What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-05-15 · 229 added, 196 removed, 123 unchanged (78% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s

Discussion and Analysis of Financial Condition and Results of Operations and other parts of this report contain forward-looking

statements that involve risks and uncertainties.

All forward-looking statements included in this report are based on information

available to us on the date hereof, and, except as required by law, we assume no obligation to update any such forward-looking

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a

number of factors, including those set forth herein under Item 1A.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this report contain

forward-looking statements that involve risks and uncertainties.

All forward-looking statements included in this report are based on

information available to us on the date hereof, and, except as required by law, we assume no obligation to update any such forward-looking

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number

of factors, including those set forth herein under Item 1A.

Risk Factors and elsewhere in this report.

The following

should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this report and the audited consolidated financial statements and

notes thereto included in our annual

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

are an artificial intelligence (“AI”) technology and consumer electronics holding company with two primary business units

– SemiCab and Singing Machine.

SemiCab is an AI-enabled software logistics business operated through our 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 our subsidiary, The Singing Machine Company, Inc.

The following should be

read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this

report and the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended

December 31, 2024.

are an artificial intelligence (“AI”) technology that currently has one business unit, which is SemiCab.

SemiCab is an AI-enabled

software logistics business operated through our subsidiary, SemiCab Holdings, LLC.

Prior to August 1, 2025, we had a second business

unit, which was Singing Machine.

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

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

We sold our Singing Machine

business on August 1, 2025.

Accordingly, we no longer own or operate the Singing Machine business line.

is a cloud-based Collaborative Transportation Platform built to achieve the scalability required to predict and optimize loads and the

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lower logistics costs, and provide visibility into the entire transportation network.

Models show that the technology has the capability

of reducing costs through optimization.

Additionally, SemiCab’s technology has the potential to play a key role in the improved

Models show that our SemiCab technology has the

capability of reducing costs through optimization.

Additionally, our SemiCab technology has the potential to play a key role in the improved

sustainability model.

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optimization could also reduce carbon emissions attributable to road freight.

Singing Machine, we engage in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings.

We are a leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke and

Singing Machine, we engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings.

We were a leading global karaoke and music entertainment company that specializes in the design and production of quality karaoke and

music enabled consumer products for adults and children.

Our products are among the most widely available karaoke products internationally.

mission is to “create joy through music.” To deliver on this mission, we are focused on a multi-prong approach.

In the short-term,

we seek to improve profitability by optimizing operations and continue to expand gross margins.

In the mid-to-long-term, we seek to continue

to expand our business into new verticals including automotive and connected-TV devices and grow our global distribution for our consumer

karaoke products.

Our products were among the most widely available karaoke products internationally.

We sold our Singing Machine business on August 1, 2025.

Accordingly, we no longer own or operate the Singing Machine business line.

Corporate Events

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In accordance with SEC rules and regulations, all share numbers and prices throughout this

report and our consolidated financial statements reflect post-reverse stock split numbers.

report and our condensed consolidated financial statements reflect post-reverse stock split numbers.

May 2, 2025 (the “Closing Date”), we and SemiCab Holdings entered into an equity purchase agreement with SemiCab Inc.

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agreement for SemiCab Holdings which sets forth the terms and conditions governing the operation and management of SemiCab Holdings.

SemiCab and Singing Machine businesses are each in very different stages of development.

Accordingly, our plans for growing each of them

are very different.

is an early-stage business that is not yet contributing a material amount of revenue to us.

We intend to invest in our SemiCab business

to develop and grow it into a significant revenue producer for us.

This will involve investments in the continued research and development

of its technology, the hiring of additional qualified employees, marketing and advertising initiatives, and back-office support.

SemiCab is a nascent business, it has already acquired several multinational consumer products companies as customers.

We believe that

as existing customers experience the benefits of our SemiCab logistics and distribution solutions, they will begin to increase their

use of SemiCab.

We also believe that SemiCab’s proven ability to improve truck utilization rates and improve trucking capacity

without adding more trucks, drivers or driven miles will be of substantial interest to additional companies that can benefit from SemiCab.

of Singing Machine Business

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

(“Stingray USA”) pursuant

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

business for $500,000.

