07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU

2023-07”), that requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision

maker and included within each reported measure of segment profit or loss.

The standard also requires disclosure of the composition of

other segment items included in the measure of segment profit or loss that are not separately disclosed.

All disclosure requirements

under ASU 2023-07 are also required for public entities with a single reportable segment.

The ASU is effective for the Company’s

Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted.

Company adopted ASU 2023-07 effective December 31, 2024 with additional disclosures detailed in

the subsequent notes.

December 2023, the FASB issued 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,

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

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

ASU 2023-09 is effective for the Company for its

fiscal year beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of adopting this

standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement

– Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) .

This ASU requires disclosure on

an annual and interim basis, in the notes to the financial statements, of disaggregated information about specific categories underlying

certain income statement expense line items.

The guidance is effective for annual periods beginning after December 15, 2026, and interim

periods with annual reporting periods beginning after December 15, 2027, on a retrospective basis.

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

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

Early adoption is permitted.

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

and related disclosures.

May 2025, the FASB issued ASU 2025-04, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers

(Topic 606), which clarifies the guidance in both ASC 718 and ASC 606 on the accounting for share-based payment awards that are granted

by an entity as consideration payable to its customer.

The ASU is intended to reduce diversity in practice and improve existing guidance,

primarily by revising the definition of a “performance condition” and eliminating a forfeiture policy election for service

conditions associated with share-based consideration payable to a customer.

In addition, the ASU clarifies that the guidance in ASC 606

on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether

an award’s grant date has occurred” (as determined under ASC 718).

ASU 2025-04 is effective for fiscal years beginning after

December 15, 2026, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating

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

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 Update 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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326), which provides a practical

expedient for measuring expected credit losses on current receivables and contract assets arising under Topic 606, Revenue from

Contracts with Customers.

The ASU allows entities to assume that the macroeconomic conditions existing at the balance sheet date

will remain unchanged over the remaining life of those assets.

The amendments are effective for fiscal years beginning after

December 15, 2025, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently

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

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

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

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 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.

adoption is permitted.

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

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (“ASU 2025-11).

of this ASU is to improve the guidance of Topic 270, Interim Reporting, by providing clarity on the current interim reporting requirements.

This amendment also provides additional guidance on what disclosures should be provided in interim reporting periods.

The amendments

in this ASU also add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period

that have a material impact on the reporting entity.

The amendments in this ASU are effective for all public companies for interim reporting

periods within annual reporting periods beginning after December 31, 2027.

Early adoption is permitted.

The amendments in this ASU can

be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is

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

Company reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the

Company’s operations or that no material effect is expected on its consolidated financial statements as a result of future adoption.

4 – Business Combination

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

5 – Acquisition of SemiCab, Inc.’s Assets

June 11, 2024, the Company, its wholly-owned subsidiary, SemiCab Holdings, SemiCab, Inc., Ajesh Kapoor and Vivek Sehgal entered into

4 unchanged sentences

The Company acquired SemiCab, Inc.’s business to diversify the Company’s business.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

Pursuant to the terms of the asset

purchase agreement that the Company entered into on June 11, 2024, the Company entered into an option agreement that granted SemiCab Holdings

the right to acquire all of the issued and outstanding equity securities of SMCB, which is a subsidiary of SemiCab, Inc., for 1,605 shares

of the Company’s common stock.

The Company did not exercise this right and the option agreement expired unexercised on August 31,

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

that granted SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB, which is a subsidiary

of SemiCab, Inc., for 1,605 shares of the Company’s common stock.

The Company did not exercise this right and the option agreement

expired unexercised on August 31, 2024.

connection with the asset purchase agreement, effective July 3, 2024, SemiCab Holdings entered into employment agreements with Ajesh

Kapoor and Vivek Sehgal.

Kapoor’s agreement is for a term of three years with an annual base salary of $ 140,000

for 2024, $ 240,000

for 2025, and $ 300,000

Sehgal’s agreement is for a term of three

years with an annual base salary of $ 105,000

for 2024, $ 210,000

for 2025, and $ 240,000

Kapoor’s agreement is for a term of three years with an annual base salary of $ 140,000 for 2024,

$ 240,000 for 2025, and $ 300,000 for 2026.

Sehgal’s agreement is for a term of three years with an annual base salary

of $ 105,000 for 2024, $ 210,000 for 2025, and $ 240,000 for 2026.

Both executives’ salaries are subject to annual

2 unchanged sentences

for the SemiCab business was $ 983,000 .

The 3,209 shares issued to SemiCab, Inc.

were valued at $ 494,000 on the Acquisition Date based on the trading price of the

Company’s common stock on the Acquisition Date discounted for a lack of marketability.

The Company recognized a

non-controlling interest at fair value as of the Acquisition Date in the amount of $ 74,000 ,

representing the value of the 20 %

membership interest in SemiCab Holdings that was issued to SemiCab, Inc.

The 3,209 shares issued to SemiCab,

were valued at $ 494,000 on the Acquisition Date based on the trading price of the Company’s common stock on the Acquisition

Date discounted for a lack of marketability.

The Company recognized a non-controlling interest at fair value as of the Acquisition Date

in the amount of $ 74,000 , representing the value of the 20 % membership interest in SemiCab Holdings that was issued to SemiCab,

in the transaction.

The 20 % membership interest was valued at the Acquisition Date based on the fair value of the implied value of SemiCab Holdings based on the

value of the Company’s common stock issued on the Acquisition Date.

The 20% membership interest was valued at the Acquisition Date based on the fair value of the implied value

of SemiCab Holdings based on the value of the Company’s common stock issued on the Acquisition Date.

The Company recorded a measurement

period adjustment during the fourth quarter of 2024 that reduced the value of finite lived intangible assets acquired in the

transaction by $ 1,050,000 .

period adjustment during the fourth quarter of 2024 that reduced the value of finite lived intangible assets acquired in the transaction

by $ 1,050,000 .

This had the effect of increasing goodwill by $ 1,050,000 .

3 unchanged sentences

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

of Consideration Transferred to the Assets Acquired and Liabilities Assumed

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

Consideration:

Equity consideration

Fair value of non-controlling interest

Fair value of non-controling interest

Total equity consideration

Effective extinguishment of advances to SemiCab,

Effective extinguishment of advances to SemiCab, Inc.

Total consideration

4 unchanged sentences

Other non-current assets

Customer relationships (nine 9 year estimated useful life)

Customer relationships (nine 9

year estimated useful life)

Trade name (nine 9 year estimated useful life)

10 unchanged sentences

Schedule of Property and Equipment

Computer and office equipment

Furniture and fixtures

Molds and tooling

Property and equipment gross

and office equipment

accumulated depreciation

Property and equipment

expense was $ 192,000 and $ 287,000 for the year ended December 2024 and nine months ended December 31, 2023, respectively.

and equipment net

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

HOLDINGS, INC AND SUBSIDIARIES

3 unchanged sentences

Schedule of Intangible Assets

Customer relationships

Developed technology

Intangible assets gross

relationships of SemiCab, Inc.

Trade name of SemiCab, Inc.

Developed technology of SemiCab, Inc.

Customer relationships of SMCB

Reacquired rights of SMCB

Trade name of SMCB

accumulated amortization

Intangible assets net

expense was $ 30,000 for

the year ended December 31, 2024.

The Company did not have any intangible assets or goodwill at December 31, 2023.