The transaction closed on August 1, 2025.

intend to invest in our SemiCab business to develop and grow it into a significant revenue producer for us.

This will involve investments

in the continued research and development of its technology, the hiring of additional qualified employees, marketing and advertising

initiatives, and back-office support.

While SemiCab is a nascent business, it has already acquired several multinational consumer products

companies as customers.

We believe that as existing customers experience the benefits of our SemiCab logistics and distribution solutions,

they will begin to increase their use of SemiCab.

We also believe that SemiCab’s proven ability to improve truck utilization rates

and improve trucking capacity without adding more trucks, drivers or driven miles will be of substantial interest to additional companies

that can benefit from SemiCab.

acquired the United States component of our SemiCab business on July 3, 2024 and acquired the India component of our SemiCab business

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Our investments could involve an acquisition of the assets or equity of complementary companies

or businesses, or could involve a strategic partnership or joint venture with complementary companies or businesses.

We believe that

additional investments could provide us with new AI logistics and distribution technologies, services and resources that we can implement

across our entire SemiCab business, or could help us to more quickly expand our SemiCab footprint into other parts of the world.

actively evaluating additional opportunities to expand our SemiCab business through investments in complementary AI logistics and distribution

businesses and companies.

contrast to our SemiCab business, our Singing Machine business has been successfully operating worldwide for decades.

Our karaoke products

are well-known and established with retailers and consumers in the countries in which we sell them.

Our plan for Singing Machine is to

continue to focus on customer retention through loyalty programs for the online and brick-and-mortar retailers offering our products

and compelling offer promotions, discounts, and special deals to attract customers and increase conversions.

We also intend to reduce

costs through overhead trimming and the use of new selling and marketing methodologies, leverage data analytics to better understand

new trends in consumer preferences for our products, explore new product features and product offerings, and support our new and existing

products with fun and exciting digital marketing and advertising initiatives.

We may also explore entering new markets that may offer

more profitable avenues for our products.

generated net sales of $1,993,000 for the three-month period ended March 31, 2025, compared to $2,426,000 for the three-month period

ended March 31, 2024.

The decrease in net sales was due primarily to the loss of retail shelf space at two major customers.

decreased $2,000 to $500,000, or 25.1% of net sales, for the three-month period ended March 31, 2025, compared to $502,000, or 20.7%

of net sales, for the three-month period ended March 31, 2024.

The decrease was due primarily to the decrease of $433,000 for net sales,

partially offset by a corresponding decrease of $431,000 for cost of goods sold associated with less products being manufactured for

Our operating expenses increased $521,000 to $3,310,000 for the three-month period ended March 31, 2025, from $2,789,000 for the

three-month period ended March 31, 2024, primarily due to an increase in general and administrative expenses incurred for the growth

and development of our SemiCab business.

As a result, we incurred a loss from operations of $2,810,000 for the three-month period ended

March 31, 2025 compared to $2,287,000 for the three-month period ended March 31, 2024.

generated net losses available to common stockholders of $9,191,000, or $4.66 per share of common stock, for the three-month period ended

March 31, 2025, compared to $2,367,000, or $73.76 per share of common stock, for the three-month period ended March 31, 2024.

total assets of $10,461,000 and $18,302,000 at March 31, 2025 and December 31, 2024, respectively.

Net cash used by operating activities

was $3,108,000 for the three-month period ended March 31, 2025 compared to $2,557,000 for the three-month period ended March 31, 2024.

most significant contributor to the increase in our net loss available to common stockholders was a one-time, non-cash charge of $6,468,000

for the change in fair value of warrants that we issued in connection with the public offering of securities that we completed on December

In that offering, we sold Series A warrants and Series B warrants that had certain features and were subject to certain contingencies

that resulted in us having to record a warrant liability of $16,603,000 on our balance sheet at December 31, 2024.

All of the contingencies

that the Series A warrants were subject to were satisfied in January 2025, and all of the Class B warrants were exercised in full during

January and February 2025.

We re-measured the warrant liability for the Class A and B warrants on their respective measurement dates

and adjusted the liability to fair value which resulted in us recording the non-cash charge of $6,468,000 for the change in fair value

The warrant liability was reclassified as equity on our condensed consolidated balance sheet for our fiscal quarter ended

March 31, 2025.

As a result, we did not have any warrant liability on our condensed consolidated balance sheet at March 31, 2025 and

will not incur any further non-cash charges for the change in fair value of warrants.

expect net sales of our Singing Machine karaoke products to decrease over the next 12 months due to the negative impact on our business

from recently implemented tariffs on our products manufactured in China.

However, we expect revenue generated from our SemiCab business

to increase over the next 12 months as we generate more business from our growing customer base in the United States and India.

result, total net sales are expected to increase over the next 12 months.

We expect gross profit to remain at similar levels over the

next 12 months as costs of goods sold decrease commensurate with the decrease in net sales of our karaoke products.

or businesses or could involve a strategic partnership or joint venture with complementary companies or businesses or digital asset treasury

We believe that additional investments could provide us with new AI logistics and distribution technologies, services and

resources that we can implement across our entire SemiCab business or could help us to more quickly expand our SemiCab footprint into

other parts of the world.

We are actively evaluating additional opportunities to expand our SemiCab business through investments in complementary

AI logistics and distribution businesses and companies.

generated revenue of $2,716,000 for the three-month period ended June 30, 2025, compared to $2,440,000 for the three-month period ended

June 30, 2024.

The increase in revenue was due primarily to net sales generated by our SemiCab business.

This was partially offset by

a decrease in net sales of our Singing Machine karaoke products due to the negative impact on our business from recently implemented

tariffs on our products manufactured in China.

Gross profit was $954,000, or 35.1% of net sales, for the three-month period ended June

30, 2025, compared to $324,000, or 13.3% of net sales, for the three-month period ended June 30, 2024.

The increase was due primarily

to an increase of $276,000 for net sales and a decrease of $354,000 for cost of goods sold.

operating expenses were $1,736,000 for the three-month period ended June 30, 2025, compared to $6,478,000 for the three-month period

ended June 30, 2024.

The decrease in operating expenses was due primarily to a decrease of $3,878,000 for operating lease impairment

We incurred a loss from operations of $782,000 for the three-month period ended June 30, 2025 compared to $6,154,000 for the

three-month period ended June 30, 2024.

generated net loss available to common shareholders of $585,000, or $0.24 per share of common stock, for the three-month period ended

June 30, 2025, compared to $6,119,000, or $190.68 per share of common stock, for the three-month period ended June 30, 2024.

assets of $12,695,000 and $18,302,000 at June 30, 2025 and December 31, 2024, respectively.

Net cash used by operating activities was

$5,436,000 for the six-month period ended June 30, 2025 compared to $5,410,000 for the six-month period ended June 30, 2024.

expect net sales generated from our SemiCab business to increase substantially over the next 12 months as we generate more business from

our growing customer base in the United States and India.

We sold our Singing Machine business on August 1, 2025.

As a result, we will

no longer be generating any net sales from that business line.

Overall, total net sales are anticipated to increase over the next 12

months as growth in net sales generated by our SemiCab business is expected to exceed the loss in net sales of our Singing Machine karaoke

We expect gross profit to decrease over the next 12 months due to an increase in cost of goods sold that we will incur in connection

with the increase in net sales that we expect to generate from our SemiCab business.

The decrease in gross profit will be partially offset

by the reduction in cost of goods sold that we will realize as a result of the sale of our Singing Machine business.

We expect operating

expenses to remain flat, if not decrease, over the next 12 months as we implement initiatives designed to reduce general and administrative

expenses, particularly those related to marketing and advertising initiatives.

The reductions achieved may be partially offset by legal

and accounting expenses that we incur as we engage in additional capital-raising activities as needed to fund our business and expenses

that we incur to fund the growth and development of our SemiCab business.

Net loss available to common stockholders is expected to decrease

substantially during the next 12 months primarily due to the fact that we do not expect to incur any additional non-cash charges for

the change in fair value of warrants, and due to the decreases in general and administrative expenses that we intend to generate.

expenses to decrease over the next 12 months as a result of our sale of the Singing Machine business.