Company tested the recorded amount of goodwill for impairment on December 31, 2024 to see if the carrying amount of goodwill

exceeded its carried value.

The Company calculated a market-based valuation utilizing inputs classified as level 3 on the fair value

hierarchy by multiplying one by projected 2025 revenue for the SemiCab business.

The Company determined that, as a result of the

SemiCab generating less revenue than anticipated, an impairment charge of $ 3,592,000

should be recorded as of December 31, 2024.

The following table presents the changes in the value of the

goodwill recognized in connection with the acquisition of SemiCab business:

expense was $ 241,000 and

the years ended December 31, 2025 and 2024, respectively.

the year ended on December 31, 2024, the Company tested the recorded amount of goodwill from the acquisition of SemiCab, Inc.’s

business for impairment on December 31, 2024 to see if the carrying amount of goodwill exceeded its carried value.

The Company calculated

a market-based valuation utilizing inputs classified as level 3 on the fair value hierarchy by multiplying one by projected 2025 revenue

for the SemiCab business.

As a result of this test, the Company recorded an impairment charge of $ 3,592,000 during the year ended December

31, 2024 and the balance of the Company’s goodwill on December 31, 2024 was $ 786,000 .

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.

the year ended on December 31, 2025, the Company tested the recorded amount of goodwill from the acquisition of SemiCab, Inc.’s

business and SMCB as of December 31, 2025 for impairment to see if the carrying amount of goodwill exceeded its carried value.

of this test, the Company determined that no impairment of goodwill was needed to be recorded as of December 31, 2025.

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

Schedule of Changes in Goodwill

Balance at January 1, 2024

Goodwill from acquisition of SemiCab, Inc.

on July 3, 2024

Goodwill from acquisition of SemiCab, Inc.’s

business on July 3, 2024

Impairment of goodwill

1 unchanged sentence

Balance at December 31, 2024

Goodwill from acquisition of SMCB on May

Impairment of goodwill

Balance at December

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

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 $ 6,000 as of December 31, 2024 that was included as a component of accrued expenses on the Company’s

consolidated balance sheets.

The Company incurred interest expense on these loans of $ 36,000 for the year ended December 31, 2024.

terms of each loan are summarized in the table below:

of Notes Payable to Related Parties Loan

Balance as of December 31, 2024

current portion of notes payable to related parties

Notes payable to related parties, net of current portion

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

to the loans described above that were in default at December 31, 2024 pursuant to which the maturity dates of the loans were extended

to February 1, 2026.

As a result of the execution of the waivers and amendments, the Company cured the defaults that had existed at December

31, 2024 due to non-payment on the original maturity dates of the notes.

payable to related parties consist of the following:

Schedule of Notes Payable to Related Parties

Loans with related parties assumed

in acquisition of SemiCab business

Promissory note issued

for acquistion of SMCB

current portion of notes payable to related

Notes payable to related parties, net of current

With Related Parties Assumed in Acquisition of SemiCab Business

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

The Company incurred

interest expense on these loans of $ 59,000 and $ 36,000 for the years ended December 31, 2025, and December 31, 2024, respectively.

relation to these loans, the Company did no t have any accrued interest payable as of December 31, 2025, and had accrued interest payable

of $ 6,000 as of December 31, 2024, that was included within accrued expenses in the Company’s consolidated balance sheets.

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

Schedule of Notes Payable to Related Parties Loan

Outstanding Principal

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 .

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.

Note Issued for Acquisition of SMCB

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

pursuant to which, in part,

the Company issued a promissory note to SemiCab, Inc.

in the principal amount of $ 1,750,000 .

A discussion of this transaction and the

terms of the promissory note is set forth herein in Note 18 – Acquisition of SMCB .

HOLDINGS, INC AND SUBSIDIARIES

2 unchanged sentences

8 – Credit Facilities and Other Financing Arrangements

Third Bank Asset-Backed Revolving Credit Facility

October 14, 2022, the Company entered into a loan and security agreement with Fifth Third Financial Corporation.

The credit agreement

established a secured asset-backed revolving credit facility that was comprised of a maximum $ 15,000,000 revolving credit facility.

under the credit facility was determined monthly by a borrowing base comprised of a percentage of eligible accounts receivable and eligible

inventory of the Company.

The Company’s obligations under the credit agreement are secured by a continuing security interest in

all property of each loan party, subject to certain excluded collateral.

associated with the closing of the credit agreement of $ 254,000 were deferred and amortized over life of the loan.

During the nine months

ended December 31, 2023, the Company incurred amortization expense of $ 215,000 associated with the amortization of deferred financing

costs from the credit agreement.

under the credit facility took the form of base rate loans at interest rates of the greater of either:

the Prime Rate plus 0.50%, or (b) the Secured Overnight Financing Rate 30-day term rate plus 3%, subject to a minimum of 0.050% in either

The Company incurred interest expense of 43,000 for the nine

months ended December 31, 2023.

May 19, 2023, the Company executed a Waiver and First Amendment agreement which provided for a waiver of previous defaults and instituted

new covenants.

On November 17, 2023, the Company voluntarily terminated the credit agreement as the Company could not comply with the

debt coverage financial covenant effective September 30, 2023.

There was no balance outstanding on the credit agreement as of the termination

Credit Facility

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$ 2,000,000 revolving credit facility.

Availability under the credit facility was determined monthly by a borrowing base comprised of

a percentage of eligible accounts receivable of the borrowers.

Availability under the credit facility was determined monthly by a borrowing base comprised

of a percentage of eligible accounts receivable of the borrowers.

The Company’s obligations under the credit agreement were secured

5 unchanged sentences

expense of $ 77,000 for financing costs associated with the credit agreement.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

Capital Merchant Cash Advance

6 unchanged sentences

in the amount of $ 16,200 for 28 weeks for a total repayment of $ 453,600 .

The effective interest rate for the borrowings is 15 % per year.

The effective interest rate for the borrowings is 15 % per

The Company incurred $ 105,400 of interest expense under this financing agreement during the year ended December 31, 2024.

As of December

31, 2024, the merchant cash advance had been repaid in full.

December 31, 2024, the merchant cash advance had been repaid in full.

Advance Merchant Cash Advance

connection with the acquisition of SemiCab, Inc.’s business, the Company assumed a merchant cash advance that was payable to

Cedar Advance, LLC that had been incurred under a financing agreement that SemiCab, Inc.

connection with the acquisition of SemiCab, Inc.’s business, the Company assumed a merchant cash advance that was payable to Cedar

Advance, LLC that had been incurred under a financing agreement that SemiCab, Inc.

had entered into on May 8, 2024.

initial amount borrowed was $ 215,000 ,

with net proceeds to SemiCab, Inc.

The initial amount

borrowed was $ 215,000 , with net proceeds to SemiCab, Inc.

in the amount of $ 204,300 .

Repayment terms consisted of weekly payments in the amount of $ 11,100 for

28 weeks for a total repayment of $ 312,000 .

The effective interest rate for the borrowings is 18 %

Repayment terms consisted of weekly payments in

the amount of $ 11,100 for 28 weeks for a total repayment of $ 312,000 .

The effective interest rate for the borrowings is 18 % per

The Company incurred $ 88,800 of interest expense under this financing agreement during the year ended December 31, 2024.

As of December 31, 2024, the merchant cash advance had been repaid in full.

December 31, 2024, the merchant cash advance had been repaid in full.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

9 – Commitments and Contingencies

1 unchanged sentence

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.