The reductions achieved may be

partially offset by increases in legal and accounting expenses that we incur as we engage in additional capital-raising activities as

needed to fund our business and expenses that we incur to fund the growth and development of our SemiCab business.

Net loss available

to common stockholders is expected to decrease during the next 12 months primarily due to the sale of our Singing Machine business.

Notwithstanding

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results of operations.

of the Three-Month Periods Ended March 31, 2025 and 2024

sales consist primarily of sales of our Singing Machine karaoke products and sales of our SemiCab logistics and distribution solutions.

Net sales decreased $433,000 to $1,993,000 for the three-month period ended March 31, 2025, compared to $2,426,000 for the three-month

period ended March 31, 2024.

The decrease in net sales was due primarily to the loss of retail shelf space at two major customers.

expect net sales of our Singing Machine karaoke products to decrease over the next 12 months due to the negative impact on our business

from recently implemented tariffs on our products manufactured in China.

However, we expect revenue generated from our SemiCab business

to increase over the next 12 months as we generate more business from our growing customer base in the United States and India.

of the Three-Month Periods Ended June 30, 2025 and 2024

sales consist primarily of sales generated by our SemiCab managed services logistics platform and sales of our Singing Machine karaoke

Net sales increased $276,000 to $2,716,000 for the three-month period ended June 30, 2025, compared to $2,440,000 for the three-month

period ended June 30, 2024.

The increase in net sales was due primarily to net sales generated by our SemiCab business.

This was partially

offset by a decrease in net sales of our Singing Machine karaoke products due to the negative impact on our business from recently implemented

tariffs on our products manufactured in China.

We sold our Singing Machine business on August 1, 2025.

As a result, we will no longer

be generating any revenue from that business line.

However, we anticipate total revenue to increase over the next 12 months as growth

in revenue generated by our SemiCab business exceeds the loss in net sales of our Singing Machine karaoke products.

of Goods Sold

of goods sold consists primarily of costs for raw materials and the manufacturing of our Singing Machine karaoke products.

only a minimal amount of costs in connection with our SemiCab business.

Cost of goods sold decreased $431,000 to $1,493,000 for the three-month

period ended March 31, 2025, compared to $1,924,000 for the three-month period ended March 31, 2024.

Our decrease in net sales of our

karaoke products resulted in a corresponding decrease in products manufactured, resulting in lower manufacturing costs.

We expect costs

of goods sold to decrease over the next 12 months commensurate with the decrease in net sales of our karaoke products due to the negative

impact on our business of recently implemented tariffs on our products manufactured in China.

of goods sold consists primarily of costs for raw materials and the manufacturing of our Singing Machine karaoke products, and freight,

handling and servicing costs that we incur in connection with our SemiCab business.

Cost of goods sold decreased $354,000 to $1,762,000

for the three-month period ended June 30, 2025, compared to $2,116,000 for the three-month period ended June 30, 2024.

The decrease in

cost of goods sold was due primarily to a decrease in cost of goods sold for our Singing Machine karaoke products associated with lower

net sales of these products.

This was partially offset by freight, handling and servicing costs that we incurred in connection with our

SemiCab business.

We expect costs of goods sold to increase over the next 12 months in connection with the increase in net sales that

we expect to generate from our SemiCab business.

We expect this increase to be partially offset by the reduction in cost of goods sold

that we will realize as a result of the sale of our Singing Machine business.

expenses consist of selling expenses and general and administrative expenses.

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with our SemiCab business.

Selling expenses increased $134,000 to $764,000 for the three-month period ended March 31, 2025, from $630,000

for the three-month period ended March 31, 2024.

The increase was due primarily to an increase in online marketing and social media advertising

We expect selling expenses to decrease over the next 12 months as we engage in fewer, but more focused, marketing and advertising

initiatives and as we navigate the negative impact of recently implemented tariffs on sales of our karaoke products.

Selling expenses decreased $313,000 to $234,000 for the three-month period ended June 30, 2025, from $547,000

for the three-month period ended June 30, 2024.

The decrease was due primarily to a decrease in marketing and advertising expenses commensurate

with the decrease in sales of our Singing Mahine karaoke products.

We expect selling expenses to decrease substantially over the next

12 months due to the sale of our Singing Machine business.

and Administrative Expenses

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associated with our Singing Machine business, and general and administrative expenses incurred in the development and growth of our SemiCab

General and administrative expenses increased $387,000 to $2,546,000 for the three-month period ended March 31, 2025, compared

to $2,159,000 for the three-month period ended March 31, 2024.

The increase was due primarily to increases of $480,000 for general and

administrative expenses incurred in the development and growth of our SemiCab business.

We expect general and administrative expenses

to decrease over the next 12 months as we implement actions designed to reduce general and administrative expenses.

The reductions achieved

may be partially offset by an increase in expenses that we incur to fund the growth and development of our SemiCab business.

expenses consists primarily of a non-cash loss that we incurred for the change in fair value of the warrants in connection with the public

offering of securities that we completed on December 6, 2024.

We incurred only a minimal amount of other expenses in connection with

our SemiCab business.

Other expenses increased $6,456,000 to $6,468,000 for the three-month period ended March 31, 2025, compared to

$28,000 for the three-month period ended March 31, 2024.

The increase was due primarily to an increase of $6,468,000 for the change in

fair value of warrants.

Loss Attributable to Non-Controlling Interest

loss attributable to non-controlling interest consists of the loss allocated to SemiCab, Inc., which owns 20% of the outstanding membership

interests of SemiCab Holdings.

General and administrative expenses decreased $551,000 to $1,502,000 for the three-month period ended June 30, 2025, compared

to $2,053,000 for the three-month period ended June 30, 2024.

The decrease was due primarily to decreases in general and administrative

expenses incurred by our Singing Machine business, partially offset by increases in general and administrative expenses incurred in the

growth and development of our SemiCab business.

We expect general and administrative expenses to decrease over the next 12 months due

to the sale of our Singing Machine business.

We expect the reductions achieved to be partially offset by an increase in expenses that

we expect to incur as we continue to invest in the growth and development of our SemiCab business.

Lease Impairment Expense

lease impairment expense consists of the write off of assets including security deposits, rent deposits and right of use assets that

we incurred due to our abandonment of our agreement of lease, dated August 23, 2023, with OAC 111 Flatiron, LLC and OAC Adelphi, LLC,

during the three months ended June 30, 2024.

Operating lease impairment expense was $3,878,000 for the three months ended June 30, 2024.

We did not incur any operating lease impairment expense for the three months ended June 30, 2025.

We do not expect to incur any additional

operating lease impairment expenses during the next 12 months.

expenses consist of financing costs that we incurred under our loan and security agreement, dated March 28, 2024, with Oxford Business

Credit and other non-operating expenses that we incurred in connection with our SemiCab business.

Other expenses increased $10,000 to

$27,000 for the three months ended June 30, 2025, compared to $17,000 for the three-month period ended June 30, 2024.

We terminated the

loan agreement and security agreement on October 17, 2024.

We may incur additional financing costs during the next 12 months, and expect

to continue to incur additional non-operating expenses in connection with our SemiCab business.

Loss Attributable to Non-Controlling Interests

loss attributable to non-controlling interests consists of the loss allocated to SemiCab, Inc., which owned a 20% of the outstanding

membership interests of SemiCab Holdings until May 2, 2025, and Ajesh Kapoor and Vivek Sehgal, who collectively owned 20% of the outstanding

membership interests of SemiCab Holdings beginning May 2, 2025.

SemiCab Holdings owns our SemiCab business.

We acquired our SemiCab business from SemiCab, Inc.

3, 2024, and, as part of the transaction, granted SemiCab, Inc.

We acquired our SemiCab business

from SemiCab, Inc.

on July 3, 2024, and, as part of the transaction, granted SemiCab, Inc.

a 20% membership interest in SemiCab Holdings.

The net loss attributable

to non-controlling interest of $103,000 represents the amount of loss incurred by SemiCab that was allocated to SemiCab, Inc.

its 20% membership interest in SemiCab Holdings for the three-month period ended March 31, 2025.