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

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.

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defaulted on the loan for non-payment.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

May 18, 2024, SemiCab, Inc.

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connection with the acquisition of the SemiCab, Inc.’s business, the Company assumed this settlement liability.

As of December

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

consolidated balance sheets.

The Company was in compliance with the terms of the settlement at December 31, 2024.

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 alleges 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 is 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 ;

damages and attorney’s fees.

The Company filed a motion to dismiss the complaint.

Based on the Company’s assessment of

the facts underlying the claims, the uncertainty of the litigation and the preliminary stage of the case, the Company cannot

reasonably estimate the potential loss or range of loss that may result from this action.

The final payment

of the settlement was made during the year ended December 31, 2025.

Accordingly, there was no unpaid balance at December 31, 2025.

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

on the Company’s consolidated balance sheets.

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

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Flatiron & OAC Adelphi Litigation

August 23, 2023, MICS NY entered into an Agreement of Lease (the “Lease Agreement”) with OAC 111 Flatiron, LLC and OAC Adelphi,

LLC (the “Landlord”), pursuant to which MICS NY agreed to lease approximately 10,000 square feet of ground floor retail space

and a portion of the basement underneath the ground floor retail space in the property located at 111 West 24 th Street, New

York, New York (the “Premises”).

LLC (the “Landlord”), pursuant to which MICS NY agreed to lease approximately 10,000 square feet of ground floor

retail space and a portion of the basement underneath the ground floor retail space in the property located at 111 West 24 th Street,

New York, New York (the “Premises”).

the year ended December 31, 2024, the Company abandoned its plans to continue use of the leased space and exercised its early termination

2 unchanged sentences

lease were impaired.

Assets including security deposits, rent deposits and right of use assets of approximately $ 3,878,000 were written

off during the year ended December 31, 2024.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

July 26, 2024, the Landlord filed a civil action in the Supreme Court of

the State of New York against MICS NY and the Company (“the Defendants”)

for alleged breach of lease, seeking monetary damages including unpaid rent, future unpaid rent, and other expenses related to the lease.

Assets including security deposits, rent deposits and right of use assets of approximately $ 3,878,000 were

written off during the year ended December 31, 2024.

July 26, 2024, the Landlord filed a civil action in the Supreme Court of the State of New York against MICS NY and the Company (“the

Defendants”) for alleged breach of lease, seeking monetary damages including unpaid rent, future unpaid rent, and other expenses

related to the lease.

The complaint alleged the Defendants breached the lease in various material respects.

1 unchanged sentence

days of the Company’s payment of $ 250,000 .

Pursuant to the settlement agreement, the Company made the first payment of $ 150,000 on September 25, 2024 and a final payment of $ 100,000 on October 25, 2024.

The remaining lease liability was written off upon settlement, resulting in a loss upon termination of the lease of

$ 4,000 , net of the write off of the related lease asset discussed above.

On October 29, 2024, the Landlord

filed a discontinuance with prejudice.

Yonder Liability

Pursuant to the settlement agreement, the Company made the first payment of $ 150,000

on September 25, 2024 and a final payment of $ 100,000 on October 25, 2024.

The remaining lease liability was written off upon settlement,

resulting in a loss upon termination of the lease of $ 4,000 , net of the write off of the related lease asset discussed above.

29, 2024, the Landlord filed a discontinuance with prejudice.

Yonder Litigation

to the asset purchase agreement with SemiCab, Inc., the Company assumed a judgement against SemiCab, Inc.

5 unchanged sentences

(“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 .

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 original term of the agreement was

for three years, at a price of $ 100,000 per year, for a total of $ 300,000 .

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

June 21, 2023, Blue Yonder filed a lawsuit claiming damages in the amount of $ 275,000 with the Maricopa County Superior Court in

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

2 unchanged sentences

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,

In the event this payment is made, the remaining

settlement shall be deemed satisfied.

If neither payment is made, Blue Yonder shall be entitled to execute the full $ 509,119 beginning

January 1, 2025.

As of the date of this filing, none of the scheduled payments have been made.

A liability of $ 509,119 has been recorded as a component

of accrued expenses on the accompanying consolidated balance sheets.

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.

judgement was in the amount of $ 509,119 .

The Company have retained counsel to represent them in this matter.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

9 – Operating Leases

Company is a party to various operating leases with rent ranging from $ 4,900

All of the leases have remaining terms of less than one year.

Lease expense for the Company’s operating leases is

recognized on a straight-line basis over the lease terms.

following table presents supplemental information about the Company’s operating leases and future minimum annual lease payments

under its operating leases as of December 31, 2024.

balance sheet information related to leases as of December 31, 2024 and 2023 is as follows:

Schedule of Supplemental Information Related To Leases

December 31, 2024

December 31, 2023

Operating lease - right-of-use assets

Current portion of operating leases

Operating lease liabilities, net of current portion

statement of operations information related to operating leases is as follows:

of Operating Lease Term and Discount Rate

Twelve Months Ended

Nine Months Ended

December 31, 2024

December 31, 2023

Operating lease expense as a component of general and administrative expenses

Supplemental cash flow information related to operating leases is as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flow paid for operating leases

Lease term and Discount Rate

Weighted average remaining lease term (years)

Weighted average discount rate

The following

table summarizes information regarding lease maturities and balance due as follows:

of Operating Lease Lease Maturities and Balance Due

Payments due by period

Total operating lease liabilities

operating lease liabilities

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

A liability of $ 506,000 has been

recorded as a component of accrued expenses on the accompanying consolidated balance sheets.

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.

10 – Stock Compensation Expense

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agents, advisors and independent contractors.

maximum 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 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

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:

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;

3 unchanged sentences

or are forfeited, become available for issuance again under the equity plan.

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.

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Company’s board of directors may amend, suspend or terminate the plan or a portion of it at any time;

5 unchanged sentences

and (ii) the date the stockholders approved the plan.

of December 31, 2024, there were 1,500

November 20, 2025, the plan was amended to provide that the number of shares of common stock available for issuance under the plan is

5,000,000 and that, commencing January 1, 2025, on the first day of each of the Company’s fiscal years thereafter, this number will be increased

by the lesser of:

(i) 15 % of the outstanding common stock on a fully diluted basis as of the end of the Company’s immediately preceding fiscal

year, or (ii) an amount determined by the board of directors, provided that any shares from any such increases in previous years that

are not actually issued shall continue to be available for issuance under the plan.

Accordingly, as of December 31, 2025, there were

5,000,000 shares of common stock authorized for issuance under the plan.

Of this amount, awards representing 1,183

shares of common stock had been granted under the plan and 317

this amount, awards representing 283,666 shares of common stock were outstanding as of December 31, 2025 and.

On January 1, 2026, the

number of shares available for issuance under the plan increased to 5,750,000 in accordance with the terms of the plan.

Company granted awards representing 283,316 shares of common stock during the year ended December 31, 2025.

The Company did not grant

any awards for shares of common stock during the year ended December 31, 2024.

There were 33 shares forfeited during the year ended December

No shares of common stock were forfeited during the year ended December 31, 2025.

There were 283,666 and 351 shares of common

stock underlying share-based awards that were outstanding at December 31, 2025 and 2024, respectively.

As of December 31, 2025, 4,716,334

shares remained available for issuance under the plan.

The Company did not issue any share-based compensation during the year ended

December 31, 2024 or the nine months ended December 31, 2023.

There were 33

shares forfeited during the year ended December 31, 2024 and the nine months ended December 31, 2023, respectively.

There were 351 and 384 shares of common stock underlying share-based awards that were outstanding at December

31, 2024 and 2023, respectively.

share-based compensation expense for the year ended December 31, 2024 and the nine months ended December 31, 2023 includes the estimated

fair value of share-based awards granted, amortized on a straight-line basis over the requisite service period for the entire portion

of the award.

For the year ended December 31, 2024 and the nine months ended December 31, 2023, the Company recognized share-based compensation

expense of $ 69,000 and $ 110,000 , respectively.

of December 31, 2024, there was an unrecognized expense of $ 33,000

remaining on stock options currently vesting over time with approximate weighted average of six

months remaining until these options are fully vested.

The vested options as of December 31, 2024, had no

intrinsic value.

compensation expense includes the estimated fair value of share-based awards granted, amortized on a straight-line basis over the requisite

service period for the entire portion of the award.

For the years ended December 31, 2025 and 2024, the Company recognized

share-based compensation expense of $ 90,000 and $ 69,000 , respectively.

of December 31, 2025, there was an unrecognized expense of $ 223,000 remaining on stock options currently vesting over time with approximate

weighted average of one year and eleven months remaining until these options are fully vested.

The vested options as of December 31,

2025, had no intrinsic value.

of December 31, 2025, there was an unrecognized expense of $ 143,000 remaining on restricted stock awards currently vesting over time

with approximate weighted average of 3 years and 7 months remaining until these awards are fully vested.

Equity Compensation

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

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

Equity Compensation

the year ended December 31, 2024, the Company issued 3,873 shares of its common stock to three vendors as payment for consulting services

rendered and issued 472 shares of common stock to Vivek Sehgal as bonus compensation earned under his employment agreement with SemiCab

The Company recognized compensation expense of $ 478,000 during the year ended December 31, 2024 in connection with these share

issuances, all of which was recorded in general and administrative expenses in the Company statement of operations.

the year ended December 31, 2025, the Company issued an aggregate of 162,882 shares of its common stock to three vendors in a non-cash

transaction as consideration for services rendered or to be rendered.

The shares were valued at the closing price of the Company’s

common stock on the respective measurement dates, resulting in a total fair value of $ 344,000 , which was recognized as general and administrative

expenses in the accompanying consolidated statement of operations.

the year ended December 31, 2024, the Company issued an aggregate of 3,873 shares of its common stock to three vendors as consideration

for services rendered and issued 472 shares of common stock to Vivek Sehgal as bonus compensation earned under his employment agreement

with SemiCab Holdings.

The Company recognized $ 478,000 of compensation expense related to these share issuances during the year ended

December 31, 2024, which was recorded as general and administrative expenses in the accompanying consolidated statement of operations.

11 – Net Loss Per Share

computations of basic and dilutive loss per share of commons stock outstanding for the year ended December 31, 2024 and the nine months

ended December 31, 2023 are as follows:

of Basic and Diluted Loss Per Share

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

Schedule of Basic and Diluted Income (Loss) Per Share

December 31, 2025

Nine Months Ended

December 31, 2024

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$ ( 23,257,000 )

Basic and fully diluted weighted average shares of common stock outstanding

Basic and fully diluted net loss per share of common stock

computation of the fully diluted weighted average number of shares of common stock outstanding for the year ended December 31, 2024 and

the nine months ended December 31, 2023 is as follows:

Diluted Weighted Average Number of Shares

Basic and diluted weighted average of common stock outstanding

Loss per common share

computations of the fully diluted weighted average number of shares of common stock outstanding for the years ended December 31, 2025

and 2024 are as follows:

Schedule of Diluted Weighted Average Number of Shares

December 31, 2025

Nine Months Ended

December 31, 2024

Basic weighted average common shares outstanding

Effect of dilutive stock options

Effect of dilutive stock options and warrants

Diluted weighted average of common shares outstanding

7 unchanged sentences

31, 2025 and 2024

the year ended December 31, 2024, 536 shares of common stock underlying stock options and 563,335 shares of common stock underlying warrants

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

months ended December 31, 2023, 569 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.

the year ended December 31, 2025, 181,067 shares of common stock underlying stock options and 1,138,163 shares of common stock underlying

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

For the year ended

December 31, 2024, 536 shares of common stock underlying stock options and 563,335 shares of common stock underlying warrants were excluded

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

12 – Securities Transactions

2023 Private Placement

On November 20,

2023, the Company entered into an agreement to sell $ 2,000,000 of

common stock through a private placement of common stock with Stingray Group and Jay Foreman, both of which were existing

shareholders with representation on the Company’s board of directors.

The shares of common stock were sold at $ 182 per

share of common stock.

A total of 10,990 shares

of common stock were issued to them by the Company.

Net proceeds from the transaction were approximately $ 1,900,000 ,

net of transaction fees of approximately $ 100,000 .

During the six-month period after the closing date, the investors had the right to make a written request for registration under the

Securities Act of all or any portion of the shares purchased.

Neither of them exercised this right.

February 15, 2023, the Company entered into an at-the-market issuance sales agreement with Aegis Capital Corp as sales agent pursuant

to which the Company could offer and sell, from time to time, through the sales agent, up to $ 1,800,000 in shares of the Company’s

common stock.

For the nine months ended December 31, 2023, the Company received net proceeds of $ 1,654,000 from the sale of its common

stock in this offering after payment of $ 146,000 for brokerage commissions and administrative fees to the agent.

The at-the-market issuance

sales agreement was terminated on May 12, 2023.

Ventures Stock Repurchase Transaction

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.

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

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 $ 472,527 ,

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%

$ 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.

February 18, 2025, the date of the closing of the transaction, the Company issued a promissory note to Regalia Ventures in the amount

of $ 472,000 , which was the principal amount of the purchase price.

The note was due and payable on demand and accrued interest at the

rate of 10 % per year.

The Company incurred $ 1,000 for interest expense for the year ended December 31, 2025 related to this promissory

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

Regalia Ventures is owned and controlled by Jay B.

who serves as a member of the Company’s board of directors.

Foreman, who served

as a member of the Company’s board of directors until November 14, 2025.

Group Stock Repurchase Transaction

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:

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 $ 285,714 ,

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 $ 285,714 ,

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%

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

Mathieu Peloquin is the Senior Vice-President, Marketing and

Communications of Stingray Group and serves as a member of the Company’s board of directors.

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.

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

February 18, 2025, the date of the closing of the transaction, the Company issued a promissory note to Stingray Group in the amount of

$ 286,000 , which was the principal amount of the purchase price.

The note was due and payable on demand and accrued interest at the rate

of 10 % per year.

The Company incurred $ 3,000 for interest expense for the year ended December 31, 2025 related to this promissory note.

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

Mathieu Peloquin is the Senior Vice-President, Marketing and Communications

of Stingray Group and served as a member of the Company’s board of directors until October 6, 2025.

2024 Private Placement

8 unchanged sentences

Offering closed on October 24, 2024.

At closing, the Company issued an aggregate of 11,500

shares of its common stock and notes in the aggregate principal amount of $ 2,352,941

to the purchasers for total proceeds of $ 2,000,000

net of original issue discount of $ 352,941 .

The Company recorded amortization of original issue discount in the amount of $ 352,941

during the year ended December 31, 2024, which was recorded in interest expense in other expense in the Company’s statement of

shares of common stock were valued at $ 943,000

on the date of issuance and were recorded as a debt issuance cost, fully amortized

to interest expense during the year ended December 31, 2024.

At closing, the Company issued an aggregate of 11,500 shares of its common stock and notes

in the aggregate principal amount of $ 2,352,941 to the purchasers for total proceeds of $ 2,000,000 net of original issue discount

of $ 352,941 .

The Company recorded amortization of original issue discount in the amount of $ 352,941 during the year ended December 31,

2024, which was recorded in interest expense in other expense in the Company’s statement of operations.

The 11,500 shares of common

stock were valued at $ 943,000 on the date of issuance and were recorded as a debt issuance cost, fully amortized to interest expense

during the year ended December 31, 2024.

The Company repaid the notes in full during the 2024 year.

Univest Securities served as the placement

agent in the offering and received seven percent of the gross proceeds received by the Company and reimbursement of the legal fees

of its counsel.

Univest Securities served as the

placement agent in the offering and received seven percent of the gross proceeds received by the Company and reimbursement of the

legal fees of its counsel.

2024 Public Offering

December 4, 2024, the Company entered into a securities purchase agreement in connection with a public offering of an aggregate of 21,000

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.

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.

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 is $ 2.00

Each Series A warrant is exercisable for one share of common stock and has an initial exercise price equal to $ 34.00 .

Each Series B warrant is exercisable for one share of common stock and has an initial exercise price equal to $ 68.00 .

The Series A and B warrants have a term of five and two and one-half years, respectively, from the date the issuance of the warrants

was approved by shareholders.

The exercise price of each pre-funded warrant was $ 2.00 per

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

pre-funded warrants are immediately exercisable upon issuance and may be exercised at any time until all pre-funded warrants are exercised

The Series A and B warrants will be exercisable

only upon receipt of such shareholder approval as may be required by the applicable rules and regulations of the Nasdaq to permit the

exercise of the Series A and B warrants, after which the Series A warrants will be exercisable

for a period of five years and the Series B warrants will be exercisable for two and one-half years.

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 contain customary terms regarding the treatment of such pre-funded warrants or the Series A and B warrants in the event of a fundamental

transaction, which include but are 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, Series A warrants, and Series 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.

Series A and B warrants include an exercise price adjustment feature upon shareholder approval, whereby the exercise price will adjust

to the greater of the lowest daily volume weighted average price during the reset period or the floor price ($ 6.844 per share), with

a proportional increase in the number of warrant shares.

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.

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

4 unchanged sentences

B warrants for $ 2.00 per share, provided the holders do not elect to exercise prior to redemption.

Company assessed the pre-funded warrants under ASC 480 and ASC 815 and determined that the pre-funded warrants met the requirements to

be classified in stockholders’ equity.

The Company assessed the Series A and B warrants under ASC 480 and ASC 815 and determined

that the Series A and B warrants will be classified as

liabilities as they do not meet the requirements to be considered indexed to the Company’s

own stock, due to (a) the adjustment to the exercise price tied to shareholder approval, and (b) the potential change in the settlement

amount of the Series B warrants upon an alternative cashless exercise election.

Additionally, the Company concluded at issuance that

it would not have sufficient authorized and available shares of common stock to settle the Series A and B warrants.

See Note 13 –

Derivative Liability .

At inception, the estimated fair value of the Series A warrants was $ 5,900,000

and the Series B warrants was $ 11,000,000 ,

for a total estimated fair value of $ 16,900,000 .

The total fair value exceeded the proceeds received in the offering by $ 8,000,000 ,

which the Company recorded as a loss upon issuance of warrants.

The Company also expensed approximately $ 900,000

of issuance costs incurred in the offering, resulting in a total loss on issuance 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

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.

Company assessed the Series A and B warrants under ASC 480 and ASC 815 and determined that the Series A and B warrants needed to be classified as liabilities as

they did not meet the requirements to be considered indexed to the Company’s own stock, due to (a) the adjustment to the exercise

price tied to shareholder approval, and (b) the potential change in the settlement amount of the Series B warrants upon an alternative

cashless exercise election.

Additionally, the Company concluded at issuance that it would not have sufficient authorized and available

shares of common stock to settle the Series A and B warrants.

See Note 13 – Derivative Liability.

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.

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

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

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

January 14, 2025, the Company’s stockholders approved the issuance of the Series A and B warrants that had been issued by the Company

in the public offering of securities that the Company had completed on December 6, 2024, at which time all of the Series A and B warrants

became exercisable.

This approval triggered the adjustment to the exercise price.

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.

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 .

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.

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

on the Company’s consolidated balance sheet at December 31, 2025.

The Company recognized a loss of $ 6,468,000 during the year ended December 31, 2025 for the change in

the fair value measurement of the warrant liability as of the date the warrant liability was reclassified to equity.

Direct Offering

6 unchanged sentences

proceeds of $ 1,665,000 from the offering after deducting placement agent fees and other offering expenses of $ 335,000 .

Diagonal Financing Transactions

Diagonal Loan #1

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,

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Company incurred and paid $ 10,000 of interest expense under the promissory note during the year ended December 31, 2025.

The outstanding

balance of this note was $ 63,000 as of December 31, 2025.

This amount is presented in the Company’s consolidated balance sheets

net of unamortized issuance costs of $ 17,000 as of December 31, 2025.

Diagonal Loan #2

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.

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 .

Company incurred $ 21,000 of interest expense under the promissory note during the year ended December 31, 2025.

The outstanding balance

of this note was $ 122,000 as of December 31, 2025.

This amount is presented in the Company’s consolidated balance sheets net

of unamortized issuance costs of $ 25,000 as of December 31, 2025.

Capital Financing Transaction

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.

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.

Company incurred and paid $ 10,000 of interest expense under the promissory note during the year ended December 31, 2025.

outstanding balance of this note was $ 63,000 as of December 31, 2025.

This amount is presented in the Company’s consolidated

balance sheets net of unamortized issuance costs of $ 8,000 as of December 31, 2025.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

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.

Company incurred and paid $ 159,000 of interest expense under the promissory note during the year ended December 31, 2025.

The outstanding

balance of the note was $ 54,000 as of December 31, 2025.

This amount is presented in the Company’s consolidated balance sheets

net of unamortized issuance costs of $ 3,000 as of December 31, 2025.

Streeterville

Capital Transaction

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

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.

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:

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 .

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

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.

registration statement became effective on November 10, 2025.

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.

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

In the event the Company elect to

do so, the Company must pay Streeterville an amount equal to 110 % multiplied by the portion of the outstanding balance the Company elected

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.

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.

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.

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.

the year ended December 31, 2025, the Company recognized $ 147,000 of interest expense associated with the First Pre-Paid Purchase.

of December 31, 2025, the outstanding principal balance of the First Pre-Paid Purchase was $ 4,390,000 , which is reflected in the consolidated

balance sheets net of unamortized issuance costs of $ 734,000 .

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

November 13, 2025, the Company entered into Secured Pre-Paid Purchase #2 with Streeterville (“Pre-Paid Purchase #2”).

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.

Second Pre-Paid Purchase was similar to the First Pre-Paid Purchase, however the Second Pre-Paid Purchase is secured by cash in an

amount not less than the lesser of:

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

Purchase (the “PPP2 Minimum Balance Amount”).

The secured funds are being held in a deposit account (the “DACA Account”)

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

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

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

Accordingly, of the

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

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.

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

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 .

the year ended December 31, 2025, the Company repaid an aggregate principal amount of $ 538,000 under the Second Pre-Paid Purchase as

a result of Streeterville exercising its right to purchase an aggregate of 421,770 shares of the Company’s common stock, and recognized

$ 61,000 of interest expense associated with the Second Pre-Paid Purchase.

As of December 31, 2025, the outstanding principal balance

of the Second Pre-Paid Purchase was $ 4,912,000 , which is reflected in the consolidated balance sheets net of unamortized issuance costs

of $ 431,000 .

December 19, 2025, the Company entered into Secured Pre-Paid Purchase #3 with Streeterville (“Pre-Paid Purchase #3”).

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

the year ended December 31, 2025, the Company repaid an aggregate principal amount of $ 99,000 under the Third Pre-Paid Purchase as a

result of Streeterville exercising its right to purchase an aggregate of 83,901 shares of the Company’s common stock, and recognized

$ 3,000 of interest expense associated with the Third Pre-Paid Purchase.

As of December 31, 2025, the outstanding principal balance of

the Third Pre-Paid Purchase was $ 991,000 , which is reflected in the consolidated balance sheets net of unamortized issuance costs of

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

13 – Derivative Liability

the year ended December 31, 2024, the Company had derivative warrant liabilities that were measured at fair value on a recurring basis.

the years ended December 31, 2025 and 2024, 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.

The key inputs for each of these warrant liabilities were as follows:

of Derivative Warrant Liabilities

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:

Schedule of Derivative Warrant Liabilities

Warrant Liability – Series A Warrants

1 unchanged sentence

December 31, 2024

January 13, 2025

Stock price on valuation date

Exercise price

Number of warrants

Number of shares of common stock

Remaining term (years)

5 unchanged sentences

January 14, 2025

January 13, 2025

Expected stockholder approval probability

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

Warrant Liability – Series B Warrants

3 unchanged sentences

Exercise price

Number of warrants

Number of shares of common stock

Remaining term (years)

6 unchanged sentences

Expected stockholder approval probability

following table details the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis

and their fair value hierarchy as of December 31, 2024:

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

January 13, 2025, the Company’s shareholders approved the issuance of the Series A and Series B Warrants.

This approval triggered

the adjustment to the exercise price described above.

In connection with this approval, the holders of the Series B warrants exercised

their warrants in full under the alternative cashless exercise provision, resulting in the issuance of 1,910,975 shares of common stock

and no additional proceeds received by the Company.

The Series A warrants became exercisable for 1,133,652 shares of common stock at

an exercise price of $ 8.38 per share after the shareholder approval adjustment was finalized on March 17, 2025.

In addition, the Company

reassessed the classification of the Series A warrants after the shareholder approval adjustment was finalized, concluding that the Series

A warrants now met the requirements for equity classification under ASC 480 and ASC 815.

The Company adjusted the Series A Warrants to

fair value upon reclassification and reclassified that value to additional paid-in capital during the year ended December 31, 2025.

The following table details the

Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy

as of December 31, 2024:

of Fair Value on a Recurring Basis

2 unchanged sentences

Total liabilities

following table provides a roll-forward of the fair value of the derivative liabilities described above:

of fair value of the Derivative Liabilities

Series A Warrants

Series B Warrants

Total Warrant Liabilities

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

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

31, 2025 and 2024:

Schedule of Fair Value of the Derivative Liabilities

Total Warrant

Balance at December 31, 2023

1 unchanged sentence

Balance at December 31, 2024

( 15,214,000 )

Loss on change in fair value

Reclassification to equity

( 7,857,000 )

Balance at December 31, 2025

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

Schedule of Shares of Common Stock Underlying Warrants

Balance at December 31, 2023

Balance at December 31, 2024

Balance at December 31, 2025

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

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

The following table provides a roll-forward of the

number of shares of common stock underlying warrants issued during the year ended December 31, 2024 and the nine months ended December 31, 2023:

of Shares of Common Stock Underlying Warrants

Pre-Funded Warrants

Series A Warrants

Series B Warrants

Other Warrants

Balance at March 31, 2023

Balance at December 31, 2023

Balance at December 31, 2024

The Company did not issue any warrants during the

nine month transition period ended December 31, 2023 and did not have any warrants outstanding as of December 31, 2023.

14 – Income Taxes

Company’s loss before income taxes for the year ended December 31, 2024 and the nine months ended December 31, 2023 is as follows:

of Loss Before Income Taxes

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

Schedule of Loss Before Income Taxes

December 31, 2025

December 31, 2024

December 31, 2025

December 31, 2024

United States

2 unchanged sentences

( 2,012,000 )

Loss before income taxes

$ ( 16,525,000 )

Company did not have any provision for income taxes for the year ended December 31, 2024 or the nine months ended December 31, 2023.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

$ ( 24,367,000 )

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

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

of Deferred Tax Assets and Liabilities

Schedule of Deferred Tax Assets and Liabilities

December 31, 2025

3 unchanged sentences

Inventory differences

Impairment of GoodWIll

Stock option compensation expense (SFAS 123R)

Intangibles - Semi Cab

Impairment of goodwiIll - SemiCab, Inc.

Stock option compensation expense

ROU liability

1 unchanged sentence

Allowance for doubtful accounts

Warrant liability

Reserve for estimated returns

4 unchanged sentences

( 8,039,000 )

Net deferred tax asset

Deferred tax asset

Depreciable and amortizable assets

( 1,000,000 )

Warrant liability

Prepaid expenses

Net deferred tax liability

$ ( 176,000 )

$ ( 1,103,000 )

Net Deferred Tax Assets and Liabilities

Deferred tax liability

Net deferred tax

Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable

5 unchanged sentences

are not expected to be realized.

Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative

evidence when determining whether it is more likely than not that deferred tax assets are recoverable.

The analysis performed to assess

the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences

and the length of carryback and carryforward periods available under the applicable federal, state and foreign laws;

and the amount and

timing of future taxable income.

The Company evaluated the realizability of its deferred tax assets as of December 31, 2024 and 2023

in accordance with accounting principles generally accepted in the United States of America and concluded that a valuation allowance

against all of the Company’s deferred tax assets was necessary based upon the Company’s conclusions regarding, among other

considerations, the Company’s recent history of losses and projected losses for fiscal year 2024 and in the future.

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

actual tax provision differs from the “expected” tax for the year ended December 31, 2024 and the nine months ended December

31, 2023 (computed by applying the U.S.

Federal Corporate tax rate of 21% to income before taxes) as follows:

of Tax Provision

December 31, 2024

Company performed an analysis in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative

evidence when determining whether it is more likely than not that deferred tax assets are recoverable.

analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals

of temporary differences and the length of carryback and carryforward periods available under the applicable federal, state and foreign

and the amount and timing of future taxable income.

T he Company evaluated the realizability of its deferred tax assets as

of December 31, 2025 and 2024 in accordance with accounting principles generally accepted in the United States of America and concluded

that a valuation allowance against all of the Company’s deferred tax assets was necessary based upon the Company’s conclusions

regarding, among other considerations, the Company’s recent history of losses and projected losses for fiscal year 2026 and in

Company’s income tax expense differs from the amount computed due to the application of the U.

federal statutory tax ra t e

to loss b e f o re

income ta x es as f o ll o w s :

of Effective Income Tax Rate Reconciliation

Pre- ASU 2023-09 Adoption

Year ended December 31, 2025

Federal statutory income tax rate

( 3,471,000 )

State and local income taxes, net of federal benefit

( 1,075,000 )

Permanent differences:

Meals & Entertainment

Permanent difference gain on sale of SMH

Foreign tax rate differential

Change in valuation allowance

Income tax loss

Pre- ASU 2023-09 Adoption

December 31, 2024

1 unchanged sentence

$ ( 5,117,000 )

$ ( 1,344,000 )

State income taxes, net of federal income tax effect

5 unchanged sentences

Actual tax (benefit) provision

December 31, 2024 and 2023, the Company had federal tax net operating loss carryforwards in the amount of $ 19,452,000

and $ 6,149,000 ,

respectively, that begin to expire in the year 2025.

The net operating loss carryforward is subject to an IRS Section 382 limitation

that limited the amount available to use beginning in fiscal 2020 to $ 150,000

In addition, the Company had state tax net operating loss carryforwards during those periods of $ 23,100,000

and $ 2,453,000 ,

respectively that began to expire in 2024.

These tax net operating loss carryforwards may be subject to further adjustment based on

future changes in ownership.

December 31, 2025, the Company had federal tax net operating loss carryforwards in the amount of $ 30,911,000 that begin to expire

in the year 2026.

The net operating loss carryforward is subject to an IRS Section 382 limitation that limited the amount available to

use beginning in fiscal 2020 to $ 150,000 per year.

In addition, the Company had state tax net operating loss carryforwards in the amount

of $ 36,908,000 that will begin to expire in 2026.

These tax net operating loss carryforwards may be subject to further adjustment based

on future changes in ownership.

December 31, 2025, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP and concluded that a valuation

5 unchanged sentences

customers, contracts and product introductions, and recent operating results.

15 – Segment Information and Revenue Disaggregation

previously detailed in Note 3 – Summary of Significant Accounting Policies – Segment Reporting , pursuant to ASC 280,

the Company’s Chief Executive Officer serves as the Company’s Chief Operating Decision Maker (“CODM”) for the

purposes of ASC 280.

The CODM concluded that the Company operates two reportable segments.

One segment consists of its Singing Machine business

and the other segment consists of its SemiCab business.

The CODM manages the Company’s operations and business separately

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

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.

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

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

Ended December 31, 2024

Months Ended December 31, 2023

Adjusted cost of revenues

Adjusted sales and marketing

Adjusted general and administrative (1)

Adjusted depreciation and amortization

Share based compensation

Impairment of goodwill

Impairment of note receivable

Change in fair value of warrant liability

Gain on disposal of fixed assets

Loss on issuance of warrants

Interest expense

Segment net loss

$ ( 18,818,000 )

$ ( 5,549,000 )

$ ( 24,367,000 )

$ ( 6,398,000 )

Total segment assets

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

The following reconciles total segment assets to consolidated

total assets as of December 31, 2024:

Schedule of Reconcilation of Segment Assets to Consolidated

Total segment assets

The Company only had one reportable segment for the nine months

ended December 31, 2023, which consisted of its Singing Machine business.

As the Company only had one reportable segment, the measure

of segment assets at December 31, 2023 is reported on the balance sheet as total consolidated assets.

Disaggregation

Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke

by product line is as follows:

of Revenue by Product Line

December 31, 2024

Nine Months Ended

December 31, 2023

Classic Karaoke Machines

Licensed Products

Kids Youth Electronics

Microphones and Accessories

Music Subscriptions

Logistics Services

Total Net Sales

Company’s policy is to recognize interest or penalties related to income tax matters in the provision for income taxes.

currently has no liabilities recorded for accrued interest or penalties and does not have any liabilities recorded related to uncertain

tax positions.

15 – Segment Information and Revenue Disaggregation

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.

to August 1, 2025, the CODM determined that the Company operated in two reportable segments:

(i) the SemiCab business, and (ii) the Singing

Machine business.

On August 1, 2025, the Company completed the sale of its Singing Machine business.

Upon the completion of this transaction,

the Company began operating as a single reportable segment consisting of its SemiCab business.

As a result of the sale, the operating

results and cash flows of the Singing Machine business have been reclassified as discontinued operations for all periods presented in

the consolidated financial statements.

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

Discontinued Operations .

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.

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

For the year ended December 31, 2025, substantially all of the Company’s revenues were generated from customers located in India.

For the year ended December 31, 2024, all of the Company’s revenues were generated from customers located

in the United States.

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

by geographic region is as follows:

of Revenue by Geographical Region

December 31, 2024

Nine Months Ended

December 31, 2023

North America

Europe and United Kingdom

Total Net Sales

geographic area of sales is based primarily on where the product was delivered.

The Company’s accounts receivable balance, net of an allowance of

$ 139,182 , was$ 7,305,920 as of December 31, 2022.

16 – Concentrations, Risks and Uncertainties Bank Liquidity and Financial Stability

16 – Concentrations, Risks and Uncertainties

Liquidity and Financial Stability

times, the Company maintains cash in United States bank accounts that are more than the Federal Deposit Insurance Corporation insured

9 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 revenues from sales of its products in North America by retailers.

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.

At December 31, 2024, 68 % of accounts receivable were due from three customers in North America

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

The Company’s allowance

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

is concentrated with several large customers.

As of December 31, 2025, 58 % of accounts receivable were due from three customers in India

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

On December 31, 2023, 82 % of accounts receivable

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

derived from the Company’s top five customers and top three customers collectively as a percentage of total net sales was 79 %

of our revenue, respectively, for the year ended December 31, 2024 and the nine months ended December 31, 2023, respectively.

Revenues from customers representing greater than 10% of total net sales were derived from top four customers for the year ended

December 31, 2024 as percentage of the net sales were 26 %, 22 %, 16 %

and 12%, respectively.

Revenues from customers representing greater than 10% of total net sales were derived from top three

customers for the nine months ended December 31, 2023 as percentage of the net sales were 48 %, 21 %

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

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 32 %

and 72 % of the Company’s revenue, respectively, for the year ended December 31, 2025.

The loss of any of these customers could

have an adverse impact on the Company.

17 – Related Party Transactions

Holdings Music Subscription Agreement

Company has a music subscription sharing agreement with Stingray Group under which the Company generated music subscription revenue of

$ 64,000 and $ 780,000 during the years ended December 31, 2025 and 2024, respectively.

revenue was included in net loss from discontinued operations on the Company’s consolidated statements of operations for the years ended December

31, 2025 and 2024.

As of December 31, 2025 and 2024, the Company had $ 0 and $ 212,000 , respectively, due

from Stingray Group for music subscription reimbursement.

These accounts receivable were included in current assets of discontinued

operations in the Company’s consolidated balance sheets as of December 31, 2024.

Mathieu Peloquin is the

Senior Vice-President, Marketing and Communications of Stingray Group and served as a member of the Company’s board of directors until October

HOLDINGS, INC AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

17 – Related Party Transactions

Group Subscription Payments

Company has a music subscription sharing agreement with Stingray Group.

For the year ended December 31, 2024 and the nine months ended

2023, the Company received music subscription revenue of $ 780,000 and $ 612,000 , respectively, from Stingray Group.

As of December 31,

2024 and 2023, the Company had $ 212,000 and $ 269,000 , respectively, due from Stingray Group for music subscription reimbursement.

Company determined that SMCB, which is a subsidiary of SemiCab, Inc., is a VIE as the Company provides financial support to SMCB.

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

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

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

While not contractually obligated, SMCB currently

1 unchanged sentence

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.

Company further determined that it is not the primary beneficiary of SMCB because the Company does not have the power to direct or control

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.

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 consolidated financial statements.

Pursuant to the terms of the asset

purchase agreement that the Company entered into on June 11, 2024, the Company entered into an option agreement that granted SemiCab Holdings

the right to acquire all of the issued and outstanding equity securities of SMCB for 1,605 shares of the Company’s common stock.

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

that granted SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB for 1,605 shares of the

Company’s common stock.

The Company did not exercise this right and the option agreement expired on August 31, 2024.

Loan Agreement

Company is a party to a loan agreement with SMCB dated March 22, 2024.

3 unchanged sentences

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.

of December 31, 2024, the Company had made aggregate advances to SMCB in the amount of $ 1,777,000 .

During the year ended December

31, 2024, SMCB charged $ 637,000

for services to the Company that were performed under the MSA, which charges offset amounts due under the loan with SMCB.

result, as of December 31, 2024, a total of $ 1,140,000

of loans were outstanding under the loan agreement, and a total of $ 1,360,000 remained available for future borrowings under the

loan agreement as of December 31, 2024.

As of December 31, 2024, SMCB had not made any interest payments due under the loan

As a result, the loans were in default as of December 31, 2024.

Company performed the credit risk assessment of the collectability of the notes receivable from SMCB at December 31, 2024 pursuant to

Due to uncertainties associated with the loans, the Company accrued a reserve in the amount of $ 439,000 as of December

The reserve was included within general and administrative

expenses in the Company’s statement of operations.

to December 31, 2024, the Company made additional advances to SMCB in the aggregate amount of $ 500,000 under the loan agreement.

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.

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.

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

May 2, 2025, the loan payable of $ 2,008,000 of SMCB and the loan receivable of $ 2,008,000 of the Company were eliminated in consolidation.

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

at December 31, 2025.

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

for the Company for services performed by SMCB under the MSA of $ 304,000 , during the period commencing January 1, 2025 and ending May

2, 2025 were eliminated in consolidation on May 2, 2025.

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

condensed consolidated statements of operations for the year ended December 31, 2025 and 2024.

18 – Acquisition of SMCB

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 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,

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

The promissory note bears interest at six percent per annum.

The Company completed the acquisition to expand its AI logistics and

distribution into India.

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.

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.

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

Schedule of Business Acquisition

Consideration:

Promissory note

119,742 shares of common stock

Assumption of debt

Identifiable net tangible assets acquired:

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses and other current assets

Property and equipment, net

Other non-current assets

Accounts payable, accrued expenses and other liabilites

Net tangible assets acquired

Identifiable intangible assets acquired:

Customer relationships

Reacquired rights

Net intangible assets acquired

Net assets acquired

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

Forma Information

unaudited pro forma financial information below presents the effects of the acquisition as though it had been completed on January 1,

The pro forma adjustments are derived from the historically reported transactions of the respective companies.

The pro forma results

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

The pro forma results for the year ended December

31, 2025 and 2024 reflect the combined performance of the Company and the SMCB business for that period.

The unaudited pro forma information

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

However, actual

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

This selected

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

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

attempt to forecast future consolidated results of operations.

Schedule of Pro Forma Financial Information

December 31, 2025

December 31, 2024

December 31, 2025

December 31, 2024

Operating loss from continuing operations

( 11,215,915 )

( 16,092,000 )

$ ( 25,251,915 )

$ ( 26,535,000 )

information on the acquisition of SMCB is presented in Note 20 – Subsequent Events .

19 – Discontinued Operations

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.

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

Accordingly, the consolidated balance sheets, the consolidated statements of operations and the consolidated statement of cash

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

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

following table summarizes the results of the Singing Machine business as a discontinued operation in the consolidated statements of

operations for the years ended December 31, 2025 and 2024:

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

December 31, 2025

December 31, 2024

For the Year Ended

December 31, 2025

December 31, 2024

Cost of Goods Sold

Operating Expenses

Selling expenses

General and administrative expenses

Total Operating Expenses

Loss From Operations

( 1,541,000 )

( 5,483,000 )

Other Expenses

Gain on sale of Singing Machine business

Total Other Expenses

Loss Before Income Tax Benefit

( 1,362,000 )

( 5,483,000 )

Net Loss From Discontinued Operations

$ ( 1,362,000 )

$ ( 5,483,000 )

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

following table summarizes the assets and liabilities of the Singing Machine business as a discontinued operation in the consolidated balance sheet for the year ended December

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

are no assets or liabilities of the discontinued operations as of December 31, 2025.

The following table summarizes the cash flows of the Singing Machine business as a discontinued operation in the consolidated statements

of cash flows for the years ended December 31, 2025 and 2024:

December 31, 2025

December 31, 2024

For the Year Ended

December 31, 2025

December 31, 2024

Net cash used in operating activities

$ ( 2,539,000 )

$ ( 5,080,000 )

Net cash provided by investing activities

Net cash provided by financing activities

Total cash used in discontinued operations

$ ( 1,694,000 )

$ ( 4,958,000 )

20 – Subsequent Events

Streeterville

Capital Transaction

January 1, 2026 and March 13, 2026, the Company repaid outstanding principal in the amount of $ 3,305,000 under the First Pre-Paid Purchase

as a result of Streeterville exercising its right to purchase an aggregate of 3,218,166 shares of the Company’s common stock.

current outstanding balance of the First Pre-Paid Purchase is $ 1,085,000 .

HOLDINGS, INC AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

January 1, 2026 and February 13, 2026, the Company repaid outstanding principal in the amount of $ 4,912,000 under the Second Pre-Paid

Purchase as a result of Streeterville exercising its right to purchase an aggregate of 6,447,017 shares of the Company’s common

The Second Pre-Paid Purchase was repaid in full on February 13, 2026.

January 1, 2026 and January 7, 2026, the Company repaid outstanding principal in the amount of $ 991,000 under the Third Pre-Paid Purchase

as a result of Streeterville exercising its right to purchase an aggregate of 1,132,410 shares of the Company’s common stock.

Third Pre-Paid Purchase was repaid in full on January 7, 2026.

February 17, 2026, the Company entered into Secured Pre-Paid Purchase #4 with Streeterville (“Pre-Paid Purchase #4”).

Purchase #4 provides for a fourth Pre-Paid Purchase in the principal amount of $ 10,355,000 , before deducting an original issue discount

of $ 855,000 (the “Fourth Pre-Paid Purchase”).

The Fourth Pre-Paid Purchase accrues interest at the rate of nine percent per

annum and has a maturity date of three years.

The Fourth Pre-Paid Purchase is similar to the Second Pre-Paid Purchase in that the Fourth

Pre-Paid Purchase is secured by cash in an amount not less than the lesser of:

(i) $ 3,500,000 , and (ii) 90 % of the then-current outstanding

balance of the Fourth Pre-Paid Purchase (the “PPP4 Minimum Balance Amount”).

Accordingly, of the $ 9,500,000 in proceeds that

the Company received from the Fourth Pre-Paid Purchase, $ 3,500,000 was placed in the DACA Account.

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.

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.

Company has not repaid any of the principal outstanding under the Fourth Pre-Paid Purchase.

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 .

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-K

Item 9A. Controls and Procedures