The net loss attributable to non-controlling interest of $224,000 represents the amount of loss incurred by SemiCab that was allocated

to SemiCab, Inc.

through its 20% membership interest in SemiCab Holdings for period beginning April 1, 2025 and ending May 2, 2025, and

the amount of loss incurred by SemiCab that was allocated to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest

in SemiCab Holdings for the period beginning May 2, 2025 and ending June 30, 2025.

We expect net loss attributable to non-controlling

interest to increase over the next 12 months as we continue to invest in the development and growth of SemiCab’s business.

of the Six-Month Periods Ended June 30, 2025 and 2024

sales decreased $157,000 to $4,709,000 for the six-month period ended June 30, 2025, compared to $4,866,000 for the six-month period

ended June 30, 2024.

The decrease in net sales was due primarily to a decrease in net sales of our Singing Machine karaoke products due

to the negative impact on our business from recently implemented tariffs on our products manufactured in China.

This was partially offset

by the increase in net sales that we generated from our SemiCab business.

of Goods Sold

of goods sold decreased $785,000 to $3,255,000 for the six-month period ended June 30, 2025, compared to $4,040,000 for the six-month

period ended June 30, 2024.

The decrease in cost of goods sold was due primarily to our decrease in net sales of our karaoke products

and the corresponding decrease in karaoke products manufactured, resulting in lower manufacturing costs.

We incurred only a minimal amount

of costs in connection with our SemiCab business.

This was partially offset by an increase in cost of goods sold associated with the

increase in net sales that we generated from our SemiCab business.

expenses decreased $179,000 to $998,000 for the six-month period ended June 30, 2025, from $1,177,000 for the six-month period ended

June 30, 2024.

The decrease was due primarily to a decrease in marketing and advertising expenses commensurate with the decrease in sales

of our Singing Machine karaoke products.

We did not incur any selling expenses in connection with our SemiCab business.

and Administrative Expenses

and administrative expenses decreased $164,000 to $4,048,000 for the six-month period ended June 30, 2025, compared to $4,212,000 for

the six-month period ended June 30, 2024.

The decrease was due primarily to decreases in general and administrative expenses incurred

by our Singing Machine business, partially offset by increases in general and administrative expenses incurred in the growth and development

of our SemiCab business.

Lease Impairment Expense

lease impairment expense was $3,878,000 for the six months ended June 30, 2024.

We did not incur any operating lease impairment expense

for the three months ended June 30, 2025.

expenses consists primarily of a non-cash loss that we incurred for the change in fair value of the warrants in connection with the public

offering of securities that we completed on December 6, 2024.

Other expenses increased $6,466,000 to $6,511,000 for the six-month period

ended June 30, 2025, compared to $45,000 for the six-month period ended June 30, 2024.

The increase was due primarily to an increase

of $6,468,000 for the change in fair value of warrants.

We incurred only a minimal amount of other expenses in connection with our SemiCab

Loss Attributable to Non-Controlling Interests

net loss attributable to non-controlling interest of $327,000 represents the amount of loss incurred by SemiCab that was allocated to

SemiCab, Inc.

through its 20% membership interest in SemiCab Holdings for period beginning January 1, 2025 and ending May 2, 2025, and

the amount of loss incurred by SemiCab that was allocated to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest

in SemiCab Holdings for the period beginning May 2, 2025 and ending June 30, 2025.

And Capital Resources

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the use of short- and long-term debt.

As of March 31, 2025, our cash balance was $3,296,000.

cash used by operating activities was $3,108,000 during the three-month period ended March 31, 2025, compared to $2,557,000 during the

three-month period ended March 31, 2024.

The increase of $551,000 was due primarily to an increase of $6,927,000 for net loss and a decrease

of $1,197,000 for accounts receivable.

This was partially offset by increases of $6,468,000 for loss on change in fair value of warrants

that we incurred in connection with the public offering of securities that we completed on December 6, 2024 and $892,000 for refunds

due to customers.

cash used by investing activities was $673,000 during the three-month period ended March 31, 2025.

We did not have any cash flows from

investing activities during the three-month period ended March 31, 2024.

The increase of $673,000 was due primarily to increases of $672,000

for advances to SMCB under our loan agreement with them.

cash used by financing activities was $473,000 for the three-month period ended March 31, 2025, compared to $21,000 for the three-month

period ended March 31, 2024.

The increase of $452,000 was due primarily to an increase of $473,000 for repayments of promissory notes

to related parties.

date, our capital needs have been met through cash generated by our operations, sales of our equity

securities and the use of short- and long-term debt to fund our operations.

We have used these sources of capital to pay virtually

all of the costs and expenses that we have incurred to date.

These costs and expenses have been comprised primarily of the professional

fees, employee compensation expenses, and general and administrative expenses discussed above.

intend to continue to rely upon each of these sources to fund our operations and expansion efforts, including additional acquisitions

of controlling or non-controlling financial interests in other complementary businesses and companies during

the next 12 months .

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

cash used by operating activities was $5,436,000 during the six-month period ended June 30, 2025, compared to $5,410,000 during the six-month

period ended June 30, 2024.

The increase of $26,000 was due primarily to an increase of $6,468,000 for change in fair value of warrants

that we incurred in connection with the public offering of securities that we completed on December 6, 2024.

This was partially offset

by a decrease of $3,878,000 for impairment expense and an increase of $1,617,000 for net loss.

cash used by investing activities was $1,359,000 during the six-month period ended June 30, 2025, compared to $6,000 during the six-month

period ended June 30, 2024.

The increase of $1,353,000 was due primarily to increases of $758,000 for repurchases of shares of our common

stock and $1,172,000 for advances to SMCB under out loan agreement with them, partially offset by an increase of $593,000 for cash received

in connection with our acquisition of SMCB on May 2, 2025.

cash provided by financing activities was $379,000 for the six-month period ended June 30, 2025, compared to net cash used in financing

activities of $42,000 for the six-month period ended June 30, 2024.

The difference of $421,000 was due primarily to an increase of $379,000

for proceeds from the issuance of promissory notes payable.

limited cash resources along with our recent history of recurring operating losses and decreases in working capital create substantial

doubt about our ability to continue as a going concern.

To date, our capital needs have been met through cash

generated by our operations, sales of our equity securities and the use of short- and long-term debt to fund our operations.

have used these sources of capital to pay virtually all of the costs and expenses that we have incurred to date.

These costs and expenses

have been comprised primarily of the professional fees, employee compensation expenses, and general and administrative expenses discussed

We intend to continue to rely upon each of these sources to fund our operations and expansion

efforts, including additional acquisitions of controlling or non-controlling financial interests in other complementary businesses

and companies during the next 12 months .

can provide no assurance that these sources of capital will be adequate to fund our operations and expansion efforts during the next

20 unchanged sentences

and, in the extreme case, cause us to discontinue our operations.

August 26, 2024, we received a letter from the Nasdaq indicating that we were not in compliance

with Nasdaq Listing Rule 5550(a)(2) because the closing bid price per share for our common stock had closed below $1.00 for more than

30 consecutive business days.

We were given until February 24, 2025, to regain compliance with the rule.

December 30, 2024, we received notice from the Nasdaq indicating that the bid price for our common stock had closed below $0.10 per share

for the 13-consecutive trading day period ended December 27, 2024 and, accordingly, we would be subject to the provisions contemplated

under Nasdaq Listing Rule 5810(c)(3)(A)(iii) and its securities would be subject to delisting from Nasdaq unless we timely request a

hearing before the Nasdaq Hearings Panel.

March 25, 2025, we received a letter from the Nasdaq stating that we had regained compliance with the minimum bid price requirement of

$1.00 per share for continued listing on the Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2).

We will be subject to a mandatory

panel monitor for a period of one year from March 25, 2025.

If, within that one-year monitoring period, the Nasdaq Listing Qualifications

staff finds that we are again out of compliance with the minimum bid price requirement, notwithstanding Nasdaq Listing Rule 5810(c)(2),

then the staff will issue a delist determination letter and we will have an opportunity to request a new hearing with the initial Nasdaq

hearing panel or a newly convened hearing panel if the initial panel is unavailable.

Sheet Arrangements

of March 31, 2025, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred

of June 30, 2025, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred

to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis