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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended: December 31, ~~2024~~2025

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to ___________

Commission File Number:

001-41405

ALGORHYTHM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-3795478
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

6301 NW 5^th Way, Suite 2900, Fort Lauderdale, FL 33309

(Address of principal executive offices) (Zip Code)

(954) ~~596~~800-~~1000~~0425

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, Par Value $0.01		RIME		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined byin Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of June 30, ~~2024~~2025, the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing price for the common stock on such date of $~~232~~2.45, as reported on the Nasdaq Stock Market, was $46,~~185~~101,~~048~~120.

As of ~~April~~March 1427, ~~2025~~2026, there were ~~on 2~~14,~~394~~651,~~829~~665 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

		Page	~~Page~~
PART I		2
Item 1.	Business	~~Business~~2	2
Item 1A.	Risk Factors	~~Risk Factors~~10	12
Item 1B.	Unresolved Staff Comments	~~Unresolved Staff Comments~~35	44
Item 1C.	Cybersecurity	~~Cybersecurity~~35	44
Item 2.	Properties	~~Properties~~36	45
Item 3.	Legal Proceedings	~~Legal Proceedings~~36	46
Item 4.	Mine Safety Disclosures	~~Mine Safety Disclosures~~36	46
PART II		37
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~37	47
Item 6.	[Reserved]	~~[Reserved]~~37	47
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~38	48
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	~~Quantitative and Qualitative Disclosures About Market Risk~~48	59
Item 8.	Financial Statements and Supplementary Data	~~Financial Statements and Supplementary Data~~48	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~49	60
Item 9A.	Controls and Procedures	~~Controls and Procedures~~49	60
Item 9B.	Other Information	~~Other Information~~51	62
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~Disclosure Regarding Foreign Jurisdictions that Prevent Inspections~~51	62
PART III		52
Item 10.	Directors, Executive Officers and Corporate Governance	~~Directors, Executive Officers and Corporate Governance~~52	63
Item 11.	Executive Compensation	~~Executive Compensation~~59	69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~65	72
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~Certain Relationships and Related Transactions, and Director Independence~~67	74
Item 14.	Principal Accountant Fees and Services	~~Principal Accountant Fees and Services~~70	75
PART IV		~~PART IV~~71
Item 15.	Exhibits and Financial Statement Schedules	~~Exhibits and Financial Statement Schedules~~71	76
Item 16.	Form 10-K Summary	~~Form 10-K Summary~~76	82

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenue and costs, and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation thereon or similar terminology or expressions.

We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results to differ materially from results proposed in such statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:

● our ability to fund our future growth; ~~and~~● ~~implement~~our ability to executed upon our business plan; ● our ability to attract and retain management; ● market acceptance ~~of our products~~ and ~~services~~demand ~~● the cost~~ of ~~equipment~~our ~~and supplies~~services; ● labor shortages and changes in employee compensation costs; ● ~~shortages or interruptions in the availability and delivery of equipment and supplies; ●~~ our ability to maintain and increase the value of our businesses; ● changes in consumer preferences; ● our ability to incorporate new and changing technologies; ● the impact of inflation and other pricing pressures on our business; ● the affect of competition and consolidation in the industries in which we operate; ● the impact of any failure of our information technology system, any breach of our network security, and any security breaches of confidential customer information; ● our ability to comply with applicable international, federal, state and local laws and regulations; ● our ability to protect our trademarks and other intellectual property; ● our ability to obtain debt, equity or other financing on favorable terms, or at all; ● the condition of the securities and capital markets generally;

	●	general economic conditions, whether internationally, nationally or in the regional and local market areas in which we are doing business, that may be less favorable than expected;

	●	other economic, competitive, governmental (including new tariffs), legislative, regulatory, geopolitical and technological factors that may negatively impact our business, operations and pricing;

and statements of assumption underlying any of the foregoing, as well as any other factors set forth herein under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 1A. Risk Factors. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise our forward-looking statements.

PART I

Item 1. Business.

Unless the context requires otherwise, references in this Annual Report to “we,” “us,” and “our,” ~~and Algorhythm~~ refer to Algorhythm Holdings, Inc. and its consolidated subsidiaries. Unless otherwise expressly provided in this Annual Report, all historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents set forth herein relating to our common stock have been adjusted to give effect to a reverse stock split of our common stock in a ratio of 1-for-200 effected on February 10, 2025.

Unless otherwise expressly provided in this Annual Report, all historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents set forth herein relating to our common stock have been adjusted to give effect to a reverse stock split of our common stock in a ratio of 1-for-200 effected on February 10, 2025.

Overview

We are an artificial intelligence (“AI”) technology ~~and consumer electronics holding~~ company ~~with~~focused ~~two~~on ~~primary~~the ~~business~~growth ~~units – SemiCab~~ and ~~Singing~~development ~~Machine~~of SemiCab. SemiCab is an ~~artificial intelligence (“~~ AI”) -enabled software logistics and distribution business ~~operated~~that ~~through~~utilizes our ~~subsidiary,~~ SemiCab ~~Holdings, LLC.~~technology ~~Singing~~platform ~~Machine~~to isenable aretailers, ~~home~~brands and ~~karaoke~~transportation ~~consumer~~providers ~~products~~to ~~business~~address ~~that~~common ~~designs~~supply ~~and~~chain ~~distributes~~problems ~~karaoke products~~ globally. toWe ~~retailers and~~operate ~~ecommerce~~our ~~partners~~SemiCab business through our subsidiary, ~~The~~SemiCab ~~Singing Machine Company~~Holdings, ~~Inc~~LLC.

~~Our~~Prior ~~operations~~to ~~include~~August ~~our wholly-owned subsidiaries~~1, ~~SMC Logistics~~2025, ~~Inc.,~~we ahad ~~California corporation (“SMCL”), SMC-Music, Inc.,~~ a ~~Florida~~second ~~corporation (“SMCM”)~~business, ~~SMC~~which ~~(HK)~~was ~~Limited, a Hong Kong company (“SMH”), The~~ Singing Machine ~~Company, Inc~~.~~, a~~ ~~Delaware corporation (“~~Singing Machine~~”),~~ ~~MICS~~was ~~Hospitality~~a ~~Holdings,~~home ~~Inc.,~~karaoke aconsumer ~~Delaware~~products ~~corporation~~business that ~~(“MICS~~designed ~~Hospitality”), MICS~~and ~~Hospitality~~distributed ~~Management,~~karaoke ~~LLC,~~products ato ~~Delaware~~retailers ~~limited~~and ~~liability~~ecommerce ~~company~~partners ~~(“MICS~~globally ~~Hospitality~~through ~~Management”)~~our subsidiary, ~~and~~The ~~MICS~~Singing ~~Nomad~~Machine Company, ~~LLC, a~~Inc. ~~Delaware~~We ~~limited~~sold ~~liability~~our ~~company~~Singing ~~(“MICS~~Machine ~~NY”),~~business ~~and~~on ~~our~~August ~~80%-owned subsidiary~~1, ~~SemiCab~~2025. ~~Holdings~~Accordingly, ~~LLC,~~we ano ~~Nevada~~longer ~~limited~~own ~~liability company~~or ~~(“SemiCab~~operate ~~Holdings”)~~the Singing Machine business.

2Our operations include our 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”), and our 80%-owned subsidiaries, SemiCab Holdings, LLC, a Nevada limited liability company (“SemiCab Holdings”) and SMCB Solutions Private Limited, an Indian company (“SMCB”).

SemiCab

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

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

Singing Machine

Through Singing Machine, we 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 music enabled consumer products for adults and children. Our products are among the most widely available karaoke products internationally.

Our 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.

Recent Events and Developments

~~Change~~Reverse Stock Split and Increase in ~~Fiscal~~Authorized ~~Year~~Shares

~~During~~On ~~2023~~January 13, 2025, our stockholders voted to authorize our board of directors ~~approved~~to effect a ~~change~~reverse instock split of the outstanding shares of our ~~fiscal~~common ~~year~~stock ~~end~~at a specific ratio within a range of 1-for-10 to a maximum of 1-for-250 and to amend our certificate of incorporation to increase the number of authorized common stock from ~~March~~100,000,000 31to 800,000,000 shares. On January 14, 2025, our board of directors approved a reverse stock split of 1-for-200 ratio and approved the filing of a certificate of amendment to ~~December~~our 31certificate of incorporation to effect the reverse stock split and to increase our authorized shares of common stock from 100,000,000 to 800,000,000. The reverse stock split took effect on February 10, 2025.

~~Asset Purchase~~2

OnAcquisition ~~July 3, 2024, we completed the acquisition~~ of substantially all of the assets and the assumption of certain liabilities of SemiCab, Inc. for a purchase price consisting of 3,210 shares of our common stock and a 20% membership interest in SemiCab Holdings.SMCB

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

On the closing date, we and SemiCab Holdings entered into an amended and restated employment agreement with each of Ajesh Kapoor and Vivek Sehgal pursuant to which Mr. Kapoor agreed to serve as the Chief Executive Officer and Chief Technology Officer of SemiCab Holdings and Mr. Sehgal agreed to serve as the Chief Product Officer of SemiCab Holdings. Pursuant to the terms of the employment agreements, SemiCab Holdings granted Messrs. Kapoor and Sehgal a membership interest in SemiCab Holdings with three quarters of each such grant subject to certain forfeiture rights tied to continued employment with SemiCab Holdings. Additionally, Mr. Kapoor was granted the right to serve as a member of our board of directors and the right to appoint an additional member of our board of directors upon the occurrence of certain specified events.

Also on the closing date, we, SemiCab Holdings, Ajesh Kapoor and Vivek Sehgal entered into an amended and restated limited liability company agreement for SemiCab Holdings which sets forth the terms and conditions governing the operation and management of SemiCab Holdings.

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

~~Hospitality~~Sale ~~Lease~~of Singing Machine

On August 231, ~~2023~~2025, ~~MICS~~we NY entered into an ~~agreement~~asset ofpurchase ~~lease~~agreement with ~~OAC~~SMC ~~111 Flatiron, LLC~~ and ~~OAC~~Stingray ~~Adelphi,~~Music ~~LLC (collectively~~USA, ~~the~~Inc. (“~~Landlord~~Stingray USA”) ~~pursuant~~, toa ~~which~~related party ~~MICS~~and NYsubsidiary ~~agreed~~of tothe ~~lease~~Stingray 10Group,~~000~~ ~~square~~Inc. ~~feet~~(“Stingray ofGroup”), ~~ground~~pursuant ~~floor~~to ~~retail~~which ~~space~~Stingray ~~and~~USA apurchased ~~portion~~substantially all of the ~~basement~~assets, ~~underneath~~and ~~the ground~~assumed ~~floor~~most ~~retail~~of ~~space in~~ the ~~property located at 111 West 24th Street~~liabilities, ~~New~~associated ~~York,~~with ~~New York. It was~~ our ~~intention~~Singing toMachine ~~use this~~business ~~space~~for ~~as a new karaoke venue~~$500,000. ~~offering~~The ~~immersive~~transaction ~~karaoke technology and audio-visual capabilities, with restaurant and bar offerings.~~closed ~~Due~~on toAugust ~~a lack of funding~~1, ~~however, we initiated termination of the lease in March 2024~~2025.

OnStreeterville ~~July~~Capital 26, 2024, the Landlord filed a civil action in the Supreme Court of the State of New York against us and MICS NY for alleged breach of lease, seeking monetary damages including unpaid rent, future unpaid rent, and other expenses related to the lease. The complaint alleged that we and MICS NY breached the lease in various material respects.Transaction

On ~~September~~August 2521, ~~2024~~2025, we ~~and MICS NY~~ entered into a ~~settlement~~securities purchase agreement with ~~OAC~~Streeterville ~~Flatiron~~Capital, LLC, a Utah limited liability company (“Streeterville”), pursuant to which we agreed to issue and ~~OAC~~sell ~~Adelphi~~to ~~for~~Streeterville shares of our common stock in one or more pre-paid purchases (each, a ~~full~~“Pre-Paid ~~release~~Purchase” and ~~dismissal~~collectively, the “Pre-Paid Purchases”) for an aggregate purchase price of up to $20,000,000 (the ~~complaint~~“Streeterville ~~that~~Transaction”). ~~became~~We ~~effective~~also ~~within~~agreed ~~five~~to ~~business~~issue ~~days~~an additional 95,694 shares of our ~~payment~~common ofstock 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, we may request additional Pre-Paid Purchases from Streeterville provided that the amount requested is no less than $250,000 toand ~~OAC~~the ~~Flatiron~~total ~~and~~outstanding ~~OAC~~balance ~~Adelphi.~~of Weall ~~made~~Pre-Paid Purchases does not exceed $3,000,000. ~~full~~The ~~payment~~original issue discount for each additional Pre-Paid Purchase will be nine percent of the ~~settlement~~ amount onset ~~October~~forth 25in the applicable request and each additional Pre-Paid Purchase will accrue interest at the rate of nine percent per annum. We also executed a guaranty, ~~2024~~a security agreement, and ~~OAC~~intellectual ~~Flatiron~~property ~~and~~security ~~OAC~~agreement ~~Adelphi~~in ~~filed~~favor aof ~~discontinuance~~Streeterville ~~with~~as ~~prejudice~~part ~~with~~ of the ~~court~~Streeterville Transaction. The Streeterville Transaction closed on ~~October~~August 2921, ~~2024~~2025.

~~Oxford~~Following ~~Credit~~the ~~Facility~~funding of each Pre-Paid Purchase, Streeterville has the right, but not the obligation, to purchase from us 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 our outstanding shares of common stock. The purchase price of the shares of common stock will be 90% of the lowest daily volume weighted average price during the 10 trading days immediately prior to the purchase notice date, but not less than the floor price, which is the greater of: (i) 20% of the “Minimum Price” as defined under Nasdaq Listing Rule 5635(d) prior to the applicable closing of the Pre-Paid Purchase, and (ii) $0.10.

OnPursuant ~~March~~to ~~28,~~the ~~2024,~~terms weof ~~entered~~the ~~into~~securities apurchase ~~loan~~ agreement, ~~and~~we ~~related~~filed ~~revolving~~a ~~credit~~registration ~~note~~statement ~~with~~on ~~Oxford~~Form ~~Commercial~~S-1 ~~Finance~~under ~~(“Oxford”) for~~the aSecurities ~~$2,000,000~~Act ~~revolving~~with ~~line~~the ofSEC to ~~credit.~~register Onthe ~~October~~resale ~~17,~~of ~~2024, we terminated~~ the ~~loan~~Commitment ~~agreement~~Shares and ~~note~~all ~~and~~shares ~~paid~~of ~~them~~common astock ~~termination fee~~issuable ofpursuant ~~$40,000.~~to ~~As of~~ the ~~date~~Pre-Paid ofPurchases. ~~termination,~~The weregistration statement ~~had~~became noeffective ~~outstanding~~on ~~amounts~~November ~~owed~~10, ~~to Oxford~~2025.

~~Name~~Nasdaq Listing Rule 5635(d) provides that shareholder approval is required prior to the issuance of shares of our common stock equal or greater in number to 20% of the number of shares of our common stock issued and ~~Symbol~~outstanding ~~Change~~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. We obtained the requisite shareholder approval for the Streeterville Transaction on November 20, 2025.

Effective September 5, 2024, our Certificate of Incorporation was amended to change our name from “The Singing Machine Company, Inc.” to “Algorhythm Holdings, Inc.” In addition, effective September 8, 2024, our ticker symbol was changed from “MICS” to “RIME.”

Amended Bylaws

On October 18, 2024, we amended our bylaws to reduce the quorum necessary to hold stockholder meetings from a majority of the voting power of the shares of our common stock that are issued and outstanding to 33 1/3% of the voting power of the shares of our common stock that are issued and outstanding.

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

OnUnivest ~~October 22~~Securities, ~~2024,~~LLC weserved ~~entered~~as ~~into~~the aplacement ~~securities~~agent ~~purchase~~in ~~agreement~~the ~~pursuant~~offering to(“Univest”). ~~which~~We we agreed to ~~issue~~pay ~~and~~Univest ~~sell to each purchaser: (i) an original issue discount senior secured note with~~ a ~~principal~~cash ~~amount~~fee equal to ~~such~~eight ~~purchaser’s~~percent ~~subscription amount divided by 0.85, and (ii) a number~~ of ~~shares~~the ofaggregate ~~our~~gross ~~common~~proceeds ~~stock~~that ~~equal~~we toreceive ~~(x)~~from ~~2,300,000, multiplied by (y) such purchaser’s subscription amount,~~any ~~divided~~Pre-Paid byPurchases ~~(z)~~that ~~$2,000,000. The Offering closed on October 24, 2024. At the closing,~~ we ~~issued~~complete toand ~~the~~reimburse ~~purchasers~~Univest anfor ~~aggregate~~legal offees ~~2,300,000 shares of our common stock and notes~~ in the ~~aggregate principal~~ amount of $240,~~352,941 for total proceeds of $2,~~000~~,000 net of original issue discount of $352,941~~. Univest Securities served as the placement agent in the offering and received seven percent of the gross proceeds received by us and reimbursement of the legal fees of its counsel. We repaid all of the notes in December 2024.

~~Regalia~~Pre-Paid ~~Ventures~~Purchase ~~Share Repurchase~~#1

OnThe ~~November~~securities 1,purchase ~~2024,~~agreement weprovides ~~entered~~for ~~into~~an ainitial ~~stock~~Secured ~~repurchase~~Pre-Paid ~~agreement~~Purchase ~~with~~in ~~Regalia~~the ~~Ventures~~principal ~~LLC,~~amount aof ~~Delaware~~$4,390,000, ~~limited~~before ~~liability company (“Regalia~~deducting ~~Ventures”),~~an ~~pursuant~~original toissue ~~which~~discount weof ~~agreed to pay~~ $~~472~~360,~~527~~000 toand ~~repurchase~~transaction ~~5,495~~expenses ~~shares~~ of ~~our~~$30,000 ~~common~~(the ~~stock~~“First ~~that~~Pre-Paid ~~Regalia~~Purchase”), ~~Ventures~~the ~~had~~terms of ~~previously~~which ~~purchased~~are ~~from~~set usforth on ~~November~~secured ~~20,~~prepaid ~~2023.~~purchase We#1 ~~agreed~~(“Pre-Paid toPurchase ~~issue~~#1”). aThe ~~promissory~~First ~~note~~Pre-Paid toPurchase ~~Regalia~~accrues ~~Holdings in the principal amount of~~interest ~~the purchase price of the shares~~ at the ~~closing~~rate of ~~the~~nine ~~transaction.~~percent Onper ~~February~~annum ~~18,~~and ~~2025,~~has ~~the~~a maturity date of ~~the~~three ~~closing~~years. ofWe ~~the~~paid ~~transaction, we~~Univest ~~issued~~ a ~~promissory~~cash ~~note~~fee equal to ~~Regalia~~eight ~~Holdings~~percent inof the ~~amount~~aggregate ofgross ~~$472,527.~~proceeds Onthat ~~February 27, 2025,~~ we ~~paid~~received ~~off~~from the ~~note~~First Pre-Paid ~~in full~~Purchase. ~~Regalia Ventures~~We iscurrently ~~owned~~have ~~and~~principal ~~controlled~~in bythe ~~Jay~~amount B.of ~~Foreman~~approximately $1,085,000 ~~who~~outstanding ~~serves~~under asthe aFirst ~~member~~Pre-Paid ~~of our board of directors~~Purchase.

~~Stingray~~Pre-Paid ~~Group~~Purchase ~~Share Repurchase~~#2

On ~~December~~November 313, ~~2024~~2025, we entered into aSecured ~~stock~~Pre-Paid ~~repurchase~~Purchase ~~agreement~~#2 with ~~Stingray~~Streeterville ~~Group, Inc., a Canadian corporation~~ (~~the~~ “~~Stingray Group~~Pre-Paid Purchase #2”),. ~~pursuant~~Pre-Paid ~~to which we agreed to pay $285,714 to repurchase 5,495 shares of our common stock that Stingray Group had previously~~Purchase ~~purchased~~#2 ~~from~~provides usfor ~~on November 20, 2023. We agreed to issue~~ a ~~promissory~~second ~~note~~Pre-Paid toPurchase ~~Stingray Group~~ in the principal amount of ~~the purchase price of the shares at the closing of the transaction. On February 18~~$5, ~~2025~~450,000, ~~the~~before ~~date~~deducting ofan ~~the~~original ~~closing~~issue discount of ~~the transaction~~$450, ~~we issued a~~000 ~~promissory note to Stingray Group in~~ (the ~~amount~~“Second ofPre-Paid ~~$285,714~~Purchase”). OnThe ~~April~~Second 3,Pre-Paid ~~2025,~~Purchase weaccrues ~~paid~~interest ~~off~~at the ~~note~~rate inof ~~full.~~nine ~~Mathieu~~percent ~~Peloquin~~per isannum ~~the~~and ~~Senior~~has ~~Vice-President, Marketing and Communications of Stingray Group and serves as~~ a ~~member~~maturity ofdate ~~our board~~ of ~~directors~~three years.

~~Public~~The ~~Offering~~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: ~~Securities~~(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 ours that we 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 we received from the Second Pre-Paid Purchase, $4,500,000 were placed in the DACA Account.

On December 4, 2024, we sold 21,000 shares of our common stock and pre-funded warrants to purchase 258,412 shares of our common stock in lieu of receiving shares of common stock to accredited investors. Each share of our common stock, or pre-funded warrant in lieu thereof, was sold together with a Series A warrant to purchase one share of our common stock and a Series B warrant to purchase one share of our common stock, at an offering price of $34 per share of common stock or pre-funded warrant. Univest Securities, LLC (“Univest Securities”) served as our exclusive placement agent in connection with the offering. We paid Univest Securities a cash fee equal to seven percent of the aggregate gross proceeds received in the offering and a non-accountable expense allowance equal to one percent of the aggregate gross proceeds received in the offering. We also reimbursed Univest Securities for various expenses incurred in connection with the offering. We received net proceeds of $8,565,000 from the offering, after deducting placement agent fees and other offering expenses.

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

OnWe ~~December~~entered ~~18,~~into ~~2024,~~a wenew ~~sold~~placement ~~120,337~~agency ~~shares~~agreement ofwith ~~our~~Univest ~~common~~that ~~stock~~superseded tothe ~~institutional~~placement ~~investors~~agency inagreement athat ~~registered~~we ~~direct~~previously ~~offering at a purchase~~entered ~~price~~into ofwith ~~$16.62~~them ~~per~~on ~~share.~~August ~~Univest~~21, ~~Securities served as our exclusive placement agent in connection with the offering~~2025. We ~~paid~~agreed to pay Univest ~~Securities~~ a cash fee equal to eight percent of the aggregate gross proceeds ~~received~~that inwe receive ~~the~~from ~~offering.~~any WePre-Paid ~~reimbursed~~Purchases ~~Univest~~that ~~Securities for~~we ~~various~~complete ~~expenses~~and ~~incurred~~reimburse inUnivest ~~connection~~for ~~with~~legal ~~the~~fees ~~offering.~~in Wethe ~~received~~amount ~~net proceeds~~ of $150,~~665,~~000. ~~from~~The ~~the~~Second ~~offering,~~Pre-Paid Purchase ~~after~~was ~~deducting placement~~repaid ~~agent~~in ~~fees~~full ~~and~~on ~~other~~December ~~offering~~11, ~~expenses~~2025.

~~Reverse~~Pre-Paid ~~Stock~~Purchase ~~Split and Increase in Authorized Shares~~#3

On ~~January~~December 1319, 2025, ~~our~~we ~~stockholders~~entered ~~voted~~into toSecured ~~authorize~~Pre-Paid ~~our~~Purchase ~~board~~#3 ofwith ~~directors~~Streeterville to(“Pre-Paid ~~effect~~Purchase a#3”). ~~reverse~~Pre-Paid ~~stock split of the outstanding shares~~Purchase of#3 ~~our~~provides ~~common~~for ~~stock at~~ a ~~specific~~third ~~ratio~~Pre-Paid ~~within~~Purchase ain ~~range~~the ofprincipal ~~1-for-10~~amount ~~to a maximum~~ of $1~~-for-250~~,090,000, ~~and~~before todeducting ~~amend~~an ~~our~~original ~~certificate~~issue discount of ~~incorporation~~$90,000 ~~to increase~~ (the ~~number~~“Third ofPre-Paid ~~authorized~~Purchase”). ~~common~~The ~~stock~~Third ~~from~~Pre-Paid ~~100,000,000~~Purchase toaccrues ~~800,000,000~~interest ~~shares.~~at Onthe ~~January~~rate ~~14,~~of ~~2025,~~nine ~~our~~percent ~~board~~per ofannum ~~directors approved~~and has a ~~reverse~~maturity ~~stock~~date ~~split~~ of ~~1-for-200~~three ~~ratio~~years. ~~and~~We ~~approved~~paid ~~the~~Univest ~~filing of~~ a ~~certificate~~cash offee ~~amendment~~equal to ~~our~~eight ~~certificate~~percent of ~~incorporation to effect~~ the ~~reverse~~aggregate ~~stock~~gross ~~split~~proceeds ~~and~~that towe ~~increase~~received ~~our authorized shares of common stock~~ from the ~~100,000,000~~Third toPre-Paid ~~800,000,000~~Purchase. The ~~reverse stock~~Third ~~split~~Pre-Paid ~~took~~Purchase ~~effect~~was repaid in full on ~~February~~December 1023, 2025.

~~Appointment~~Pre-Paid ofPurchase ~~Chief Financial Officer & General Counsel~~#4

On February 1317, ~~2025~~2026, ~~our~~we ~~board~~entered into Secured Pre-Paid Purchase #4 with Streeterville (“Pre-Paid Purchase #4”). Pre-Paid Purchase #4 provides for a fourth Pre-Paid Purchase in the principal amount of ~~directors~~$10,355,000, ~~appointed~~before ~~Alex~~deducting ~~Andre~~an tooriginal ~~serve~~issue asdiscount ~~our~~of ~~Chief~~$855,000 (the ~~Financial~~“Fourth ~~Officer~~Pre-Paid Purchase”). The Fourth Pre-Paid Purchase accrues interest at the rate of nine percent per annum and has ~~General~~a ~~Counsel~~maturity date of three years. HeThe ~~replaced~~Fourth Pre-Paid Purchase is similar to the Second Pre-Paid Purchase in that the Fourth Pre-Paid ~~Richard~~Purchase ~~Perez~~is secured by cash in an amount not less than the lesser of: (i) $3,500,000, ~~who~~and ~~was~~(ii) ~~terminated~~90% asof ~~our~~the ~~Chief~~then-current ~~Financial~~outstanding ~~Officer~~balance of onthe Fourth Pre-Paid Purchase (the “PPP4 Minimum Balance Amount”). Accordingly, of the $9,500,000 in proceeds that ~~same~~we ~~date~~received from the Fourth Pre-Paid Purchase, $3,500,000 was placed in the DACA Account.

~~Our~~We ~~Product~~have ~~Portfolio~~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, we 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.

Our product portfolio consists of our Singing Machine karaoke products and our SemiCab AI logistics and distribution services.

Singing Machine Karaoke Product Offerings

Karaoke Machines

Our karaoke products are sold directly to distributors and retail customers under our flagship Singing Machine brand name and are offered at affordable price points that we believe deliver great value to our customers. All of our karaoke products are Bluetooth® enabled to allow access to digital music content via our mobile apps available on iOS and Android platforms. Our core karaoke line offers advanced features, including but not limited to, enabling customers to output video to a TV screen, correcting singer’s pitch in real-time with our proprietary PitchLab™ technology, streaming karaoke content directly to the machine via WiFi, casting karaoke songs from a mobile device to our karaoke machines through our SingCast™ casting technology, singing duets, and displaying scrolling lyrics in-time with the song. Our products are sold directly to consumers via our retail channels, ecommerce, our own website, and distributors worldwide.

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

We ~~offer~~have ~~innovative~~not ~~Carpool~~repaid ~~Karaoke~~any ~~Microphone~~of ~~that~~the ~~works~~principal ~~specifically~~outstanding inunder the ~~car.~~Fourth ~~In 2019, we entered into a 3~~Pre-~~year~~Paid ~~license agreement with CBS® for its Carpool Karaoke brand, made popular by James Corden on The Late Show with James Corden~~Purchase. This license agreement with CBS expired on September 30, 2022. On February 28, 2023, we renewed this license agreement for an additional three years. On March 16, 2023, we entered into a three-year license agreement with Sesame Street Workshop for its Sesame Street brand for karaoke and singalong toy products, effective January 1, 2023. Through this license agreement, we develop and offer for sale all the iconic and beloved Sesame Street characters like Elmo, Big Bird, Cookie Monster, Abby Cadabby, and many more.

~~Microphones~~Our ~~and~~SemiCab ~~Accessories~~Technology Platform

WeTraditional ~~offer~~logistics aplatforms ~~line~~and ofsystems ~~traditional~~optimize ~~microphone~~visible ~~accessories~~demand ~~that~~by ~~are~~optimizing ~~compatible~~individual ~~with~~lanes ~~our~~within ~~karaoke~~the ~~machines~~logistics network. ~~These~~Freight ~~microphones feature an assortment~~planning, ~~of colors~~execution, ~~come wired or wireless,~~ and ~~may~~exception ~~include~~management ~~new~~rely ~~features~~heavily ~~like~~on ~~party~~manual ~~lighting~~workflows and ~~voice~~fragmented ~~changing effects~~systems. WeAs ~~also~~volumes ~~offer~~increase, ~~portable Bluetooth~~costs ~~microphones~~typically ~~which~~scale linearly ~~are~~with ~~marketed~~headcount, ~~under~~limiting ~~our~~profitability ~~Party~~and ~~Machine~~operational ~~brand~~flexibility.

~~Singing~~Our ~~Machine~~SemiCab ~~Kids~~technology ~~Youth~~platform ~~Electronics~~is an AI-enabled, cloud-based collaborative transportation platform that operates at the network level. It achieves the scalability required to predict and optimize millions of loads and hundreds of thousands of trucks. It uses real-time data from application programming interface (“API”)-based load tendering and pre-built integrations with transportation management system (“TMS”) partners, warehouse management system (“WMS”) partners, and electronic logging device (“ELD”) partners to orchestrate collaboration across manufacturers, retailers, distributors, and their carriers. It uses AI and machine learning predictions and advanced predictive optimization models to enable fully loaded round trips. By pooling demand and supply across shippers, regions, and timeframes, the platform identifies return legs and cross-lane flows that are invisible under conventional planning models. This approach enables structural efficiency improvements rather than episodic or temporary gains.

WeThe platform ~~have~~directly asupports ~~children’s~~stronger ~~line~~unit ofeconomics ~~products~~and ~~offered~~capital ~~under~~efficiency for our ~~Singing~~customers. ~~Machine~~It ~~Kids~~has ~~brand~~successfully ~~that~~enabled ~~have~~individual ~~fun~~operators to ~~music~~manage ~~entertainment~~more ~~features~~than ~~designed specifically~~2,000 ~~for~~loads ~~children~~annually. ~~Our~~As ~~products~~volumes ~~for~~increase, ~~children~~our ~~introduce~~customers ~~singing~~benefit ~~and~~from ~~music~~lower ~~entertainment~~cost ~~for~~per ~~young~~load, ~~singers~~greater asset utilization, lower administrative overhead and ~~offer~~more ~~advanced~~predictable ~~features~~service levels. By automating network-level decision-making, the ~~such~~platform asallows ~~voice~~organizations ~~changing~~to ~~effects,~~scale ~~recording,~~throughput ~~Bluetooth~~without ~~compatibility~~proportional increases in labor, ~~and~~infrastructure, ~~portability~~or overhead.

~~Automotive~~We ~~Technology~~are focused on expanding and enhancing our SemiCab technology platform to provide better transportation services to our customers as well as to automate operational processes. The objective of these additions and enhancements is to build additional functionality and improve or automate existing functions. This will make us more efficient, lower our costs of operation, enable us to provide more consistent and reliable services, and reduce potential human error in our processes targeting transportation execution and billing.

We ~~intend~~employ toa ~~enter~~dedicated ~~the~~software ~~connected~~development ~~vehicle~~team ~~karaoke device market through a partnership~~ that wemaintains ~~have~~and ~~with~~enhances ~~Stingray Group. We have developed microphone hardware utilizing~~ our ~~PitchLab™~~SemiCab technology ~~to offer integrated wireless microphones for connection with major automotive brand’s vehicles~~platform. ~~We are currently in discussions with many automotive brands to offer these products.~~

~~Music~~Our ~~Subscriptions~~Service Offering

InOur ~~conjunction~~service ~~with~~offering ~~Stingray~~consists ~~Group~~of contract-based, welong-haul, ~~offer~~full ~~karaoke~~truckload ~~music~~transportation ~~subscription~~logistics ~~services for the iOS~~ and ~~Android~~distribution ~~platforms~~services asthat ~~well as a web-based~~utilize ~~download~~our ~~store~~SemiCab ~~and~~technology ~~integrated~~platform. ~~streaming~~We ~~services~~currently ~~for~~provide our ~~hardware.~~services Wein ~~currently~~India ~~offer~~and ~~almost~~are ~~20,000~~actively ~~licensed~~marketing ~~karaoke~~our ~~songs~~services in the ~~catalog.~~United States and Europe.

~~SemiCab AI Logistics and Distribution~~Managed Services

~~Transportation~~In ~~Services~~India, we offer our services through a managed services model to retailers, suppliers and manufacturers and other shippers through our own network of shippers and brokers. We primarily focus on full truck load and over-the-road transportation services. Our services are sold directly to shippers via bids for transportation services. These bids are typically awarded for a selected number of routes for a pre-determined period of time, normally up to a year.

~~SemiCab offers transportation services to shippers and brokers that deliver products for retailers and manufacturers. SemiCab primarily focuses on full truck load and over~~SaaS-~~the-road transportation services. SemiCab’s services are sold directly to shippers via bids for transportation~~Based ~~services. These bids are typically awarded for a selected number of routes for a pre-determined period of time, normally up to a year.~~Services

In the U.S. and other countries, we offer our services through a software-as-a-service (“SaaS”) model called “Apex” ~~Subscription~~by selling subscriptions to shippers, carriers and third-party logistics providers (“3PLs”) to utilize our SemiCab technology platform. Our software enables shippers and carriers to better manage their freight network by creating optimal lane bundles for ~~Shippers~~bidding and optimized execution of loads with better control over their data and analytics. Our software enables 3PLs to better manage their operations for transportation execution by assisting them with shipper management, carrier management, document management, load operations management, invoicing, integration services, and reporting and analytics.

~~This~~Apex ~~service~~optimizes ~~category~~both ~~consists~~visible ofand apredicted ~~SaaS~~demand ~~based~~across ~~platform~~the ~~subscription~~entire ~~for~~freight ~~shippers~~ecosystem, ~~that~~completely ~~enables~~redefining ~~them~~the toefficiencies ~~better~~that ~~manage~~can ~~their~~be ~~freight network~~achieved bywithin ~~creating~~a ~~optimal~~logistics ~~lane~~network. ~~bundles~~Through ~~for~~Apex, ~~bidding~~shippers, ~~and~~carriers ~~optimized execution of loads with better control over their data~~ and ~~analytics.~~3PLs can:

~~Saas Subscription~~● ~~for~~launch ~~Brokers~~their own branded logistics operating systems, embedding SemiCab’s AI logic, dashboards, and APIs; ● create multi-party freight networks that reduce empty miles and unlock shared efficiencies; ● integrate seamlessly with existing TMS, WMS, and telematics systems through open APIs; and ● use predictive analytics and benchmarking to identify cost savings and improve yield per lane.

~~SemiCab~~Our ~~also~~SemiCab ~~offers~~technology ~~a software-as-a-service (“SaaS”) based~~ platform ~~subscription~~enhances ~~for~~traditional logistics ~~brokers~~platforms ~~that~~by ~~enables~~providing them towith ~~better manage~~predictive, ~~their~~self-learning ~~operations~~orchestration ~~for~~that automates ~~transportation~~network ~~execution.~~coordination ~~The~~at ~~subscription~~scale. ~~primarily~~It ~~covers~~continuously ~~shipper~~learns ~~management,~~from ~~carrier~~network ~~management~~activity, ~~document management,~~dynamically ~~load~~adjusting ~~operations management~~routing, ~~invoicing~~pooling, ~~integration services,~~ and ~~reporting~~capacity allocation ~~and~~in ~~analytics~~real time.

Product Development and Design

Singing Machine Karaoke Product Offerings

Product development is a key element of our strategic growth plan for our karaoke products. We strive to deliver many new, exciting consumer products to market every single year to retain and strengthen our presence in consumer karaoke products. Strategic product development is done in-house from our corporate headquarters in Fort Lauderdale, FL where we identify new potential categories, features, and price points. Products are created in conjunction with contract product designers and inventors in collaboration with our contract manufacturers in China to deliver products that represent tremendous value to our customers. In addition to new products, we always look for ways to improve existing products to hit more affordable price points or improve features based upon market feedback.

SemiCab AI Logistics and Distribution Services

For our SemiCab logistics and distribution services, we are focused on expanding and enhancing our SemiCab platform to provide better transportation services to our customers as well as to automate operational processes. The objective of these additions and enhancements is to build additional functionality and improve or automate existing functions. This will make us more efficient, lower the costs of operation, provide consistent and reliable services, and reduce potential human error in its processes targeting the transportation execution and billing. We maintain a small, dedicated software development team in India to build, host, maintain and enhance our SemiCab platform.

Suppliers and Manufacturing

Singing Machine Karaoke Product Offerings

We source our karaoke products from a variety of contract manufacturers in southern China. We are not dependent on any one supplier as we use multiple manufacturers to make our products. We maintain a Hong Kong office that provides us with factory management, sourcing, quality control, engineering, and product development. We buy finished goods from our suppliers and generally do not source raw materials for manufacturing, however in limited circumstances where we develop proprietary hardware and software, we will secure the proprietary circuits and provide them to our contract manufacturers for assembly into the final product. While we are not responsible for sourcing raw materials, we rely on our contract manufacturers’ ability to secure injected plastic, wood cabinets, integrated circuits, display panels, speaker drivers, and other components that are necessary for assembly into our final products.

Our karaoke products are manufactured by our contract manufacturers and are either shipped via ocean vessels to our two third-party logistics (“3PL”) warehouses located in California and Canada or we utilize a direct import program where our retail customers coordinate to pick up the goods FOB China. The direct import program allows our customers to take advantage of better ocean container rates through bigger volume and allows us to bypass our 3PL warehouses. We sell directly to retail customers and independent channels in Canada from our 3PL warehouse in Canada. Historically, most of our customers pick up goods from our warehouse (freight collect).

On August 31, 2023, the lease at our Ontario, California warehouse facility expired and was not renewed. Instead, we outsourced this business function by entering into a service agreement with a 3PL company to provide domestic and Canadian warehousing services, effective September 1, 2023.

SemiCab AI Logistics and Distribution Services

We do not utilize any suppliers or manufacturers in connection with our SemiCab logistics and distribution services.

Sales and Marketing

~~Singing~~Our ~~Machine~~SemiCab ~~Karaoke~~logistics ~~Product~~and ~~Offerings~~distribution services are sold through our direct sales team who work with shippers, participate in preparing and submitting transportation bids, and onboard shippers and customers to start operations. While the transportation services contracts are signed for longer durations, generally up to a year, revenue from these services is recognized only after the loads from shippers are executed and delivered by us. Our platform subscriptions are sold through a direct sales team. Sales are recognized on a rolling monthly basis aligned with SaaS revenue models. We engage in only limited marketing and promotions at this time as we are primarily focused on creating name recognition and visibility through appropriate social media channels, blogs, and press releases to share industry awards and customer acquisition news.

Our karaoke products are marketed and sold through our direct sales team, working in conjunction with independent sales representatives that provide sales and customer support for our retail customers in North America. We seek to expand our direct-to-consumer sales, which we believe will increase overall gross margins and increase brand awareness. Sales are recognized upon transfer of title to our customers and are made utilizing standard credit terms of 60 to 90 days. Our sales terms indicate that we only accept returns for defective merchandise, however we have accepted overstock returns from our retail partners in the past.8

Marketing, promotion, and consumer engagement are key elements in the youth electronics, toy, and music categories. Historically, a significant percentage of our promotional spending has been structured as co-op promotion incentives with our large retail partners. We continue to focus our marketing efforts on growing brand awareness among our target consumer demographic, optimizing marketing investments, and executing an integrated marketing strategy. We believe that an important component of our future growth is based on speaking to the right customer, with the right content, in the right channel, at the right time. We have implemented online marketing, social media, and digital analytics tools, which allow us to better measure the performance of our marketing activities, learn from our consumers, and receive valuable insights into industry and competitor activities.Customers

9Our customers are comprised primarily of large, fast-moving consumer products companies in India. Our target customers in the United States and Europe are comprised primarily of 3PLs and carriers and shippers of consumer products.

Customer service is a critical component of our marketing strategy for our karaoke products. We maintain a U.S.-based internal customer service department within our corporate headquarters that responds to customer inquiries, investigates, and resolves issues, and is available to assist customers and consumers during business hours.

SemiCab AI Logistics and Distribution Services

Our SemiCab logistics and distribution services are sold through our direct sales team who work with shippers, participate in preparing and submitting transportation bids, and onboard shippers and customers to start operations. While the transportation services contracts are signed for longer durations, generally up to a year, revenue from these services is recognized only after the loads from shippers are executed and delivered by us.

Our platform subscriptions are sold through resellers. Sales are recognized on a rolling monthly basis aligned with SaaS revenue models.

SemiCab uses limited marketing and promotions at this time as it is primarily focused on creating name recognition and visibility through appropriate social media channels, blogs, and press releases to share industry awards and customer acquisition news.

Competition

~~Singing~~The transportation ~~Machine~~services ~~Karaoke~~industry ~~Product~~is ~~Offerings~~highly competitive and fragmented. We compete with traditional and non-traditional logistics companies, including transportation providers that own equipment, third-party freight brokers, technology matching services, internet freight brokers, carriers offering logistics services, and on-demand transportation service providers. We win business by providing reliable services at lower costs and creating an industry-wide network that can operate more efficiently with less empty miles than the industry norm, thus creating a more sustainable transportation network for the entire industry.

With respect to our karaoke products, the youth electronics, toy, and music industries have many participants, none of which have a dominant market share, though certain companies may have disproportionate strength in specific product categories. We compete with a number of different companies in a variety of categories, although there is no single company that competes with us across all of our product categories. Our largest direct competitors are Singsation®, Singtrix®, eKids®, Bonaok, Karaoke USA™, and Ion® Audio. The primary methods of competition in the industry consist of brand positioning, product innovation, quality, price, and timely distribution. Our competitive strengths include our ability to develop innovative new products and features, speed to market, our relationships with major retailers, and the quality and pricing of our products.

SemiCab AI Logistics and Distribution Services

In the AI logistics and distribution space, we compete with traditional and non-traditional logistics companies, including transportation providers that own equipment, third-party freight brokers, technology matching services, internet freight brokers, carriers offering logistics services, and on-demand transportation service providers. We win business by providing reliable services at lower costs and creating an industry-wide network that can operate more efficiently with less empty miles than the industry norm, thus creating a more sustainable transportation network for the entire industry.

Intellectual Property

We rely on a combination of ~~word~~cybersecurity, ~~and~~trademarks, ~~design~~copyrights, ~~mark~~trade ~~trademarks~~secrets, and ~~trade~~nondisclosure ~~secrets~~and non-competition agreements to establish and protect our intellectual property and proprietary technology. In certain circumstances, we will partner with third parties to develop proprietary ~~products~~technology, and, where appropriate, we have license agreements related to the use of third-party innovation in our ~~products~~technology. The duration of our trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.

Customers

Singing Machine Karaoke Product Offerings

We operate across geographically diverse marketplaces and sell our karaoke products globally to large, national retailers as well as independent retailers, on our retailer’s websites, and our own direct to consumer website. In North America, our customers include Amazon, Costco, Sam’s Club, Target and Wal-Mart. Our largest international territories are the U.K. and Australia, where we sell through international distributors. We also sell to select international retail customers in geographic locations where we do not have a direct sales presence.

Sales to our top five customers and top three customers collectively in our karaoke business comprised 79% and 81% of our revenue, respectively, for the year ended December 31, 2024 and the nine-month transition period ended December 31, 2023, respectively. We have no long-term contracts with these customers, and as a result, our success depends heavily on our customers’ willingness to purchase and provide floor or shelf space for our products.

SemiCab AI Logistics and Distribution Services

In the logistics industry, we provide our contract-based, long-haul, full truckload transportation services in the United States. We offer our services to any shipper that may need such services on an ongoing basis. Our customers include Staples and Pepsi.

Seasonality

~~Singing~~Our operating ~~Machine~~results ~~Karaoke~~have ~~Product~~been ~~Offerings~~subject to seasonal trends as a result of, or as influenced by, numerous factors, including national holidays, weather patterns, consumer demand, economic conditions, and other similar and subtle forces. Although seasonal changes in the transportation industry have not had a significant impact on our cash flow or results of operations, we cannot guarantee that they will not adversely impact us in the future.

We experience heightened seasonal demand for our karaoke products, typically beginning in late July, and extending into early November of each calendar year, which is accounted for in our quarters ended September 30th and December 31st. Transportation demand is also seasonal by nature. In the US, freight demand typically increases before the holidays and reduces after the holiday season is over. The agricultural produce seasons may also affect the freight markets. In India, agricultural and festival seasons drive the market seasons for freight.

SemiCab AI Logistics and Distribution Services

In the AI logistics and distribution space, the transportation industry not only experiences seasonality, but it is cyclic as well and goes through regular boom and bust cycles. Capacity falls when demand and prices are high. By contrast, smaller operators go out of business when supplies build up and depress prices.

Regulatory Matters

~~Singing~~The Ministry ~~Machine~~of ~~Karaoke~~Road ~~Product~~Transport ~~Offerings~~and Highways is the primary regulator for the road transport and automotive industry in India, overseeing policy, regulations, and standards in that country. The U.S. Department of Transportation regulates the transportation industry in the United States. This federal agency mandates licensing, insurance and service requirements on the operators in this industry.

Each of our karaoke products are designed to comply with all applicable mandatory and voluntary safety standards. In the United States, these safety standards are promulgated by federal, state and independent agencies such as the United States Consumer Product Safety Commission, ASTM International, the Federal Communications Commission, and various states Attorney Generals and state regulatory agencies. All of our products are independently tested by third party laboratories accepted by the Consumer Product Safety Commission to verify compliance to applicable safety standards. A similar approach is used to design and test products sold internationally.9

~~SemiCab~~We are AIalso ~~Logistics~~subject to laws and ~~Distribution~~regulations in the United States and India concerning the handling of personal information, including laws ~~Services~~that require us to notify governmental authorities and/or affected individuals of data breaches involving certain personal information.

~~With~~Additionally, ~~respect~~as toa ~~our~~publicly-traded ~~SemiCab~~company AIand ~~logistics~~issuer of stock, we are subject to and ~~distribution~~maintain ~~services,~~compliance ~~the~~with ~~transportation~~various ~~industry~~anti-corruption inand anti-bribery statutes such as the ~~Unites~~U.S. ~~States~~Foreign isCorrupt ~~regulated~~Practices byAct. We may in the ~~Department of~~future ~~Transportation.~~be ~~This~~subject ~~federal~~to ~~agency~~certain ~~mandates~~other ~~licensing,~~foreign ~~insurance~~countries’ ~~and~~equivalent statutes ~~service~~or ~~requirements~~programs onin the ~~operators~~countries in ~~this~~which ~~industry~~we operate.

Employees

As of ~~April~~March 1427, ~~2025~~2026, we had a total of 2549 employees, of which 46 were full-time employees and three were part-time employees. None of our employees are represented by a collective bargaining unit or is a party to a collective bargaining agreement.

Available Information

We file reports and other materials with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements. We make available free of charge through our website at https://~~ir.~~algoholdings.com/~~investor-~~filings#/ all materials that we file electronically with the SEC as soon as reasonably practicable after electronically filing or furnishing such material with the SEC. These materials are also available on the SEC’s website at www.sec.gov.

The information contained on, or accessible through, our website and the SEC’s website does not constitute a part of this report. The inclusion of our website and the SEC’s website in this report is an inactive textual reference only.

Item 1A. Risk Factors.

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors in addition to other information in this report before purchasing our common stock. The risks and uncertainties described below are those that we currently deem to be material and that we believe are specific to us, our industry and our stock. In addition to these risks, our business may be subject to risks currently unknown to us. If any of these or other risks actually occurs, our business may be adversely affected, the trading price of our common stock may decline and you may lose all or part of your investment.

Summary Risk Factors

Risks Related to Our Company

	●	We have a history of losses, we can provide no assurance that we will ever become profitable, and the audit report issued by M&K CPAs, PLLC in connection with our audited financial statements as of and for the year ended December 31, 2025 includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

	●	We will need to raise additional capital in the future, which capital may not be available or, if available, may not be available on acceptable terms.

	●	Our growth could strain our personnel and infrastructure resources.

	●	Strategic acquisitions and other transactions that we complete in the future could prove difficult to integrate, disrupt our business, adversely affect our operating results and dilute stockholder value.

	●	We depend upon our executive officers and may not be able to retain or replace these individuals or recruit additional personnel if they leave, which could harm our business.

	●	Our success depends on our SemiCab technology platform attaining market acceptance by transportation providers.

	●	Our failure or inability to enforce our trademarks, trade secrets and other proprietary rights could adversely affect our image, brands and competitive position.

	●	We may not be able to protect our intellectual property rights throughout the world.

	●	Our information technology systems or data, or those of our service providers or customers or users, could be subject to cyber-attacks or other security incidents, which could result in significant liability, reputational damage and other adverse consequences to us.

	●	The failure of our information technology systems could significantly disrupt the operation of our business.

	●	We rely on third parties for most of our management information systems and for other back-office functions.

	●	Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation.

	●	Issues in the use of AI technologies in our SemiCab business may result in reputational harm or liability to us, and our business, operating results, and financial results may be adversely affected.

	●	Any significant changes in U.S. trade or other policies that block or restrict imports or increase import tariffs could have a material adverse effect on results of operations.

	●	Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine and the Middle East and other geopolitical tensions.

	●	High inflation and unfavorable economic conditions could negatively affect our business, financial condition and results of operations.

	●	We are exposed to the credit risk of customers who are experiencing financial difficulties and if these customers are unable to pay us, our revenue and results of operations will be adversely impacted.

	●	We may have trouble hiring additional qualified personnel.

	●	The industries in which we operate are subject to international, federal, state and local laws, compliance with which is both complex and costly.

	●	We could be a party to litigation that could adversely affect us by diverting management attention, increasing our expenses and subjecting us to significant monetary damages and other remedies.

	●	Our certificate of incorporation provides limitations on director liability and indemnification of directors and officers and employees.

	●	Our insurance may not provide adequate levels of coverage against claims.

	●	Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.

	●	An impairment in the carrying value of our fixed assets, intangible assets or goodwill could adversely affect our financial condition and results of operations.

	●	We are subject to risks related to the sale of our Singing Machine business.

	●	Significant adverse weather conditions and other disasters could negatively impact our results of operations.

Risks Related to the Streeterville Transaction

	●	The sale of a substantial number of our securities in the public market by Streeterville and/or by our existing security holders could cause the price of our common stock to fall.

	●	Shares of our common stock purchased by Streeterville may be issued at a price significantly below the prevailing market price of our common stock, resulting in substantial dilution of existing stockholders and a decrease in the price of our common stock.

	●	We may be required to make substantial cash payments to Streeterville, which could reduce the amount of cash available to fund our operations.

Risks Related to Ownership of Our Securities

	●	We may raise additional funds in the future through the issuance of equity securities or debt, which funding may be dilutive to stockholders or impose operational restrictions on us.

	●	The market price of our common stock is likely to be highly volatile and subject to wide fluctuations.

	●	Our quarterly and annual operating results may fluctuate due to increases and decreases in sales and other factors.

	●	Our common stock may be affected by price fluctuations, which could adversely impact the value of our common stock.

	●	FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities.

	●	An investment in our securities is speculative, and there can be no assurance of any return on any such investment.

	●	We identified material weaknesses in our internal control over financial reporting during the assessment of our internal control that we performed in connection with the preparation of our audited consolidated financial statements included herein.

	●	If we are unable to establish and maintain an effective system of internal control, we may not be able to accurately report our financial results on a timely basis or prevent fraud.

	●	The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

	●	If we are not able to comply with the applicable continued listing requirements of the Nasdaq, it could delist us, which may adversely affect the market price and liquidity of our common stock.

	●	New laws, regulations, and standards relating to corporate governance and public disclosure may create uncertainty for public companies, increase legal and financial compliance costs and make some activities more time consuming.

	●	As a “smaller reporting company” under applicable law, we are subject to lessened disclosure requirements, which could leave our stockholders without information or rights available to stockholders of more mature companies.

	●	Applicable SEC rules governing the trading of “penny stocks” may limit the trading and liquidity of our common stock, which may affect the trading price of our common stock.

	●	We have never paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future.

Risks Related to Our ~~Financial Condition~~Company

We have a history of losses, we can provide no assurance that we will ever become profitable, and the audit report issued by M&K CPAs, PLLC in connection with our ~~auditors~~audited ~~concluded~~financial statements as of and for the year ended December 31, 2025 includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

We incurred net losses available to common stockholders of $15,900,000 and $23,257,000 for our fiscal years ended December 31, ~~2023~~ 2025 and 2024, respectively, and had accumulated deficits of $4965,~~172~~072,000 and $2549,~~915~~172,000 as of December 31, ~~2024~~2025 and ~~2023~~2024, respectively. In addition, ~~net~~ net cash used by operating activities was $87,~~556~~309,000 and $3,985,000 for ~~the~~our ~~year~~fiscal years ended December 31, 2025 and 2024., respectively. Based upon this, our current cash resources and our internally generated cash flow projections, the audit report issued by M&K CPAS, PLLC in connection with our ~~auditors~~audited ~~concluded~~financial statements as of and for the year ended December 31, 2025 includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern ~~for the next 12 months~~. Our future profitability is dependent upon our ability to successfully execute upon our business plan. We can provide no assurance that we will be able to sustain or increase profitability on a quarterly or annual basis. Accordingly, we may continue to generate losses in the future and, in the extreme case, may need to discontinue operations.

We will need to raise additional capital in the future, which capital may not be available or, if available, may not be available on acceptable terms.

Our current cash resources will not be sufficient to sustain our current operations for the next 12 months. As a result, we will need to obtain additional capital through external sources of financing. We may attempt to obtain additional capital through the sale of equity securities or the issuance of short- and long-term debt. If we raise additional funds by issuing shares of our common stock, our stockholders will experience dilution. If we raise additional funds by issuing securities exercisable or convertible into shares of our common stock, our stockholders will experience dilution in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity or debt securities that we issue may have rights, preferences and privileges senior to those of the securities held by our stockholders.

While we are optimistic about our ability to raise sufficient funds to continue our operations for at least one year after the date of this report, we have not made arrangements to obtain additional capital and can provide no assurance that additional financing will be ~~available~~ available in an amount or on terms acceptable to us, if at all. Our ability to obtain additional capital will be subject to a number of factors, including maintenance of our listing on the Nasdaq ~~Stock Market (“Nasdaq”)~~, market conditions and our operating performance. These factors may make the timing, amount, terms or conditions of any proposed future financing transactions unattractive to us. If we cannot raise additional capital when needed, or if such capital cannot be obtained on acceptable terms, we may not be able to pay our costs and expenses as they are incurred, take advantage of future acquisition opportunities, respond to competitive pressures or unanticipated events, or otherwise execute upon our business plan. This may adversely affect our business, financial condition and results of operations and, in the extreme case, cause us to discontinue operations.

Risks Related to Our Company

Our growth could strain our personnel and infrastructure resources.

We expect to enter a stage of rapid growth in our operations which could place a significant strain on our management, administrative, operational and financial infrastructure. Our future success will depend in part upon the ability of our management to manage growth effectively. Our existing management systems, financial and management controls, and information and reporting systems and procedures may not be adequate to support our expansion. Our ability to manage our growth effectively will require us to continue to enhance these systems, controls and procedures and to locate, hire, train and retain qualified management and operating personnel. If we fail to successfully manage our growth, we may be unable to execute upon our business plan, which could have an adverse effect on our business, financial condition and results of operations.

Strategic acquisitions and other transactions that we complete in the future could prove difficult to integrate, disrupt our business, adversely affect our operating results and dilute stockholder value.

On July 3, 2024, we completed the acquisition of substantially all of the assets and the assumption of certain liabilities of SemiCab, Inc., which was the owner of the United States component of our AI logistics and distribution business. On May 2, 2025, we and SemiCab Holdings completed the acquisition of substantially all of the issued and outstanding equity shares of SMCB and we purchased the 20% membership interest in SemiCab Holdings then held by SemiCab, Inc. We may continue to expand our business through the acquisition of additional businesses in the future.

To successfully execute any acquisition or development strategy, we need to identify suitable acquisition or development candidates, negotiate acceptable acquisition or development terms, obtain appropriate financing, and successfully integrate any businesses and assets acquired. Any acquisition or development transaction that we pursue, whether or not successfully completed, will subject us to numerous risks and uncertainties, including:

● our ability to accurately assess the value, growth potential, strengths, weaknesses, contingent and other liabilities, and potential profitability of the target businesses and assets; ● our ability to complete the transaction and integrate the operations, technologies, services and personnel of any businesses or assets acquired; ● the costs associated with the completion of the transaction and the integration of the businesses or assets acquired; ● our ability to generate sufficient revenue to offset the transaction costs and achieve projected economic and operating synergies; ● the diversion of financial and management resources from existing operations and potential loss of key personnel; ● the risks associated with entering new domestic markets and conducting operations where we have little or no prior experience;

● the diversion of financial and management resources from existing operations and potential loss of key personnel; ● the risks associated with entering new domestic markets and conducting operations where we have little or no prior experience; ● the possible negative impact of the transaction on our reputation and the reputation of the business that we acquire; and ● the effect of any limitations imposed by federal and state tax laws on our ability to use all or a portion of our pre-transaction net operating losses against post-transaction income.

If we fail to properly evaluate and execute any acquisition or development transactions that we are currently pursuing or will pursue in the future, our business, financial condition and results of operations could be seriously harmed. Additionally, we may be limited in our ability to evaluate such acquisitions as a result of incomplete or inaccurate information from the target businesses.

Future acquisitions may provide for additional contingent payments based on the achievement of performance targets or milestones. Management must exercise considerable discretion when estimating the fair value of contingent payments. Although these estimates are based on management’s best knowledge of current events, the estimates could change significantly from period to period. Any changes to the significant unobservable inputs used, including a change in the forecast of net sales for the earn-out periods, may result in a change in the fair value of contingent consideration, and could have a material adverse impact on our results of operations. In addition, actual payments of contingent consideration in the future could be different from the current estimated fair value of the contingent consideration. Further, these arrangements can impact or restrict the integration of acquired businesses and can, and frequently do, result in disputes, including litigation. Any such impact, restrictions or disputes could have a material adverse impact on our business and results of operations.

In addition, acquisition and development transactions could result in us issuing equity securities or short- or long-term debt to finance the transaction. The issuance of additional equity securities would result in dilution to our stockholders. The issuance of securities exercisable or convertible into shares of our common stock would result in dilution to our stockholders in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity or debt securities that we issue may have rights, preferences and privileges senior to those of the securities held by our stockholders. Future acquisition and development transactions could also result in us assuming debt obligations and liabilities and incurring impairment charges related to goodwill, investments and other intangible assets.

We depend upon our executive officers and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business.

We believe that we have benefited substantially from the leadership and experience of our executive officers, including Gary Atkinson, who is our Chief Executive Officer, Alex Andre, who is our Chief Financial Officer and General Counsel, and Bernardo Melo, who is our Chief Revenue Officer. Our executive officers may terminate their employment with us at any time without penalty, and we do not maintain key person life insurance policies on any of our executive officers. The loss of the services of any of our executive officers could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis. In addition, any such departure could be viewed in a negative light by investors and analysts, which could cause the price of our common stock to decline. As our business expands, our future success will depend greatly on our continued ability to attract and retain highly skilled and qualified executive-level personnel. Our inability to attract and retain qualified executive officers could impair our growth and have an adverse effect on our business, financial condition and results of operations.

~~Our~~We ~~failure~~depend orupon ~~inability~~our toexecutive ~~enforce~~officers ~~our~~and ~~trademarks,~~may ~~trade~~not ~~secrets~~be ~~and~~able ~~other~~to ~~proprietary~~retain ~~rights~~or ~~could~~replace ~~adversely~~these ~~affect~~individuals ~~our~~or ~~competitive~~recruit ~~position~~additional personnel if they orleave, ~~the~~which ~~value~~could ofharm our ~~brands~~business.

We ~~own~~believe ~~U.S.~~that ~~registered~~we ~~trademarks~~have ~~for~~benefited ~~many~~substantially offrom the ~~signs,~~leadership ~~designs~~ and ~~expressions~~experience ~~that~~of ~~identify~~our ~~the~~executive ~~products~~officers, ~~and~~including ~~services~~Gary ~~that~~Atkinson, ~~we use in~~who is our ~~business~~Chief Executive Officer, ~~including~~and ~~“The~~Alex ~~Singing~~Andre, ~~Machine”~~who is our Chief Financial Officer and ~~“SemiCab”~~General Counsel. WeOur ~~also~~executive ~~have~~officers ~~common~~may ~~law~~terminate their ~~trademark~~employment ~~rights~~with ~~for~~us ~~certain of~~at ~~our~~any ~~proprietary~~time ~~marks~~without penalty, and ~~rely~~we ~~upon~~do ~~trade~~not ~~secrets~~maintain tokey ~~protect~~person ~~certain~~life insurance policies on any of our ~~rights~~executive officers. WeThe ~~believe~~loss ~~that~~of ~~our~~the ~~trademarks,~~services ~~trade~~of ~~secrets and~~any ~~other~~of ~~proprietary~~our ~~rights~~executive ~~have~~officers ~~significant~~could ~~value~~have ~~and~~a ~~are~~material ~~important~~adverse toeffect on our business and ~~competitive~~prospects, as ~~position.~~we ~~We,~~may ~~therefore,~~not ~~devote time~~be ~~and~~able ~~resources~~to find suitable individuals to ~~the~~replace ~~protection~~such ofpersonnel ~~these~~on ~~rights~~a timely basis. ~~Our~~In ~~policy~~addition, isany tosuch ~~pursue~~departure ~~registration~~could be ofviewed ~~our~~in ~~important~~a ~~trademarks~~negative ~~whenever~~light ~~feasible~~ by investors and toanalysts, ~~oppose~~which ~~vigorously~~could ~~any~~cause ~~infringement~~the price of our ~~trademarks~~common stock to decline. WeAs ~~protect~~our business expands, our ~~trade~~future ~~secrets~~success ~~and~~will ~~proprietary~~depend ~~information,~~greatly inon ~~part,~~our bycontinued ~~entering into~~ability ~~confidentiality~~to ~~agreements~~attract ~~with~~and ~~our~~retain ~~employees~~highly skilled and ~~consultants~~qualified executive-level personnel. WeOur ~~also~~inability ~~seek~~ to ~~preserve~~attract ~~the~~and ~~integrity~~retain ~~and~~qualified ~~confidentiality~~executive ofofficers could impair our ~~proprietary~~ ~~information~~growth byand ~~maintaining~~have ~~physical~~an ~~security~~adverse ofeffect on our business, ~~premises~~financial ~~and~~condition ~~physical~~ and ~~electronic~~results ~~security~~ of ~~our information technology systems~~operations.

Our success depends on our SemiCab technology platform attaining market acceptance by transportation providers.

The continued growth in market demand for and market acceptance of our SemiCab technology platform is critical to our continued success. Demand for our SemiCab technology platform is affected by a number of factors, many of which are beyond our control, including the extension of our SemiCab technology platform for new use cases, the timing of development and release of new products, features and functionality introduced by us or our competitors, technological change and the growth or contraction of the market in which we compete. We may be unable to effectively adapt our platform and respond to changes in technology and customer needs. If we are unable to meet customer demand, or if we otherwise fail to achieve more widespread market acceptance of our SemiCab technology platform, our business, results of operations, financial condition and growth prospects may be adversely affected.

Our failure or inability to enforce our trademarks, trade secrets and other proprietary rights could adversely affect our image, brands and competitive position.

We own U.S. registered trademarks for many of the signs, designs and expressions that identify the services that we use in our business, including “SemiCab”. We also have common law trademark rights for certain of our proprietary marks and rely upon trade secrets to protect certain of our rights. We believe that our trademarks, trade secrets and other proprietary rights have significant value and are important to our business and competitive position. We, therefore, devote time and resources to the protection of these rights. Our policy is to pursue registration of our important trademarks whenever feasible and to oppose vigorously any infringement of our trademarks. We protect our trade secrets and proprietary information, in part, by entering into confidentiality agreements with our employees and consultants. We also seek to preserve the integrity and confidentiality of our proprietary information by maintaining physical security of our premises and physical and electronic security of our information technology systems.

We cannot assure you that the protective actions that we have taken will successfully prevent unauthorized use or imitation of our intellectual property and proprietary rights by other parties. In the event third parties unlawfully use or imitate our intellectual property and proprietary rights, we could suffer harm to our image, brands and competitive position. If we commence litigation to enforce our intellectual property and proprietary rights, we will incur significant legal fees and may not be successful in enforcing our rights. Moreover, we cannot assure you that third parties will not claim infringement by us of their intellectual property and proprietary rights in the future. Any such claim, whether or not it has merit, could be time-consuming and distracting for management to defend, result in costly litigation, require us to enter into royalty or licensing agreements, or cause us to change existing menu items or delay the introduction of new menu items. As a result, any such claim could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, and defending intellectual property rights on our products in international jurisdictions is prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained intellectual property rights to develop their own products and, further, may export otherwise infringing products to territories where we have intellectual property rights, but where enforcement is not as strong as that in the U.S. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing.

~~Many~~We ~~companies~~may ~~have~~not ~~encountered~~be ~~significant~~able ~~problems~~to inprotect ~~protecting~~our ~~and defending~~ intellectual property rights inthroughout ~~foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor~~ the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generallyworld. ~~Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.~~

Filing, prosecuting, and defending intellectual property rights on our technology in international jurisdictions is prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained intellectual property rights to develop their own technology and, further, may export otherwise infringing technology to territories where we have intellectual property rights, but where enforcement is not as strong as that in the U.S. Their technology may compete with our technology in jurisdictions where we do not have any issued or licensed patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of any patents we may have in the future, or the use of competing technologies in violation of our proprietary rights generally. Proceedings to enforce any patent rights we may have in the future in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

Our information technology systems or data, or those of our service providers or customers or users, could be subject to cyber-attacks or other security incidents, which could result in significant liability, reputational damage and other adverse consequences to us.

The ever-evolving threat landscape makes data security and privacy a critical priority. We maintain processes for key risk identification, mitigation efforts, and day-to-day management of risks, including cybersecurity risks. In addition, our third-party vendors have experience and expertise supporting mitigation of the potential cyber-attacks facing our organization and vulnerabilities facing our technology infrastructure and potential cyber-attacks.

Although it is difficult to determine the potential impacts from a cyber-attack or other security incident, we may experience negative impacts such as reputational harm, inability to retain existing customers or attract new customers, exposure to legal claims and government action, among others. In particular, given the interconnected nature of the supply chain and our significant presence in the industry, our AI logistics and distribution business may be an attractive target for such attacks. The impact of a cyber-attack or other security incident may have a material adverse impact on our financial condition, results of operations, availability of our systems, and growth prospects, which makes cybersecurity risk management of critical importance.

We have processes and programs in place to meet our global compliance obligations and work with our employees and teams across the globe to ensure security and data protection principles are integrated into the way we conduct our business. Notwithstanding this, our operations may be subject to successful breaches, employee malfeasance, or human or technological error. Any such acts could result in:

● unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third-party data or systems; ● theft of sensitive, regulated, or confidential data including personal information and intellectual property; ● the loss of access to critical data or systems through ransomware, destructive attacks or other means; and ● business delays, service or system disruptions or denials of service.

The occurrence of any of these acts could have a material adverse effect on our business, financial condition and results of operations.

	●	theft of sensitive, regulated, or confidential data including personal information and intellectual property;

	●	the loss of access to critical data or systems through ransomware, destructive attacks or other means; and

	●	business delays, service or system disruptions or denials of service.

The occurrence of any of these acts could have a material adverse effect on our business, financial condition and results of operations.

The failure of our information technology systems could significantly disrupt the operation of our business.

We rely on information technology systems and networks as part of our business. As such, we could experience a material disruption to our operations if our internal computer systems and servers fail or suffer security breaches. The secure operation of our information technology, or IT, systems and networks as well as the secure processing and maintenance of information is critical to our operations and business strategy. Our ability to execute our business plan and to comply with regulatory requirements with respect to data control and data integrity depends, in part, on the continued and uninterrupted performance of our IT systems. These systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, we may experience electronic break-ins, computer viruses, sustained or repeated system failures, or problems arising during the upgrade of any of our IT systems that interrupt our ability to generate and maintain data. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

We rely on third parties for most of our management information systems and for other back-office functions.

We use third-party vendors to provide, support and maintain most of our management information systems. We also outsource certain accounting, payroll and human resource functions to third-party service providers. The parties that we utilize for these services may not be able to handle the volume of activity or perform the quality of service necessary for our operations. The failure of these parties to fulfill their support and maintenance obligations or service obligations could disrupt our operations. Furthermore, the outsourcing of certain of our business processes could negatively impact our internal control processes. Any such effects on our operations or internal controls could have an adverse effect on our business, financial condition and results of operations.

Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation.

We receive and maintain certain personal information about our customers and employees. The use of this information by us is regulated at the federal and state levels. If our security and information systems are compromised or our franchisees or employees fail to comply with these laws and regulations and this information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation and results of operations and could result in litigation against us or the imposition of fines and penalties.

Issues in the use of AI technologies in our SemiCab business may result in reputational harm or liability to us, and our business, operating results, and financial results may be adversely affected.

We actively integrate AI technologies in our SemiCab platform to enhance automation, analytics, customer experience, and operational efficiency. As we expand the use of AI-enabled capabilities, we are exposed to risks inherent in the development and deployment of emerging technologies.

AI systems may generate inaccurate, biased, incomplete, or unintended outputs due to limitations in algorithms, data quality, model design, or oversight. If AI-enabled features fail to perform as intended or are perceived as unreliable, we could experience reputational harm, customer dissatisfaction, competitive disadvantage, or legal exposure.

~~Any~~Certain AI capabilities rely on ~~significant~~third ~~changes~~party inservice ~~U.S.~~providers, ~~trade~~cloud infrastructure, or ~~other~~external ~~policies~~models. ~~that~~Disruptions, ~~block~~security incidents, orpricing ~~restrict~~changes, ~~imports~~contractual restrictions, or ~~increase~~termination ~~import~~of ~~tariffs~~such services could ~~have~~impair athe ~~material adverse~~availability ~~effect~~or onperformance ~~results~~ of ~~operations~~AI-enhanced features and increase our costs.

~~Our karaoke~~The ~~products~~regulatory ~~are~~framework ~~manufactured in southern China. In recent years, the U.S. government has implemented substantial changes to U.S.~~governing ~~trade policies~~AI, ~~including~~data ~~import restrictions~~privacy, ~~increased import tariffs~~ and ~~changes~~automated ~~in U.S. participation in multilateral trade agreements, such as the United States~~decision-~~Mexico-Canada~~making ~~Agreement~~is toevolving ~~replace the former North American Free Trade Agreement. The U.S. government has assessed supplemental tariffs on certain goods imported from China, resulting~~ in ~~China’s assessment of retaliatory tariffs on certain imports of U.S. goods into China and block imports from Myanmar. In addition,~~ the United States ~~has assessed or proposed supplemental tariffs~~ and ~~quantitative restrictions on U~~internationally.S. ~~imports~~New ~~of certain products from other countries as well. U.S. trade policy continues to evolve in this regard. Such changes could prevent~~ or ~~make~~expanded itlegal ~~difficult or more expensive for us to obtain our products, which could affect~~requirements ~~our~~may ~~sales. Further tariff increases could~~ require usproduct ~~to increase prices~~modifications, ~~which~~increased ~~likely~~compliance ~~would~~expenditures, decrease customer demand for our products. Retaliatory tariff and trade measures imposed by other countries could affect our ability to export products and therefore adversely affect sales. Any significant changes in current U.S. trade or ~~other~~limitations ~~policies~~on ~~that~~certain ~~restrict~~AI-driven ~~imports or increase import tariffs could have a material adverse effect upon results of our operations~~functionality.

Our AI-enabled features process sensitive customer data. Any failure to maintain appropriate safeguards, governance controls, or oversight could result in regulatory scrutiny, litigation, or reputational harm.

We have implemented governance frameworks, human oversight, security controls, and monitoring processes designed to manage risks associated with AI-enabled capabilities. However, these measures may not be sufficient to prevent errors, misuse, security incidents, or regulatory non-compliance. If our risk management efforts are ineffective, our business, financial condition, and results of operations could be adversely affected.

Any significant changes in U.S. trade or other policies that block or restrict imports or increase import tariffs could have a material adverse effect on results of operations.

In recent years, the U.S. government has implemented substantial changes to U.S. trade policies, including import restrictions, increased import tariffs and changes in U.S. participation in multilateral trade agreements, such as the United States-Mexico-Canada Agreement to replace the former North American Free Trade Agreement. The U.S. government has assessed supplemental tariffs and quantitative restrictions on U.S. imports of certain products from numerous countries throughout the world. U.S. trade policy continues to evolve in this regard. Any significant changes in current U.S. trade or other policies that restrict imports or increase import tariffs could have a material adverse effect upon results of our operations.

Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine and the Middle East and other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption as a result of the escalation of geopolitical tensions and ~~the start of~~military ~~the~~conflicts ~~military~~in ~~conflict between Russia~~ and ~~Ukraine.~~around ~~On February 24~~Ukraine, ~~2022~~Israel, aand ~~full-scale~~other ~~military~~areas ~~invasion~~ of ~~Ukraine~~the ~~by Russian troops was reported~~world. Although the length and impact of ~~the~~any potential or ongoing military conflict is highly unpredictable, ~~the~~such ~~conflict~~conflicts inhave ~~Ukraine~~led ~~has lead~~ to ~~market~~ market disruptions, including significant volatility in credit and capital markets.

For example, Russia’s military interventions in Ukraine have led to sanctions and other penalties being levied by the U.S., European Union and other ~~countries~~ countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets. In addition, the invasion of Ukraine and the resulting sanctions imposed on Russia have resulted in increased volatility in the financial markets and the markets for certain commodities including oil, which may significantly impact the manufacturers that we rely on.

~~Additionally,~~In ~~the~~addition, ~~conflict~~acts inof ~~the~~war, ~~Middle~~terrorism ~~East~~or ~~between~~political ~~Israel~~instability ~~and~~in ~~the~~oil ~~government~~producing ofcountries ~~Hamas~~(e.g. inthe ~~Gaza~~invasion ~~has~~of ~~caused~~Ukraine ~~disruptions~~by inRussia ~~shipping~~and conflicts ~~lanes~~ in the ~~Red Sea~~Middle ~~where~~East, ~~some~~including ~~major~~the ~~cargo~~recent ~~lines~~escalation ~~have~~involving ~~opted~~Iran, toand ~~route~~recent ~~their~~U.S. ~~vessels~~intervention ~~away~~in ~~from~~Venezuela) ~~the~~have ~~region~~resulted ~~which~~in ~~has~~ increased volatility in the ~~time~~financial ~~required~~markets toand ~~reach~~the ~~their~~markets ~~destinations as well as increased time~~ for ~~vessels~~certain tocommodities ~~return~~including tooil, ~~their~~which ~~port of origin with empty containers. Continued shipping line disruptions and delays~~ may significantly impact the ~~availability~~manufacturers ~~and~~that ~~cost~~we ofrely ~~shipping containers during peak shipping season~~on.

Additionally, the conflict in the Middle East between Israel and the government of Hamas in Gaza, Hezbollah in Lebanon, as well as groups in Syria and Iran, have caused disruptions in shipping lanes in the Red Sea where some major cargo lines have opted to route their vessels away from the region which has increased the time required to reach their destinations as well as increased time for vessels to return to their port of origin with empty containers. Continued shipping line disruptions and delays may impact the availability and cost of shipping containers during peak shipping season.

While we have not experienced any direct impact from the conflicts in ~~the~~and around Ukraine, ~~and~~ the Middle East and elsewhere, the extent and duration of the ~~military~~ military action, sanctions and resulting market and shipping lane disruptions are impossible to predict but could be substantial and could adversely affect our operating results as they impact the global economy in the future.

High inflation and unfavorable economic conditions could negatively affect our business, financial condition and results of operations.

Unfavorable global or regional economic conditions may be triggered by numerous developments beyond our control, including inflation, geopolitical events, health crises such as the COVID-19 pandemic, and other events that trigger economic volatility on a global or regional basis. In particular, a significant deterioration in economic conditions, including economic slowdowns or recessions, increased unemployment levels, inflationary pressures or disruptions to credit and capital markets, could lead to decreased consumer confidence and consumer spending more generally, thus reducing consumer demand for our ~~products~~services. Such heightened inflationary levels and economic conditions may negatively impact consumer disposable income and discretionary spending, negatively impacting our business, financial condition and results of operations.

We are exposed to the credit risk of customers who are experiencing financial difficulties and if these customers are unable to pay us, our revenue and results of operations will be adversely impacted.

We sell ~~products~~our toservices ~~retailers,~~primarily ~~including~~to ~~national chains~~large, ~~warehouse~~fast-moving ~~clubs,~~consumer ~~department~~goods ~~stores, lifestyle merchants, specialty stores, and direct mail catalogs and showrooms~~companies. Deterioration in the financial condition of our customers could result in these customers not being able to pay us for our ~~products and~~ services. This would have a negative impact on our revenue and results of operations.

We may have trouble hiring additional qualified personnel.

As we expand our ~~product~~technology development, service offerings and marketing activities, we will need to hire additional personnel and could experience difficulties attracting and retaining qualified employees. Competition for qualified personnel could be intense due to the limited number of individuals who possess the skills and experience required by such an industry. We may not be able to afford, attract and retain quality personnel on favorable terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that such personnel have been improperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their ~~product~~technology or service ideas. Any of these events could have a material adverse effect on our business, financial condition and results of operations.

The industries in which we operate are subject to international, federal, state and local laws, compliance with which is both complex and costly.

We are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other anti-corruption laws of the countries in which we do business. The FCPA and other anti-corruption laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We and our commercial partners operate in several jurisdictions that pose a high risk of potential FCPA violations and we participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under the FCPA or local anti-corruption laws.

We are also subject to other laws and regulations governing our international operations, including regulations administered in the U.S. and in the EU, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations. We cannot predict the nature, scope, or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition, and results of operations.

We can provide no assurance that we will be in full compliance with all applicable anticorruption laws, including the FCPA or other legal requirements. Any investigation of potential violations of the FCPA or other laws and regulations by the United States, the European Union or other authorities could have an adverse impact on our reputation, our business, results of operations and financial condition. Furthermore, should we be found not to be in compliance with the FCPA or other laws and regulations, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, as well as the accompanying legal expenses, any of which could have a material adverse effect on our business, financial condition and results of operations.

We could be a party to litigation that could adversely affect us by diverting management attention, increasing our expenses and subjecting us to significant monetary damages and other remedies.

We are subject to various claims and legal actions arising in the ordinary course of our business. Such claims may be expensive to defend against and may divert resources away from our operations, regardless of whether they are valid or whether we are ultimately found liable. In the event we are found liable for any such claims, we could be required to pay substantial damages. With respect to insured claims, a judgment for monetary damages in excess of any insurance coverage that we have could result in us being required to pay substantial damages. Any adverse publicity resulting from these claims may also adversely affect our reputation, regardless of whether we are found liable. Any payments of damages or adverse publicity could have a material adverse effect on our business, financial condition and results of operations.

Our ~~charter~~certificate of incorporation provides limitations ofon director liability and indemnification of directors and officers and employees.

Our certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:

	●	breach of their duty of loyalty to us or our stockholders;

	●	act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

	●	unlawful payment of dividends or unlawful stock repurchases, or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

	●	transaction from which the directors derived an improper personal benefit.

These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission.

Our certificate of incorporation and bylaws provide that we will indemnify our officers and directors to the fullest extent permitted by law and that we will advance expenses incurred by any such persons in advance of the final disposition of any action or proceeding. We believe that these provisions are necessary to attract and retain qualified persons as officers and directors.

The limitation of liability in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duties. It may also reduce the likelihood of derivative litigation being brought against our officers and directors even though an action, if successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards pursuant to these indemnification provisions.

Our insurance may not provide adequate levels of coverage against claims.

We currently maintain insurance that we believe is appropriate for a business of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure against. Such losses could have a material adverse effect on our business and results of operations. Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in materially different amounts of expense under these programs, which could have a material adverse effect on our business, financial condition and results of operations.

Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.

There has been a marked increase in the use of social media platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. Many of our competitors are expanding their use of social media and new social medial platforms are rapidly being developed, potentially making more traditional social media platforms obsolete. As a result, we need to continuously innovate and develop our social media strategies in order to maintain broad appeal with customers and brand relevance.

Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted on such platforms may be inaccurate or adverse to our interests, and we may have little or no opportunity to redress or correct the information. The dissemination of such information online, regardless of its accuracy, could harm our business, reputation and brands.

Other risks associated with the use of social media include improper disclosure of proprietary information, personal identifiable information and out-of-date information, as well as fraud, by our customers, employees, franchisees and business partners. The inappropriate use of social media by our customers, employees, franchisees or business partners could increase our costs, lead to litigation or result in negative publicity that could damage our business, reputation and brands.

An impairment in the carrying value of our fixed assets, intangible assets or goodwill could adversely affect our financial condition and results of operations.

We evaluate the useful lives of our fixed assets and intangible assets to determine if they are definite- or indefinite-lived assets. Reaching a determination on useful life requires significant judgments and assumptions regarding the expected life, future effects of obsolescence, demand, competition, the level of required maintenance expenditures and the expected lives of other related groups of assets, as well as other economic factors, such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels. We cannot accurately predict the amount and timing of any impairment of assets. Should the value of fixed assets or intangible assets become impaired, we will have to recognize an impairment charge for the related asset. In the event we recognize any impairment charges in the future, such charges may have a material adverse effect on our business, financial condition and results of operations.

In addition, we may be required to record goodwill in the event we acquire additional assets or businesses in the future. Goodwill represents the excess of cost over the fair value of identified net assets of business acquired. We review any goodwill for impairment annually, or whenever circumstances change in a way which could indicate that impairment may have occurred. Goodwill is tested at the reporting unit level. We identify potential goodwill impairments by comparing the fair value of the reporting unit to its carrying amount, which includes goodwill and other intangible assets. If the carrying amount of the reporting unit exceeds the fair value, this is an indication that impairment may exist. We calculate the amount of the impairment by comparing the fair value of the assets and liabilities to the fair value of the reporting unit. The fair value of the reporting unit in excess of the value of the assets and liabilities is the implied fair value of the goodwill. If this amount is less than the carrying amount of goodwill, impairment is recognized for the difference. A significant amount of judgment is involved in determining if an indication of impairment exists. Factors may include, among others:

● a significant decline in our expected future cash flows; ~~● a sustained, significant decline in our stock price and market capitalization~~

● a sustained, significant decline in our stock price and market capitalization ● a significant adverse change in legal factors or in the business climate; ● unanticipated competition; ● the testing for recoverability of a significant asset group within a reporting unit; and ● slower growth rates.

We will be required to record a non-cash impairment charge if the testing performed indicates that goodwill has been impaired.

We are subject to risks related to the sale of our Singing Machine business.

On August 1, 2025, we entered into an asset purchase agreement with SMC and Stingray USA pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with our Singing Machine business. The transaction closed on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business line. In connection with the transaction, we also entered into a transitional services agreement with Stingray USA to provide certain limited services following the closing. The performance of these services by us and other related conditions outside of our control could adversely affect our operations and future financial results.

As a result of the sale of our Singing Machine business, we became a smaller, less diversified company than we were prior to the transaction, which could make us more vulnerable to factors impacting our performance, such as changing market conditions and market volatility. In addition, while it is intended that the transaction be tax-free to our stockholders for U.S. federal income tax purposes, there is no assurance that the transaction will qualify for this treatment. If the sale is ultimately determined to be taxable, we or our stockholders could incur income tax liabilities that could be significant. Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows, and the price of our common stock.

Significant adverse weather conditions and other disasters could negatively impact our results of operations.

Our business could be negatively affected by adverse weather conditions and acts of God, such as regional winter storms, fires, floods, hurricanes, tropical storms and earthquakes, and other disasters, such as pandemics, oil spills and nuclear meltdowns. The occurrence of any such events in the future could cause substantial damage to our business and subject us to substantial repair costs that could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Karaoke Business

If we are unable to develop new karaoke products, our revenues may not continue to grow.

The karaoke industry is characterized by rapid technological change, frequent new product introductions and enhancements and ongoing customer demands for greater performance. In addition, the average selling price of any karaoke machine has historically decreased over its life, and we expect that trend to continue. As a result, our products may not be competitive if we fail to introduce new products or product enhancements that meet evolving customer demands. The development of new products is complex, and we may not be able to complete development in a timely manner. To introduce products on a timely basis, we must:

● accurately define and design new products to meet market demand; ● design features that continue to differentiate our products from those of our competitors; ● transition our products to new manufacturing process technologies; ● identify emerging technological trends in our target markets; ● anticipate changes in end-user preferences with respect to our customers’ products; ● bring products to market on a timely basis at competitive prices; and ● respond effectively to technological changes or product announcements by others.

We will need to continue to enhance our karaoke machines and develop new machines to keep pace with competitive and technological developments and to achieve market acceptance for our products. At the same time, we will need to continue to identify and develop other products that may be different from our existing karaoke machines.

~~Our~~Risks ~~manufacturing~~Related ~~operations are located in China, subjecting us~~ to ~~risks associated with~~ the ~~manufacturing~~Streeterville ~~and shipping of our products.~~Transaction

WeThe ~~currently~~sale ~~use several contract manufacturers in China to manufacture all our karaoke products. Our arrangements with these contract manufacturers are subject to the risks~~ of ~~doing~~a ~~business~~substantial ~~abroad,~~number ~~such as import duties, trade restrictions, work stoppages, and foreign currency fluctuations, limitations on the repatriation~~ of ~~earnings and political instability, which could have an adverse impact on~~ our ~~margins.~~securities ~~Furthermore, we~~in ~~have limited control over~~ the ~~manufacturing~~public ~~processes.~~market Asby aStreeterville ~~result,~~and/or ~~any difficulties encountered~~ by our ~~third-party~~existing ~~manufacturers that~~security ~~result~~holders ~~in product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis~~ could ~~adversely~~cause ~~affect~~the ~~our~~price ~~revenues, profitability and cash flow. Also, since we do not have written agreements with any~~ of ~~these~~our ~~contract~~common ~~manufacturers, we~~stock ~~are subject~~ to ~~additional uncertainty if the contract manufacturers do not deliver products to us on a timely basis~~fall.

WeOn ~~rely~~August ~~principally~~21, on2025, awe ~~limited~~completed ~~number~~the Streeterville Transaction. As of ~~contract~~March ~~ocean~~27, ~~carriers~~2026, towe ~~ship~~had ~~substantially~~completed ~~all~~Pre-Paid ofPurchases ~~our~~for ~~karaoke~~the ~~products~~aggregate amount ~~that~~of we$21,285,000 ~~import~~and tohad ~~our outsourced~~repaid ~~warehouse~~Pre-Paid ~~facility~~Purchases in ~~Chino,~~the ~~California.~~aggregate ~~Retailers~~amount ~~that~~of ~~take~~$9,845,000 ~~delivery~~as a result of ~~our~~Streeterville ~~products~~electing into exercise ~~China~~its ~~rely~~right onto purchase a ~~variety~~total of ~~carriers~~11,303,264 shares of our common stock under the First Pre-Paid Purchase, Second Pre-Paid Purchase toand ~~import~~Third ~~those~~Pre-Paid ~~products~~Purchase. ~~Any~~The ~~disruptions~~Second Pre-Paid Purchase and Third Pre-Paid Purchase have been paid off in ~~shipping~~full. However, ~~whether~~we have principal in ~~California~~the oramount ~~China,~~of ~~caused~~approximately by$1,085,000 ~~labor~~and ~~strikes~~$10,355,000 ~~other~~outstanding ~~labor~~under ~~disputes~~the First Pre-Paid Purchase and Fourth Pre-Paid Purchase, ~~terrorism,~~respectively. ~~and~~In ~~international~~the ~~incidents~~event ~~may~~Streeterville ~~prevent~~elects orto ~~delay~~exercise ~~our~~its ~~customers’~~right ~~receipt~~to ofpurchase ~~our~~additional ~~products.~~shares Ifof our ~~customers~~common dostock ~~not~~under ~~receive~~the First ~~their~~Pre-Paid ~~products~~Purchase onor aFourth ~~timely~~Pre-Paid ~~basis~~Purchase, ~~they~~we may ~~cancel~~be ~~their~~required ~~orders~~to orissue ~~return~~a ~~the~~substantial ~~products~~number of additional shares of our common stock to usStreeterville. ~~This~~The ~~would~~sale ~~negatively~~of ~~impact~~a substantial number of our ~~revenue~~ shares of common stock in the public market by Streeterville and/or ~~results~~by our other existing security holders, or the perception that those sales might occur, could result in a significant decline in the public trading price of ~~operations~~our common stock.

WeShares ~~rely~~of ~~upon~~our ~~third~~common ~~party~~stock ~~suppliers~~purchased ~~for~~by ~~the~~Streeterville ~~components~~may ~~that~~be ~~are~~issued ~~incorporated~~at ~~into~~a price significantly below the prevailing market price of our ~~karaoke~~common stock, ~~products~~resulting ~~and~~in ifsubstantial wedilution ~~were~~of ~~unable~~existing tostockholders ~~obtain~~and ~~these components~~a asdecrease ~~needed,~~in ~~our~~the ~~operations~~price ~~would~~of beour ~~adversely~~common ~~affected~~stock.

~~Our~~Following ~~growth~~the ~~and~~funding ~~ability~~of toeach ~~meet~~Pre-Paid ~~customer~~Purchase, ~~demand~~Streeterville ~~depends~~has inthe ~~part~~right, onbut ~~our~~not ~~ability~~the obligation, to ~~obtain~~purchase ~~timely~~from ~~deliveries~~us that number of ~~karaoke~~shares of ~~machines~~common ~~and~~stock ~~our~~up ~~electronic products.~~to Wethe ~~rely~~lesser onof: ~~third~~(i) ~~party~~a ~~suppliers~~number of shares of common stock equal in value to ~~manufacture~~the outstanding balance of the ~~parts~~funded amount, and ~~materials~~(ii) that ~~are~~number ~~incorporated~~of ~~into~~shares ~~these~~of ~~products~~common stock such that Streeterville will not beneficially own greater than 9.99% Ifof our ~~suppliers~~outstanding ~~are~~shares ~~unable~~of tocommon ~~provide~~stock. ~~our~~The ~~factories~~price ~~with~~per share used to calculate the ~~components~~number ~~needed,~~of weshares ~~will~~to be ~~unable~~issued to ~~manufacture~~Streeterville is equal to 90% of the lowest daily volume-weighted average price of our ~~products.~~common ~~For~~stock ~~example,~~during ~~there~~the ~~has~~ten (10) trading days immediately preceding the applicable ~~been~~purchase ~~recent~~date, ~~worldwide~~but ~~volatility~~not inless than the ~~supply~~floor price, which is the greater of: ~~electronic~~(i) ~~chips~~20% ~~due~~of the Minimum Price prior to the ~~increased~~applicable ~~demand~~closing of ~~for~~the ~~semiconductors~~Pre-Paid Purchase, and we(ii) ~~are~~$0.10. ~~currently competing~~If ~~with~~Streeterville ~~large~~exercises ~~companies~~its right to ~~obtain~~purchase ~~these~~additional ~~parts~~shares ~~and~~of ~~could~~our ~~see~~common ~~production~~stock ~~and~~under Pre-Paid ~~shipment~~Purchases, ~~delays.~~the Weshares ~~cannot~~may ~~guarantee~~be ~~that~~sold weby ~~will~~us ~~be able~~ to ~~purchase~~Streeterville at a price significantly below the ~~components~~prevailing wemarket ~~need~~price. atThis ~~reasonable~~could lead ~~prices~~to orsubstantial indilution aof ~~timely~~existing ~~fashion~~stockholders. IfThis wedilution, ~~are~~combined ~~unable~~with tothe ~~anticipate~~potential ~~and~~for ~~address~~downward ~~any~~pressure ~~shortages~~on our share ofprice ~~parts~~if ~~and~~Streeterville ~~materials~~promptly insells the ~~future,~~shares wein ~~may~~the ~~experience~~open ~~manufacturing~~market, ~~and~~could ~~delivery~~reduce ~~delays,~~the ~~which~~market ~~would~~value ~~negatively~~of ~~impact~~ our ~~sales~~common ~~and business~~stock significantly.

We ~~depend~~may onbe ~~the~~required ~~ability of our suppliers~~ to ~~manufacture~~make ~~our~~substantial ~~products~~cash ~~without~~payments ~~infringing~~to Streeterville, ~~misappropriating~~which orcould ~~otherwise~~reduce ~~violating~~ the ~~intellectual property~~amount ~~rights~~of orcash ~~proprietary~~available ~~rights~~to offund ~~others~~our operations.

WeIf ~~source~~Streeterville ~~our~~chooses ~~products~~to ~~from~~not aexercise ~~variety~~its ofright ~~contract~~to ~~manufacturers.~~purchase Weshares ~~buy~~of ~~finished~~common ~~goods~~stock from ~~our~~us, ~~suppliers~~we ~~and~~will ~~generally~~be dorequired ~~not~~to ~~source~~repay ~~the~~any outstanding ~~raw~~Pre-Paid ~~materials~~Purchases ~~and~~in ~~components~~cash. ~~incorporated~~We ~~into~~may ~~the~~not ~~final~~have ~~products.~~sufficient Wecash ~~rely~~ on ~~our~~hand ~~contract~~or ~~manufacturers’~~available ~~ability~~resources to ~~secure~~meet ~~injected plastic,~~such ~~wood~~a ~~cabinets,~~repayment ~~integrated circuits~~obligation, ~~display~~which could ~~panels,~~force ~~speaker~~us ~~drivers,~~to ~~and~~seek ~~other~~emergency ~~components~~financing ~~that~~or ~~are~~other ~~necessary~~arrangements ~~for~~which ~~the~~may ~~manufacture of our final products. While we are~~ not ~~responsible~~be ~~for~~available ~~sourcing~~or, ~~raw~~if ~~materials~~available, wemay ~~rely~~be on ~~these~~unfavorable ~~suppliers~~terms. In tothe ~~have~~event ~~all~~we ~~required~~do ~~licenses and~~have ~~proprietary~~sufficient ~~rights~~funds toavailable, the ~~materials~~cash ~~that~~payment ~~are~~obligations, ~~incorporated~~if ~~into our final products. In addition~~triggered, wecould ~~rely~~significantly onreduce the ~~representations~~cash ofwe ~~our~~have ~~contract~~available ~~manufacturers~~to ~~that~~fund ~~they~~our ~~are~~operations ~~using~~or ~~materials~~make ~~and components that meet all~~ necessary ~~legal,~~investments. ~~safety,~~This ~~and~~would ~~compliance~~adversely ~~requirements. If~~affect our ~~suppliers~~financial ~~do not have the proper licenses or rights or are not in compliance with all regulatory requirements~~condition, welimit ~~may~~our ~~be named~~ability ~~a party in disputes or be subject~~ to ~~claims,~~pursue ~~including~~growth ~~claims of infringement or violating the intellectual property or proprietary rights of third parties~~opportunities, ~~with~~and ~~respect~~adversely toaffect our ~~products~~business prospects.

~~Changes~~In addition, the occurrence of an event of default under the Pre-Paid Purchases or certain change-of-control or other fundamental transactions may accelerate repayment or suspend Streeterville’s funding obligations to us. If an event of default occurs under a Pre-Paid Purchase, the outstanding balance will become immediately due and payable. At any time 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. If we are involved in ~~government~~a ~~regulations~~change-of-control ~~relating~~or other fundamental transaction, we may be required to ~~international~~repay ~~tariffs~~the Pre-Paid Purchases in cash. We may not have sufficient cash on hand or available resources to meet such a repayment obligation, which could ~~significantly~~force us to seek emergency financing or other arrangements which may not be available or, if available, may be on unfavorable terms. In the event we do have sufficient funds available, the cash payment obligations, if triggered, could significantly reduce the cash we have available to fund our ~~revenues~~operations or make necessary investments. This would adversely affect our financial condition, limit ~~product~~our ~~cost~~ability to pursue growth opportunities, and ~~profitability~~adversely affect our business prospects.

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

A small number of our customers account for a substantial portion of the revenue we generate from our karaoke business and the loss of one or more of these key customers would negatively impact our revenue and cash flow.

We rely on a few large customers to provide for a substantial portion of our revenue. Sales to our top five customers and top three customers collectively in our karaoke business comprised 79% and 81% of our revenue, respectively, for the year ended December 31, 2024 and the nine- month transition period ended December 31, 2023, respectively. We do not have long-term contractual arrangements with any of our customers and they can cancel their orders at any time prior to delivery. A reduction in or termination of orders from any of these customers would negatively impact our revenue and cash flow.

Our customers may return karaoke products that they have purchased from us which would result in a reduction in our revenue and cash flow.

We incur significant product returns from our customers and expect to incur additional returns in the returns. The return of products is due to a variety of reasons, including defective units, customers’ overstock and buyer’s remorse. In addition, the factories that we utilize for the manufacture of our products charge customary repair and freight costs, which increase our expenses and reduce our cash flow. If any of our customers increase the volume of their returned karaoke products to us, our revenue and cash flow would be negatively impacted.

We are subject to pressure from our customers relating to price reduction and financial incentives that negatively impact our revenue and cash flow from sales of our karaoke products.

We are subject to pricing pressure from our customers due to intense competition in the karaoke industry. Many of our customers have demanded that we lower our prices to remain competitive with other companies offering karaoke products. If we do not meet our customers’ demands to lower our regular prices, we may not sell as many karaoke products. Additionally, we are also subject to pressure from our customers regarding certain financial incentives, such as return credits or large cooperative promotion incentives, which effectively reduce our revenue and cash flow. We have historically offered these co-op promotion incentives to our customers because it is standard practice in the retail industry. We incurred co-op promotion incentives of $2,100,000 and $2,600,000 for the year ended December 31, 2024 and the nine-month transition period ended December 31, 2023, respectively. In the event we continue to experience pricing pressure from our customers and continue to offer co-op promotion incentives to our customers, our revenue and cash flow will be negatively impacted.

If we do not accurately forecast the demand for our karaoke products, our revenue, cash flow and results of operations will be adversely affected.

Our production lead times range from one to four months due to our reliance on manufacturers in China for the production of our karaoke products. Therefore, we must commit to production in advance of customers’ orders. It is difficult for us to forecast customer demand because we do not have any scientific or quantitative method to predict this demand. Our forecasting is based on our general expectations about customer demand, the general strength of the retail market and our historical experiences. In past years we have overestimated demand for our products, which led to excess inventory in some of our products. In the event we fail to accurately forecast demand for our karaoke products in the future, our revenue, cash flow and results of operations will be adversely affected.

We are subject to the costs and risks of carrying inventory for our customers and if we have too much inventory, it will negatively affect our cash flow from operations.

Our karaoke business is seasonal in nature. Many of our customers place orders with us several months prior to the holiday season, but they schedule delivery two or three months before the holiday season begins. As such, we are subject to the risks and costs of carrying inventory during the time period between the placement of the order and the delivery date, which reduces our cash flow. If we are forced to maintain excessive inventory levels in the future, we may incur higher storage costs which will have a material adverse effect on our cash flow and results of operations.

We are subject to insurance risk of loss for karaoke products that are damaged while in transit from the manufacturer to the customer and our warehouse.

All of our karaoke products are manufactured in China and are transported to customers and our warehouse in California via ocean vessel. The risk of loss remains with us until the products are delivered. As a result, we are subject to the risk that these products could be damaged while they are in transit to customers or our warehouse. While we have taken significant measures to reduce the likelihood of our products being damaged, we cannot guarantee that our products won’t be damaged in the future. We have obtained insurance coverage for products that are shipped direct import to our customers and for goods in transit to our California warehouse. Notwithstanding this, certain exclusions apply that may prevent insurance from covering a loss. In the event our products are damaged while in transit in the future, we could experience a significant loss of revenue and inventory and incur significant out-of-pocket expenses, all of which would have a negative impact on our cash flow and results of operations.

Our karaoke business is seasonal and therefore our annual operating results will depend, in large part, on our sales during the relatively brief holiday season.

Sales of consumer electronics and toy products in the retail channel are highly seasonal, with a majority of retail sales occurring during the period of September through December in anticipation of the holiday season. A substantial majority of our sales occur during our fiscal quarters ended September 30th and December 31st. Sales in these two quarters accounted for 79% and 91% of our revenue for the year ended December 31, 2024 and the nine-month transition period ended December 31, 2023, respectively. In the event we fail to generate sufficient sales of our products during this period in future years, our revenue and results of operations will be negatively adversely affected.

Consumer discretionary spending may affect karaoke purchases and is affected by various economic conditions and changes.

Purchases of karaoke machines and music are considered discretionary for consumers. Our success will therefore be influenced by a number of economic factors affecting discretionary and consumer spending, such as employment levels, business, interest rates, and taxation rates, none which are under our control. Additionally, other extraordinary events such as terrorist attacks or military engagements could occur which may adversely affect the retail environment negatively impact consumer spending. Any such events would have an adverse affect on our revenue and results of operations.

If our third-party logistics provider experiences disruptions to the operation of its distribution centers, it could have a material adverse effect on our business, financial condition and results of operations.

We do not have our own warehouse or distribution facilities for our karaoke products, but instead rely upon a third-party logistics provider that is responsible for warehousing and fulfilling our orders. With the exception of direct import, all of our merchandise is shipped from our suppliers to one of our provider’s distribution facilities and then packaged and shipped from our distribution facilities to our customers. The success of our business depends on our timely receipt of our products so that we can continuously bring new, on-trend products online for sale. The success of our business also depends on customer orders being timely processed and delivered to meet promised delivery dates and satisfy our customers. The efficient flow of our merchandise requires that we have adequate capacity and uninterrupted service in our distribution facilities to support both our current level of operations. Upgrading our existing arrangement or transferring our operations to another third-party provider, if necessary, would require us to incur additional costs, which could be significant, and may require us to obtain additional financing. Our failure to provide adequate order fulfillment, secure additional distribution capacity when necessary or retain a suitable third-party logistics provider could increase our costs, which in turn could have a material adverse effect on our business, financial condition and results of operations.

In addition, if our current provider encounters difficulties associated with its distribution facilities or if they were to shut down or be unable to operate for any reason, including because of fire, natural disaster, power outage or other event, we could face inventory shortages, resulting in “out-of-stock” conditions on our website and delays in shipments, resulting in lost revenue, significantly higher costs and longer lead times distributing our merchandise.

Our production costs may increase if we are required to make purchases using the Chinese Yuan instead of the U.S. dollar.

All of our karaoke products are currently manufactured in China. During the year ended December 31, 2024 and the nine-month transition period ended December 31, 2023, the Chinese local currency had no material effect on us as all of our purchases are denominated in the U.S. dollar. If, in the future, our purchases are required to be made in Chinese local currency, the Yuan, we will be subject to the risks involved in foreign exchange rates. The value of the Yuan depends largely on the Chinese government’s policies and China’s domestic and international economic and political developments. As a result, our production costs may increase if we are required to make purchases using the Yuan instead of the U.S. dollar and the value of the Yuan increases over time. Any significant increase in the cost of manufacturing our products would have a material adverse effect on our business and results of operations.

We also sell some of our karaoke products to Canadian customers, some of whom require us to invoice them in Canadian dollars. This subjects us to risks involved in the exchange rate between the Canadian and U.S. dollar. The exchange rate has been stable during the year ended December 31, 2024 and the nine-month transition period ended December 31, 2023, and the associated exchange rates did not have a material impact on our financial results. Should the exchange rate between the Canadian and U.S dollar become more volatile and sales to Canadian customers increase, the use of Canadian dollars could have a material adverse effect on our business.

Our profit margin may be negatively impacted by higher raw material prices and higher production and shipping costs.

Fluctuations in the price of oil, electronic chip components and shipping costs have and will continue to affect the sourcing and delivery of the raw materials and services used in the manufacture and shipping of our karaoke products. If we are not able to negotiate lower costs, reduce other expenses, or pass on some or all of these costs to our customers, our profit margin may be adversely affected.

If we are unable to compete in the karaoke products category, our revenue, cash flows and results of operations will be negatively impacted.

Our major competitors for karaoke machines and related products are Singsation®, Singtrix®, eKids®, Bonaok, Karaoke USA™, Ion® Audio, licensed property karaoke product companies and other consumer electronics companies. In addition, we compete with companies offering other forms of entertainment, including motion pictures, video arcade games, home video games, theme parks, nightclubs, television, prerecorded tapes, CDs, DVDs and streaming video. Many of our direct and indirect competitors are well-established national and international companies that have been in business longer than we have, have greater consumer awareness than we do, and have substantially greater capital, marketing and human resources than we do. As our competitors expand their operations and as new competitors enter the industry, we expect competition to intensify. Increased competition could result in price reductions, decreases in profitability and loss of market share by us.

We are subject to intense pricing pressure for our karaoke products. We expect that the intense pricing pressure existent in the market for karaoke products will continue in the future. We believe that competition for karaoke machines and other forms of entertainment is based primarily on price, product features, reputation, delivery times, and customer support. In the event we are unable to compete successfully with our current and future competitors, our business, financial condition and results of operations could be materially and adversely affected.

If we ship products that contain defects, the market acceptance of our karaoke products and our reputation will be harmed and our customers could seek to recover their damages from us.

Our products are complex and, despite extensive testing, may contain defects or undetected errors or failures that become apparent only after our products have been shipped to our customers or after product features or new versions are released. Any such defect, error or failure could result in reduced market acceptance of our products, damage to our reputation, or damage to our relations with our customers, resulting in the cancellation of orders, warranty costs and product returns. In addition, any defects, errors, misuse of our products or other potential problems within or out of our control that may arise from the use of our products could result in financial or other damages to our customers. Our customers could seek to have us pay for these losses. Although we maintain product liability insurance, it may not be adequate to cover us for these losses. In the event we experience significant defects, errors or failures with our karaoke products, or in the event we incur losses for financial and other damages suffered by our customers that are not covered by insurance, our business and results of operations could be negatively impacted.

Risks Related to Our AI Logistics and Distribution Business

The transportation industry historically has experienced cyclical fluctuations in financial results that could negatively impact our business and results of operations.

SemiCab has experienced cyclical fluctuations in financial results due to economic recessions, downturns in business cycles, interest rate fluctuations, currency fluctuations, and other economic factors. Many of these cyclical fluctuations are beyond SemiCab’s control. Any downturn in SemiCab’s business will negatively impact our revenues.

Fluctuation in freight volumes resulting from supply chain disruptions or other factors may impact working capital needs.

A reduction in overall freight volumes in the marketplace may occur due to supply chain disruptions or overall economic conditions. In addition, a downturn in customer business cycles could cause a reduction in the volume of freight shipped by those customers and result in a reduction in freight rates. During 2023 and 2024, SemiCab experienced a decline in freight volumes as shippers struggled with elevated inventory levels and consumer demand was negatively impacted by inflation and macroeconomic uncertainty. As its volumes increase or SemiCab increases freight rates charged to its customers, the resulting increase in revenues may increase its working capital needs due to its business model, which generally has a higher length of days sales outstanding than days payables outstanding.

SemiCab’s business is susceptible to numerous expense challenges which may impact operating results.

SemiCab may not be able to appropriately adjust its expenses to changing market demands. In periods of rapid change, it may be difficult to match its staffing levels to its business needs. Higher carrier prices may result in decreased adjusted gross profit margin and a need for working capital. Carriers can be expected to charge higher prices if market conditions warrant or to cover higher operating expenses. SemiCab’s adjusted gross profits and income from operations may decrease if SemiCab is unable to increase its pricing to its customers. Increased demand for over the road transportation services and changes in regulations may reduce available capacity and increase motor carrier pricing. In the event market conditions change and its contracted rates are below market rates, SemiCab may be required to provide transportation services at a loss. Changing fuel prices and interruptions in fuel supplies may also impact SemiCab, negatively impacting its gross profit margin.

SemiCab is dependent on third parties which may impact the provision of its services.

SemiCab’s dependence on third parties to provide equipment and services may impact the delivery and quality of its transportation and logistics services. SemiCab depends on independent third parties to provide trucking services and to report certain events to them, including but not limited to, shipment status information and freight claims. These independent third parties may not fulfill their obligations to SemiCab, or SemiCab’s relationship with these parties may change, which may prevent SemiCab from meeting its commitments to its customers. SemiCab’s reliance on these third parties also could cause delays in reporting certain events, including recognizing claims. If SemiCab is unable to secure sufficient equipment or other transportation services from third parties to meet its commitments to its customers, its operating results could be materially and adversely affected, and its customers could switch to its competitors temporarily or permanently.

Cyclical challenges in the transportation industry may impact SemiCab’s results of operations and operating cash flows.

The transportation industry may also be significantly impacted by disruptions such as the availability of transportation equipment, as well as factors such as labor shortages, fuel prices, shifts in consumer demand toward more locally sourced products, and regulatory changes. These disruptions may impact the growth rates within the logistics industry and SemiCab’s ability to provide transportation services for its customers, each of which may adversely impact its results of operations and operating cash flows.

SemiCab faces substantial competition in the logistics and distribution industry.

Competition in the digital freight industry is intense and broad-based. SemiCab competes with traditional and non-traditional logistics companies, including transportation providers that own equipment, third-party freight brokers, technology matching services, internet freight brokers, carriers offering logistics services, and on-demand transportation service providers. In addition, customers can offer in-house some of the services SemiCab provides to them. Increased competition could reduce the market opportunity for SemiCab’s services and create downward pressure on freight rates. Continued rate pressure may adversely affect SemiCab’s adjusted gross profits and income from operations.

SemiCab’s business may be adversely affected by seasonality.

SemiCab business may be adversely impacted by seasonal changes or significant disruptions in the transportation industry. Results of operations for the industry generally show a seasonal pattern as customers reduce shipments during and after the winter holiday season. SemiCab believes this historical pattern has been the result of, or influenced by, numerous factors, including national holidays, weather patterns, consumer demand, economic conditions, and other similar and subtle forces. Although seasonal changes in the transportation industry have not had a significant impact on its cash flow or results of operations, SemiCab expects this trend to continue, and it cannot guarantee it will not adversely impact SemiCab in the future.

SemiCab relies on technology to operate its business.

SemiCab has internally developed the majority of its operating systems and also relies on technology provided by third parties. Its continued success is dependent on its systems continuing to operate and meet the changing needs of its customers and users. The continued automation of existing processes and usage of third-party technology and cloud network capacity will require adaptation and adjustments that may increase its exposure to cybersecurity risks and system availability reliance. SemiCab relies on its technology staff and third-party vendors to successfully implement changes to, and to maintain, its operating systems in an efficient manner. If SemiCab fails to maintain, protect, and enhance its operating systems, it may be at a competitive disadvantage and lose customers.

As demonstrated by recent material and high-profile data security breaches, computer malware, viruses, computer hacking, and phishing attacks have become more prevalent, and may occur on SemiCab’s operating systems. SemiCab can offer no assurance that any future attacks will have little to no impact on its business. Furthermore, given the interconnected nature of the supply chain and its significant presence in the industry, it may be an attractive target for such attacks. The insurance coverage held by SemiCab may not apply to a particular loss or it may not be sufficient to cover all liabilities to which we may be subject. A loss for which SemiCab is not adequately insured could materially affect its financial results.

Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, a significant impact on the performance, reliability, security, and availability of SemiCab’s operating systems and technical infrastructure to the satisfaction of its users may harm its reputation, impair its ability to retain existing customers or attract new customers, and expose it to legal claims and government action, each of which could have a material adverse impact on its financial condition, results of operations, and growth prospects.

SemiCab’s international operations subject it to complex and ever-changing operational, financial, and data privacy risks.

SemiCab provides services within foreign countries on an increasing basis. Its business outside of the U.S. is subject to various risks, including:

● difficulties in managing or overseeing foreign operations and agents; ● limitations on the repatriation of funds because of foreign exchange controls; ● foreign currency fluctuations; ● different liability standards; ● intellectual property laws of countries that do not protect its intellectual property rights, including but not limited to, its proprietary information systems, to the same extent as the laws of the U.S; ● issues related to non-compliance with laws, rules, and regulations in the countries in which it operates including the U.S. Foreign Corrupt Practices Act and similar regulations; and

● global laws and regulations regarding the collection, use, processing, and transfer of personal information may impact its services by imposing restrictions on processing, increase legal claim liability, and increase regulatory scrutiny and fines.

In addition, foreign currency fluctuations could result in currency exchange gains or losses or could affect the book value of its assets and liabilities. Furthermore, SemiCab may experience unanticipated changes to its income tax liabilities resulting from changes in geographical income mix and changing international tax legislation. If SemiCab does not correctly anticipate changes in international economic and political conditions and comply with applicable laws and regulations, its business and results of operations could be negatively impacted.

SemiCab’s may not be able to hire and retain qualified employees.

SemiCab’s continued success depends upon its ability to attract and retain motivated logistics and technology professionals. In periods of rapid change, it may be more difficult to match its staffing level to its business needs. SemiCab cannot guarantee it will be able to continue to hire and retain a sufficient number of qualified personnel to sustain the growth in its business. In addition, macroeconomic factors impacting the labor market may result in higher costs to hire and retain qualified personnel. Because of its highly experienced employee base, its employees are attractive targets for new and existing competitors. Continued success depends in large part on its ability to develop successful employees into managers and architects.

SemiCab may fail in its efforts to expand its use of machine learning and AI technologies and may be subject to risks and liabilities in the event it does expand its use of machine learning and AI technologies.

If SemiCab fails to successfully integrate AI into its platform and business processes, or if it fails to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented AI developers and programmers and cybersecurity personnel, it may face a competitive disadvantage. At the same time, the use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, privacy and compliance issues, ethical concerns, confidentiality, reputational harm, and security risks. It is not possible to predict all of the risks related to the use of AI. Changes in laws, rules, directives, and regulations governing the use of AI may adversely affect the ability of SemiCab to develop and use AI or subject SemiCab to legal liability. The cost of complying with laws and regulations governing AI could be significant Further, market demand and acceptance of AI technologies are uncertain, there may be challenges to further incorporate AI into SemiCab’s processes. Each of these risks could adversely affect SemiCab’s business, financial condition, and results of operations.

We have integrated, and may continue to integrate in the future, AI in our logistics and distribution services. AI technology presents various operational, compliance, and reputational risks and if any such risks were to materialize, our business and results of operations may be adversely affected.

We have integrated AI technologies into our logistics and distribution services. We may continue to integrate AI technologies in new product or service offerings. Given that AI is a rapidly developing technology that is in its early stages of business use, it presents a number of operational, compliance and reputational risks. AI algorithms are currently known to sometimes produce unexpected results and behave in unpredictable ways (e.g., “hallucinatory behavior”) that can generate irrelevant, nonsensical, fictitious, deficient, offensive or factually incorrect content and results, which, if incorporated into our platform, may result in reputational harm to us and be damaging to our brand. Additionally, content, analyses or recommendations that are based on AI might be found to be biased, discriminatory or harmful. Data sets from which large language models learn are at risk of poisoning or manipulation by bad actors, resulting in offensive or undesired output. Similarly, the data set could contain copyrighted material resulting in infringing output. AI output might present ethical concerns or violate current and future laws and regulations.

We expect that there will continue to be new laws or regulations concerning the use of AI technology, which might be burdensome for us to comply with and may limit our ability to offer or enhance our existing tools and features or new offerings based on AI technology. Further, the use of AI technology involves complexities and requires specialized expertise. We may not be able to attract and retain top talent to support our AI technology initiatives. If any of the operational, compliance or reputational risks were to materialize, our business and results of operations may be adversely affected.

We may be subject to risks associated with artificial intelligence and machine learning technology.

Recent technological advances in AI and machine learning technology may pose risks to us. Our use of AI could give rise to legal or regulatory action, create liabilities, or materially harm our business. While we aim to develop and use AI and machine learning technology responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise. Further, as the technology is rapidly evolving, costs and obligations could be imposed on us to comply with new regulations.

We also could be exposed to the risks of machine learning technology if third-party service providers or any counterparties, whether or not known to us, also use machine learning technology in their business activities. We will not be in a position to control the use of such technology in third-party products or services. Use by third-party service providers could give rise to issues pertaining to data privacy, data protection, and intellectual property considerations.

SemiCab’s business is dependent on a single customer.

SemiCab derives almost all of its revenue from a single customer. This customer accounted for 99% of its revenue for the year ended December 31, 2024 and the nine-month transition period ended December 31, 2023. The sudden loss of this customer would materially and adversely affect its operating results.

SemiCab may be subject to a variety of claims arising from its transportation operations.

SemiCab uses the services of thousands of third-party transportation companies in connection with its transportation operations. From time to time, the drivers employed and engaged by the motor carriers with which SemiCab contracts are involved in accidents, which may result in serious personal injuries. The resulting types and amounts of damages may be excluded by or exceed the amount of insurance coverage maintained by the contracted motor carrier. SemiCab contractually requires all motor carriers it works with to carry at least $1,000,000 in automobile liability insurance. SemiCab also requires all contracted motor carriers to maintain workers’ compensation and other insurance coverage as required by law. Most contracted motor carriers have insurance exceeding these minimum requirements, as well as cargo insurance in varying policy amounts. Although these drivers are not employees of SemiCab and all of these drivers are employees, owner-operators, or independent contractors of the contracted motor carriers, claims may be asserted against SemiCab. Claims against SemiCab may exceed the amount of its insurance coverage or may not be covered by insurance at all. A material increase in the frequency or severity of accidents, liability claims, workers’ compensation claims, or unfavorable resolutions of claims could materially and adversely affect SemiCab’s operating results. In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce its profitability. SemiCab’s involvement in the transportation of certain goods, including but not limited to, hazardous materials, could also increase its exposure in the event one of its contracted motor carriers is involved in an accident resulting in injuries or contamination.

In its customer contracts, SemiCab may agree to assume cargo liability up to a stated maximum. Although SemiCab is not legally liable for loss or damage to its customers’ cargo, from time to time, claims may be asserted against SemiCab for cargo losses. SemiCab maintains a broad contingent cargo liability insurance policy to help protect it against catastrophic losses that may not be recovered from the responsible contracted carrier. SemiCab also carries various liability insurance policies, including automobile and general liability insurance.

SemiCab’s business is subject to numerous government regulations.

SemiCab’s operations are regulated and licensed by various federal, state, and local transportation agencies in the U.S. and similar governmental agencies in foreign countries in which it operates. SemiCab is subject to licensing and regulation as a property freight broker and is licensed by the DOT to arrange for the transportation of property by motor vehicle. The DOT prescribes qualifications for acting in this capacity, including certain surety bonding requirements. SemiCab also has and maintains other licenses as required by law. SemiCab’s failure to maintain required permits or licenses, or to comply with applicable regulations, could result in substantial fines or revocation of its operating permits and licenses

Legislative or regulatory changes could affect the economics of the transportation industry by requiring changes in operating practices or influencing the demand for, and the cost of providing, transportation services. SemiCab may experience an increase in operating costs, such as security costs, as a result of governmental regulations that have been or will be adopted in response to terrorist activities and potential terrorist activities. No assurance can be given that SemiCab will be able to pass these increased costs on to its customers in the form of rate increases or surcharges, and its operations and results of operations may be materially and adversely affected as a result.

Risks Related to Ownership of Our Securities

We may raise additional funds in the future through the issuance of equity securities or debt, which funding may be dilutive to stockholders or impose operational restrictions on us.

On December 6, 2024, we completed a public offering of an aggregate of 21,000 shares of our 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. Immediately prior to the completion of the offering, we had 1471,~~215,176~~ 076 shares of our common stock outstanding. Additionally, due to price adjustment provisions contained in the Series A and Series B warrants, the Series A warrants became exercisable into 1,133,652 shares of common stock and the Series B warrants became exercisable into 1,910,975 shares of our common stock. All of the pre-funded warrants and Class B warrants were exercised in their entirety. As a result of the offering, shareholders who owned shares immediately prior to the completion of the offering experienced immediate and substantial dilution as a result of the issuance of the shares of common stock on December 6, 2024 and the subsequent exercise of the pre-funded warrants and Class B warrants.

On August 21, 2025, we completed the Streeterville Transaction. As of March 27, 2026, we had completed Pre-Paid Purchases for the aggregate amount of $21,285,000 and had repaid Pre-Paid Purchases in the aggregate amount of $9,845,000 as a result of Streeterville electing to exercise its right to purchase a total of 11,303,264 shares of our common stock under the First Pre-Paid Purchase, Second Pre-Paid Purchase and Third Pre-Paid Purchase.

Shareholders who owned shares of our common stock immediately prior to the completion of the December 6, 2024 securities offering experienced immediate and substantial dilution as a result of the issuance of the shares of common stock on December 6, 2024 and the subsequent exercise of the pre-funded warrants and Class B warrants. Additionally, shareholders who owned shares of our common stock immediately prior to the dates Streeterville elected to purchase 11,303,264 shares of our common stock under the First Pre-Paid Purchase, the Second Pre-Paid Purchase and the Third Pre-Paid Purchase experienced immediate and substantial dilution.

We may need to raise additional capital through the sale of equity securities or the issuance of short- and long-term debt during the next 12 months to fund our operations and growth. If we raise additional funds by issuing shares of our common stock, our stockholders will experience dilution. If we raise additional funds by issuing securities exercisable or convertible into shares of our common stock, our stockholders will experience dilution in the event the securities are exercised or converted, as the case may be, into shares of our common stock. Debt financing may involve agreements containing covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, issuing equity securities, making capital expenditures for certain purposes or above a certain amount, or declaring dividends. In addition, any equity securities or debt that we issue may have rights, preferences and privileges senior to those of the securities held by our stockholders.

The market price of our common stock is likely to be highly volatile and subject to wide fluctuations.

The market price of our common stock may fluctuate significantly in response to a number of factors, many of which we cannot control, including:

● fluctuations in our annual or quarterly operating results; ● changes in capital market conditions or other adverse economic conditions; ● upgrades or downgrades by securities analysts following our stock; ● changes in estimates of our future financial results by securities analysts following our stock; ● our achievement, or our failure to achieve, projected financial results; ● future sales of our stock by our officers, directors or significant stockholders; ● investors’ perceptions of our business and prospects relative to other investment alternatives; ● acquisitions, joint ventures, capital commitments or other significant transactions by us or our competitors; ~~● global economic, legal and regulatory factors unrelated to our performance; and ● the other risks and uncertainties set forth herein.~~

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	●	global economic, legal and regulatory factors unrelated to our performance; and

	●	the other risks and uncertainties set forth herein.

The stock market experiences significant price and volume fluctuations that affect the market price of the stock of many companies and that are often unrelated or disproportionate to the operating performance of these companies. Market fluctuations such as these may seriously harm the price of our common stock. Further, securities Series Action suits have been filed against companies following periods of market volatility in the price of their securities. If such an action is instituted against us, we may incur substantial costs and a diversion of management attention and resources, which would seriously harm our business, financial condition and results of operations. In addition, the initiation of any such action could cause the price of our common stock to decline

Our quarterly and annual operating results may fluctuate due to increases and decreases in sales, ~~raw material~~ and ~~supply costs, and~~ other factors.

Our quarterly and annual operating results may fluctuate significantly because of a variety of factors, including:

● increases or decreases in sales of our ~~products and~~ services; ● our ability to operate effectively in new markets; ● labor availability and costs for management and other personnel; ● changes in consumer preferences and competitive conditions; ● negative publicity relating to us, our vendors or the ~~products~~services we sell; ● disruptions in the ~~type~~availability ~~and delivery~~ of ~~our~~trucks ~~raw~~needed ~~materials~~to ~~and~~complete ~~supplies~~shipments; ● changes consumer confidence and fluctuations in discretionary spending; ● changes in ~~raw material and supply costs,~~ labor costs or other variable costs and expenses; ● potential distractions or unusual expenses associated with our expansion plans; ● the impact of inclement weather, natural disasters, and other calamities; and ● economic conditions in the jurisdictions in which we operate and nationally.

As a result of the factors discussed above, as well as the other factors set forth herein, our operating results for one fiscal quarter or year are not necessarily indicative of results to be expected for any other fiscal quarter or year. These fluctuations may cause future operating results to fall below our estimates or the expectations of our stockholders or the investment community in general. If our results of operations do not meet the expectations of our stockholders or the investment community, the price of our common stock may decline.

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Our common stock may be affected by price fluctuations, which could adversely impact the value of our common stock.

Our common stock has experienced, and is likely to experience, significant price and volume fluctuations in the future which could adversely affect the market prices of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the market price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time.

FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities.

Effective June 30, 2020, the SEC implemented Regulation Best Interest requiring that “A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer...” This is a significantly higher standard for broker-dealers to recommend securities to retail customers than before under prior suitability rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”). FINRA suitability rules do still apply to institutional investors and require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending securities to their customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information, and, for retail customers, determine that the investment is in the customer’s “best interest,” and meet other SEC requirements. Both SEC Regulation Best Interest and FINRA’s suitability requirements may make it more difficult for broker-dealers to recommend that their customers buy speculative, low-priced securities and may have the effect of reducing the level of trading activity in our securities. As a result, fewer broker-dealers may be willing to make a market in our common stock.

An investment in our securities is speculative, and there can be no assurance of any return on any such investment.

Investors are cautioned that an investment in ~~the~~our securities ~~offered hereby~~ is highly speculative and involves a significant degree of risk. The success of our business and the ability to achieve our business goals and objectives, as outlined in this ~~prospectus~~report, are subject to numerous uncertainties, contingencies and risks. As such, there is no assurance that investors will realize a return on their investment or that they will not lose their entire investment. Potential investors should carefully consider whether such a speculative investment is suitable for their financial situation and investment objectives before purchasing securities.

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We identified material weaknesses in our internal control over financial reporting during the assessment of our internal control that we performed in connection with the preparation of our audited consolidated financial statements included herein.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require management to complete an annual assessment of our internal control over financial reporting. During the preparation of our audited consolidated financial statements for the year ended December 31, ~~2024~~2025, we identified several control deficiencies that have been classified as material weaknesses in our internal control over financial reporting. A material weakness is a control deficiency that results in a more than remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis by our employees in the normal course of their assigned functions. Based on the material weaknesses identified, management concluded that our internal control over financial reporting was not effective as of December 31, ~~2024~~2025.

Our management, in consultation with our independent registered public accounting firm, concluded that the following material weaknesses existed in the following areas as of December 31, ~~2024~~2025:

	●	We lack 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. Management evaluated our current process of review and approval of certain material journal entries and concluded this deficiency represented a material weakness.

	●	We lack sufficient resources in our accounting department, which restricts our ability to review certain material reconciliations related to financial reporting in a timely manner. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. Management evaluated the impact of our failure to have proper segregation between the preparation, review and approval of account reconciliations and concluded that this control deficiency represented a material weakness.

	●	Due to resource restrictions, we have not established a three-way match of documents or other controls precise enough to detect a material misstatement in revenue. Management evaluated our current process of determining the occurrence of revenue and concluded this deficiency represented a material weakness.

The standards that must be met for management to assess internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We may encounter problems or delays in completing the activities necessary to make future assessments of our internal control over financial reporting and completing the implementation of any necessary improvements. Future assessments may require us to incur substantial costs and may require a significant amount of time and attention of management, which could seriously harm our business, financial condition and results of operations.

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If we are unable to establish and maintain an effective system of internal control, we may not be able to accurately report our financial results on a timely basis or prevent fraud.

Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports on a timely basis or prevent fraud, we may not be able to manage our business as effectively as we would if an effective internal control environment existed, and our business and reputation with investors may be harmed. We have not performed an in-depth analysis to determine if undiscovered failures of internal controls exist and may in the future discover areas of our internal control environment that need improvement. If we are unable to establish and maintain an effective system of internal control, we may not be able to report our financial results in an accurate and timely manner or prevent fraud.

We are working on improving and simplifying our internal processes and implement enhanced controls to address the material weaknesses in our internal control over financial reporting discussed above and to remedy the ineffectiveness of our disclosure controls and procedures. We are addressing our accounting resource requirements to help remediate the segregation of duties and plan to implement a concise “three-way” document matching procedure. These material weaknesses will not be considered as remediated until the applicable remediated controls are operating for a sufficient period and management has concluded, through testing, that these controls are operating effectively.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

We are a public company and subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act of 2002. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. Compliance with the Sarbanes-Oxley Act may divert internal resources and will take a significant amount of time and effort to achieve. If we fail to maintain compliance with the Sarbanes-Oxley Act, we could be subject to sanctions or investigations by the Nasdaq, the SEC, or other regulatory authorities. Furthermore, investor perceptions of us may decline as a result.

Any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement necessary changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal controls from our independent auditors. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company, particularly if we become fully subject to the Sarbanes-Oxley Act and its auditor attestation requirements, which will increase costs. Our management team and other personnel will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company, which may divert attention from other business concerns and have a material adverse effect on our business, financial condition and results of operations.

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If we are not able to comply with the applicable continued listing requirements of the Nasdaq, it could delist us, which may adversely affect the market price and liquidity of our common stock.

Our common stock currently trades on the Nasdaq under the symbol “RIME”. For our common stock to continue trading on the Nasdaq, we must meet continued listing standards mandated by the Nasdaq. These continued listing standards include specifically enumerated criteria, including maintaining a $1.00 minimum closing bid price and maintaining stockholder’s equity of at least $2,500,000. If we fail to meet any of the continued listing standards of the Nasdaq, our common stock could be delisted.

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

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

On November 1319, 2024, we filed our Quarterly Report on Form 10-Q for our fiscal quarter ended September 30, 2024 with the SEC. Therein, we reported stockholders’ equity of approximately $2,700,000. That same day we filed a Form 8-K with the SEC stating that we believed we had regained compliance with the stockholders’ equity requirement. On November 22, 2024, we received a letter from the Nasdaq ~~indicating~~ indicating that, based on the Form 810-KQ that we filed on November 1319, 2024, the Nasdaq had determined that we were in compliance with the stockholders’ equity rule. The Nasdaq advised us that it would continue to monitor our ongoing compliance with the stockholders’ equity requirement and, if at the time of our next periodic report, we fail to comply with the requirement, we may be subject to delisting.

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

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

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

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

New laws, regulations, and standards relating to corporate governance and public disclosure may create uncertainty for public companies, increase legal and financial compliance costs and make some activities more time consuming.

These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, may evolve over time as new guidance is provided by the courts and applicable government agencies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

As a “smaller reporting company” under applicable law, we are subject to lessened disclosure requirements, which could leave our stockholders without information or rights available to stockholders of more mature companies.

We are a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are permitted to comply with reduced disclosure obligations in our SEC filings compared to larger public companies. This includes, but is not limited to, simplified executive compensation disclosures, reduced financial statement requirements, and less stringent narrative disclosure obligations. While these scaled disclosure requirements may reduce the burden on us and provide some cost savings, investors should be aware that they may also receive less information about us than they would from a larger public reporting company. The designation as a smaller reporting company and the accompanying reduced disclosure requirements could make it more difficult for investors to fully assess the value and risks of an investment in our securities. Consequently, the designation as a smaller reporting company under the SEC rules increases the risk to investors, as it may limit the amount of publicly available information to assess our performance, prospects, and financial health. Potential investors should consider the implications of these reduced disclosure requirements when making an investment decision.

Applicable SEC rules governing the trading of “penny stocks” may limit the trading and liquidity of our common stock, which may affect the trading price of our common stock.

Our common stock is a “penny stock” as defined under Rule 3a51-1 of the Exchange Act and is accordingly subject to SEC rules and regulations that impose limitations upon the manner in which our common stock can be publicly traded. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain brokers who recommend penny stocks to persons other than established customers or certain accredited investors must make a special written suitability determination regarding the purchaser and receive the purchaser’s written agreement to participate in the transaction prior to sale. These regulations may have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock.

We have never paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future.

We have never paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future. We intend to use any cash generated from our operations for reinvestment in the growth of our business. Any determination to pay dividends in the future will be made by our board of directors and will depend upon our results of operations, financial condition, contractual restrictions and growth plan, restrictions imposed by applicable law, and other factors deemed relevant by our board of directors. Accordingly, the realization of a gain on stockholders’ investments in our common stock will depend on the appreciation of the price of our common stock. We can provide no assurance that our common stock will appreciate in value or even maintain the price at which stockholders purchased their shares.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

Risk Management and Strategy

We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We primarily rely on expert third-party managed IT service providers to protect our IT systems from cybersecurity threats.

Managing Material Risks & Integrated Overall Risk Management

As one of the critical elements of our overall risk management program, our cybersecurity program is focused on the following key areas:

● Technical Safeguards: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, anti-malware software, and monitoring software agents that are installed on our devices. ● Third-Party Management: Our financial data and primary operational systems are hosted off-site in virtual cloud environments which get periodically backed up and can be restored in the event of a cybersecurity incident. Our music subscription service is managed by our content provider, Stingray Group, who processes payments, and our e-commerce website payment processing is handled by Shopify. We do not store sensitive customer credit card data within our IT systems. ● Risk Management: We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management team works closely with our third-party IT service provider to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.

~~Oversee Third-Party Risk~~35

	●	Third-Party Management: Our financial data and primary operational systems are hosted off-site in virtual cloud environments which get periodically backed up and can be restored in the event of a cybersecurity incident. We do not store sensitive customer credit card data within our IT systems.

	●	Risk Management: We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management team works closely with our third-party IT service provider to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.

Oversight of Third-Party Risk

We conduct annual assessments of the SOC reports of our providers because we are aware of the risks associated with third-party service providers. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties.

Risks from Cybersecurity Threats

As of the date of this report, there have been no cybersecurity incidents that have materially affected our results of operations or financial condition.

Item 2. Properties.

We lease ~~6,500 square feet of~~ office space in Fort Lauderdale, Florida for our corporate headquarters. Weand ~~also~~ lease ~~1,890 square feet of~~ office space in ~~Hong~~Bangalore, ~~Kong~~India for our India operations ~~there~~. We believe ~~that each of~~ these locations isare adequate to support our operations for the next 12 months. We also believe that these facilities are not unique and could be replaced, if necessary, at the end of the term of the existing leases.

Item 3. Legal Proceedings.

~~Derivative~~On ~~Litigation~~February 11, 2025, Blue Yonder, Inc. (“Blue Yonder”) filed a civil action in the Superior Court of the State of Arizona against us for breach of contract and to enforce a stipulated judgment entered against SemiCab, Inc. in connection with the liabilities related to Blue Yonder that we assumed when it acquired SemiCab, Inc.’s business. Blue Yonder alleges that, because we assumed these liabilities, Blue Yonder can enforce the judgment against us. The judgment was in the amount of $509,119. On August 1, 2025, we filed an answer to the complaint and counterclaims against Blue Yonder for breach of contract. On January 30, 3026, the court granted Blue Yonder’s motion for judgment on the pleadings. The outcome of this matter is uncertain.

On December 21, 2023, Ault Lending, LLC (“Ault Lending”), a wholly owned subsidiary of Ault Alliance, Inc., which was at one time one of our largest stockholders, filed a derivative shareholder action in Delaware Chancery Court against us, our board of directors, Stingray Group and Regalia Ventures for alleged breach of fiduciary duty in approving a recent above-market private placement equity transaction. The complaint alleges that we and our board of directors followed an inadequate process in evaluating the private placement transaction that we completed in November 2023 and that we and our board of directors entered into the transaction with an intent to dilute Ault’s ownership stake in us. 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) rescinding our sale of shares to Stingray Group and Regalia Ventures, and (iii) awarding damages and attorney’s fees to Ault Lending. The defendants have retained Delaware counsel to represent them in this matter and we have filed a motion to dismiss the suit.

OAC Flatiron & OAC Adelphi Litigation

On July 26, 2024, OAC 111 Flatiron, LLC and OAC Adelphi, LLC, filed a civil action in the Supreme Court of the State of New York against MICS Nomad LLC, a subsidiary of ours, and us for alleged breach of lease, seeking monetary damages including unpaid rent, future unpaid rent, and other expenses related to the lease. The complaint alleges the defendants breached the lease in various material respects. On September 25, 2024, we entered into a Settlement Agreement for a full release and dismissal of the complaint within five business days of our payment of $250,000. We made full payment of the settlement amount on October 25, 2024, and OAC Flatiron and OAC Adelphi filed a discontinuance with prejudice with the court on October 29, 2024.

Blue Yonder Litigation

On February 11, 2025, Blue Yonder, Inc. (“Blue Yonder”) filed a civil action in the Superior Court of the State of Arizona against us for breach of contract and to enforce a stipulated judgment entered against SemiCab, Inc. In connection with the acquisition of the SemiCab business from SemiCab, Inc., we assumed a judgment against SemiCab in favor of Blue Yonder, Inc. associated with damages resulting from a breach of contract for IT subscription-based services. The judgment was in the amount of $509,119. The complaint alleges that because we assumed SemiCab, Inc.’s liabilities related to Blue Yonder, Blue Yonder can enforce the judgment against us. We have retained counsel to represent us in this matter.

Item 4. Mine Safety Disclosures.

Not applicable.

4636

PART II

Item 5. Market For Registrant’s Common Equity And Related Stockholder Matters And Issuer Purchases Of Equity Securities.

Market Information

Our common stock is listed on the Nasdaq under the trading symbol “RIME.”

Record Holders

As of ~~April~~March 1427, ~~2025~~2026, based upon information received from our transfer agent, there were 8336 record holders of our outstanding common stock. This number does not include: (i) any beneficial owners of common stock whose shares are held in the names of various dealers, ~~clearing~~ clearing agencies, banks, brokers and other fiduciaries, or (ii) broker-dealers or other participants who hold or clear shares directly or indirectly through the Depository Trust Company or its nominee, Cede & Co.

Dividends

We have not paid any dividends on our common stock to date, nor do we intend to pay any dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to finance the growth of our business. Future dividend policy will depend upon our earnings, financial condition, contractual restrictions and other factors considered relevant by our board of directors and will be subject to limitations imposed under Delaware law.

Recent Sales of Unregistered Securities

None.

Equity Compensation Information

The information required by this item regarding equity compensation plans is incorporated by reference to the information set forth in Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters of this report.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 6. [Reserved].

4737

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this report contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this report are based on information available to us on the date hereof, and, except as required by law, we assume no obligation to update any such forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth herein under Item 1A. Risk Factors and elsewhere in this report. See also “~~Special Note~~Disclosure Regarding Forward-Looking Statements” beginning on page 1 of this report. The following should be read in conjunction with our consolidated financial statements beginning on page F-1 of this report.

Overview

We are an AI technology ~~and consumer electronics holding~~ company ~~with~~focused ~~two~~on ~~primary~~the ~~business~~growth ~~units – SemiCab~~ and ~~Singing~~development ~~Machine.~~of SemiCab. SemiCab is an AI-enabled software logistics and distribution business ~~operated~~that ~~through~~utilizes our ~~subsidiary,~~ SemiCab ~~Holdings,~~technology ~~LLC.~~platform ~~Singing~~to ~~Machine~~enable isretailers, abrands ~~home~~and ~~karaoke consumer~~transportation ~~products~~providers ~~business~~to ~~that~~address common ~~designs~~supply ~~and~~chain ~~distributes~~problems ~~karaoke products~~ globally. toWe ~~retailers~~operate ~~and~~our ~~ecommerce~~SemiCab ~~partners~~business through our subsidiary, ~~The~~ ~~Singing~~SemiCab ~~Machine Company, Inc~~Holdings.

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

SemiCab

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

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

Singing Machine

Through Singing Machine, we ~~engage~~engaged in the development, marketing, and sale of consumer karaoke audio equipment, accessories, and musical recordings. We ~~are~~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~~were among the most widely available karaoke products internationally. We sold our Singing Machine business on August 1, 2025. Accordingly, we no longer own or operate the Singing Machine business line.

Recent Corporate Events

Change in Fiscal Year

During 2023, our board of directors approved a change in our fiscal year end from March 31 to December 31. In accordance with SEC regulations, our consolidated financial statements are comprised of our balance sheets at December 31, 2024 and 2023 and our statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2024 and the nine-month period ended December 31, 2023. As a result, this Management’s Discussion and Analysis of Financial Condition and Results of Operations is comparing our results of operations for the full year ended December 31, 2024 with our results of operations for only the nine-month period ended December 31, 2023.

Name and Symbol Change

Reverse Stock Split and Increase in Authorized Shares

On January 13, 2025, our stockholders voted to authorize our board of directors to effect a reverse stock split of the outstanding shares of our common stock at a specific ratio within a range of 1-for-10 to a maximum of 1-for-250 and to amend our certificate of incorporation to increase the number of authorized common stock from 100,000,000 to 800,000,000 shares. On January 14, 2025, our board of directors approved a reverse stock split of 1-for-200 ratio and approved the filing of a certificate of amendment to our certificate of incorporation to effect the reverse stock split and to increase our authorized shares of common stock from 100,000,000 to 800,000,000. The reverse stock split took effect on February 10, 2025. In accordance with SEC rules and regulations, all share numbers and prices throughout this report and our consolidated financial statements reflect post-reverse stock split numbers.

Strategy

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

49We acquired the United States component of our SemiCab business on July 3, 2024 and acquired the India component of our SemiCab business on May 2, 2025. We may make additional investments in companies operating in the AI distribution and logistics space that we believe are complementary to our business. Our investments could involve an acquisition of the assets or equity of complementary companies or businesses or could involve a strategic partnership or joint venture with complementary companies or businesses or digital asset treasury strategies. We believe that additional investments could provide us with new AI logistics and distribution technologies, services and resources that we can implement across our entire business or could help us to more quickly expand our footprint into other parts of the world. We are actively evaluating additional opportunities to expand our SemiCab business through investments in complementary AI logistics and distribution businesses and companies.

SemiCab 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. While SemiCab is a nascent business, it has already acquired some multinational consumer products companies as customers. We believe that as existing customers experience the benefits of our SemiCab logistics and distribution solutions, they will begin to increase their use of SemiCab. We also believe that SemiCab’s proven ability to improve truck utilization rates and improve trucking capacity without adding more trucks, drivers or driven miles will be of substantial interest to additional companies that can benefit from SemiCab.

We acquired the United States component of our SemiCab business on July 3, 2024. We may make additional investments in companies operating in the AI distribution and logistics space that we believe are complementary to our SemiCab business. Our investments could involve an acquisition of the assets or equity of complementary companies or businesses, or could involve a strategic partnership or joint venture with complementary companies or businesses. 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.

In 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.

Financial Results

We generated net sales of $234,~~494~~391,000 for the year ended December 31, ~~2024~~2025, compared to $29297,~~198,~~000 for the ~~nine-month~~year ~~transition period~~ ended December 31, ~~2023~~2024. The ~~decrease was primarily due to decreases in sales to Walmart that resulted from us not~~ ~~participating~~increase in ~~Walmart’s~~revenue national Black Friday promotion and decreases in sales due to the loss of retail shelf space at Target. Gross profit decreased $1,409,000 to $4,781,000, or 20.4% of net sales, for the year ended December 31, 2024 compared to $6,190,000, or 21.2% of net sales, for the nine-month transition period ended December 31, 2023. The decrease was due primarily to the ~~decrease~~addition of ~~$5,704,000 for~~ net sales, ~~partially~~generated ~~offset~~ by a corresponding decrease of $4,295,000 for cost of goods sold associated with less products being manufactured for sale. Our operating expenses increased $6,373,000 to $18,706,000 for the year ended December 31, 2024 from $12,333,000 for the nine-month transition period ended December 31, 2023, primarily due to an increase in general and administrative expenses incurred for the growth and development of our SemiCab business, aresulting ~~loss~~from ~~on the issuance of warrants incurred in connection with~~ our ~~December~~acquisition ~~2024 public offering~~ of ~~securities, legal and accounting expenses~~ ~~incurred~~SMCB inon ~~connection~~May ~~with the acquisition of SemiCab~~2, ~~Inc~~2025.’s ~~business~~Cost ~~in July 2024 and the capital raising activities that we engaged in during 2024, and impairment~~ of ~~goodwill~~sales ~~recorded~~was ~~in connection with the acquisition of the SemiCab, Inc.’s business. As a result, we incurred a loss from operations of~~ $135,~~925~~706,000 ~~during~~for the year ended December 31, ~~2024.~~2025, Wecompared ~~generated net losses available~~ to ~~common stockholders of~~ $23491,~~257,~~000, ~~or $353.87 per share of common stock,~~ for the year ended December 31, 2024,. ~~compared~~The ~~to $6,398,000,~~increase orin ~~$263.04~~cost ~~per share~~ of ~~common~~ ~~stock,~~sales ~~for~~was ~~the~~due ~~nine-month~~primarily ~~transition~~to ~~period~~the ~~ended~~addition ~~December 31, 2023. We had total assets~~ of ~~$18~~freight,~~302,000~~ ~~and~~handling ~~$27,715,000 at December 31, 2024~~ and ~~2023,~~servicing ~~respectively.~~costs ~~Net~~incurred ~~cash used~~ by ~~operating~~SMCB ~~activities was $8,556,000 for the year ended December 31, 2024~~resulting ~~compared~~from toour ~~net~~acquisition ~~cash provided by operating activities~~ of ~~$411,000~~SMCB ~~for~~on ~~the~~May ~~nine- month transition period ended December 31~~2, ~~2023~~ 2025.

5039

~~The~~Our ~~most~~operating ~~significant~~expenses ~~contributors~~were $6,629,000 for the year ended December 31, 2025, compared to $8,248,000 for the year ended December 31, 2024. The decrease in operating expenses was due primarily to a decrease of $3,592,000 related to the impairment of goodwill recorded in connection with the acquisition of SemiCab, Inc’s business during the year ended December 31, 2024, partially offset by the increase in ~~our~~general and administrative expenses incurred in the growth and development of the SemiCab business during the year ended December 31, 2025. We incurred a net loss ~~available~~from continuing operations of $15,210,000 for the year ended December 31, 2025, compared to ~~common~~$18,884,000 ~~stockholders~~for ~~were~~the ayear ended ~~one-time~~December 31, 2024. The most significant contributors to the decrease in the net loss from continuing operations were decreases in non-cash ~~charge~~charges of $3,592,000 for impairment of goodwill and ~~a one-time~~$8,889,000 ~~non-cash~~for loss on the issuance of warrants. This decrease was partially offset by an increase of $86,~~889~~468,000 onfor non-cash charges for changes in the ~~issuance~~fair value of warrants liability and increases in general and administrative expenses incurred in the growth and development of the SemiCab business.

We ~~incurred~~generated anet ~~one-time,~~loss ~~non-cash~~from ~~charge~~continuing operations of $315,~~592~~210,000, ~~for~~or ~~impairment~~$5.86 per share of ~~goodwill~~common instock, ~~connection~~for ~~with~~the ~~our~~year ~~acquisition~~ended ofDecember ~~SemiCab~~31, 2025, ~~Inc~~compared to $18,884,000, or $270.’s44 ~~business~~per onshare ~~July~~of 3common stock, for the year ended December 31, 2024. WeThe ~~tested~~decrease ~~the~~was ~~recorded~~due ~~amount~~primarily to an increase of ~~goodwill~~$4,094,000 for ~~impairment~~net onsales ~~December~~and 31a decrease of $3,592,000 ~~2024~~for toimpairment ~~see~~of ifgoodwill. ~~the carrying~~This ~~amount~~was partially offset by an increase of ~~goodwill~~$5,215,000 ~~exceeded~~for ~~its~~cost ~~carried~~of ~~value~~sales. We ~~calculated~~had atotal ~~market-based~~assets ~~valuation~~of ~~utilizing~~$12,724,000 ~~inputs~~and ~~classified~~$18,302,000 asat ~~level 3~~December on31, ~~the~~2025, ~~fair~~and ~~value~~2024, ~~hierarchy~~respectively. Net cash used by ~~multiplying~~operating ~~one~~activities byattributable ~~projected~~to ~~2025~~continuing ~~revenue~~operations was $7,309,000 for the ~~SemiCab,~~year ~~Inc.’s~~ended ~~business~~December ~~and~~31, ~~determined~~2025, ancompared ~~impairment~~to ~~charge of~~ $3,~~592~~985,000 ~~should~~for bethe ~~recorded~~year asended of December 31, 2024.

We incurred a one-time, non-cash loss of $8,889,000 in connection with the public offering of securities that we completed on December 6, 2024. 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 and a loss on the issuance of warrants of $8,889,000 on our income statement. All of the contingencies that the Series A warrants were subject to were satisfied in January 2025, and of the Class B warrants were exercised in full in January 2025. As a result, we expect that the warrant liability will be reclassified as equity on our balance sheet for our fiscal quarter ended March 31, 2025.

Outlook

We expect net sales ~~of our Singing Machine karaoke products~~ to decrease over the next 12 months due to the negative impact on our business of recently implemented tariffs on our products manufactured in China. However, we expect revenue generated from our SemiCab business to increase substantially over the next 12 months as we generate more business ~~from~~through our growing customer base in ~~the United~~ ~~States.~~India Asand aas ~~result,~~we ~~total~~begin ~~net sales are expected~~ to ~~increase~~generate ~~over~~business in the ~~next~~United 12States ~~months~~and Europe. We expect ~~gross profit to improve over the next 12 months as~~ costs of ~~goods~~sales ~~sold remain at similar levels, subject~~ to ~~uncertainty surrounding the recently implemented tariffs on our products manufactured in China, and sales of our higher margin, newer streaming technology karaoke machines~~ increase ~~as a percentage of total net sales. We expect operating expenses to remain flat, if not decrease,~~ over the next 12 months ~~as we implement~~in ~~initiatives~~connection ~~designed~~with tothe ~~reduce~~increase 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~~net ~~activities~~sales ~~as needed to fund our business and expenses~~ that we ~~incur~~expect to ~~fund~~generate ~~the~~from ~~growth and development of~~ our SemiCab business. ~~Net~~We ~~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 tooperating ~~incur~~expenses ~~any~~and ~~non-cash losses in connection with the issuance of warrants requiring liability classification. We also expect~~ net loss available to common stockholders to ~~decrease~~increase ~~due~~over to the ~~aforementioned improvements~~next in12 ~~gross~~months ~~profit~~as ~~that~~ we ~~expect~~continue to ~~realize~~fund ~~and~~ the ~~decreases~~growth ~~in general~~ and ~~administrative~~development ~~expenses~~of ~~that we intend to~~our ~~generate~~SemiCab business.

51Notwithstanding the foregoing, in the event we complete additional acquisitions of controlling or non-controlling financial interests in other complementary businesses or companies through mergers, acquisitions, joint ventures or other strategic initiatives, such as the acquisition of the United States component of our SemiCab business on July 3, 2024 and the acquisition of the India component of our SemiCab business on May 2, 2025, our financial results will include and reflect the financial results of the target entities. Accordingly, the completion of any such transactions in the future may have a substantial beneficial or negative impact on our business, financial condition and results of operations.

Notwithstanding the foregoing, in the event we complete additional acquisitions of controlling or non-controlling financial interests in other complementary businesses or companies through mergers, acquisitions, joint ventures or other strategic initiatives, such as the acquisition of the United States component of our SemiCab business on July 3, 2024, our financial results will include and reflect the financial results of the target entities. Accordingly, the completion of any such transactions in the future may have a substantial beneficial or negative impact on our business, financial condition and results of operations.40

Critical Accounting Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our audited consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors, that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our consolidated financial statements because they inherently involve significant judgments and uncertainties. For a more complete discussion of our accounting policies and procedures, see our consolidated financial statements beginning on page F-1 of this report.

~~Reserve~~Revenue ~~for~~Recognition ~~Sales Returns and Returns Asset~~

~~While~~We werecognize ~~have~~revenue noin ~~overstock~~accordance ~~return~~with ~~privileges~~ASC in606, ~~its~~Revenue ~~vendor~~from ~~agreements~~Contracts with ~~its~~Customers. ~~customers,~~All werevenue dois ~~accept~~generated ~~defective~~from ~~returns,~~contracts ~~warranty~~with ~~exchanges~~customers. ~~and~~We ~~overstock~~recognize ~~from~~revenue ~~seasonal~~when ~~customers.~~services Weare ~~estimate~~performed for the ~~sales~~customer ~~value~~in ofan ~~goods~~amount, referred to beas ~~returned~~the ~~from~~transaction ~~our~~price, ~~allowance~~that ~~programs~~reflects ~~for~~the consideration ~~goods~~to ~~returned from~~which ~~the~~we ~~customer~~are ~~for~~expected ~~various~~to ~~reasons,~~be ~~whereby~~entitled ain ~~reserve~~exchange for ~~sales~~those ~~returns~~services. isWe ~~recorded~~determine ~~based~~revenue onrecognition ~~historic~~utilizing ~~return~~the following ~~amounts,~~five ~~specific~~steps: ~~events as~~(i) ~~identified~~identification ~~and~~of ~~management~~the ~~estimates.~~contract Wewith ~~estimate~~a customer; (ii) identification of the ~~net~~performance ~~realizable~~obligations ~~value~~in ofthe ~~these~~contract (promised ~~expected~~services ~~future~~that ~~sales~~are ~~returns.~~distinct); ~~The~~(iii) ~~net~~determination ~~realizable~~of ~~value~~the transaction price; (iv) allocation of ~~these~~the ~~estimated returns~~transaction isprice ~~classified~~to asthe performance ~~return~~obligations; ~~assets~~and as(v) ~~part~~recognition of ~~current~~revenue ~~assets~~when, onor as, we transfer control of the ~~accompanying~~service ~~consolidated~~for ~~financial~~each ~~statements.~~performance obligation.

52Our performance obligations are established when a customer submits a purchase order notification and we accept the order. We identify 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 we transfer control to the customer, typically at the time when the services are performed in full, at which time there are no further performance obligations remaining.

~~Inventory~~Our contracts with customers consist of one performance obligation, which is the performance of services. Our contracts have no financing elements. 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 we expect to receive for the sale of the service.

~~Inventory~~We isutilize ~~comprised~~independent ~~primarily~~contractors ~~of electronic karaoke equipment, microphones,~~ and ~~accessories,~~third-party ~~and~~carriers ~~are~~to ~~stated~~perform attransportation ~~the~~services ~~lower~~in ofconnection ~~cost~~with orour ~~net~~SemiCab ~~realizable~~business. ~~value,~~In asaccordance ~~determined~~with ~~using~~ASC ~~the~~Topic ~~first in~~606, ~~first~~Revenue ~~out~~Recognition: ~~method.~~Principal WeAgent ~~reduce~~Considerations, ~~inventory~~we onevaluate ~~hand to its net realizable value on an item-by-item basis when it is apparent that~~ the ~~expected~~terms ~~realizable value~~ of anagreements ~~inventory~~with ~~item~~customers and ~~falls~~vendors ~~below its original cost. A charge~~ to ~~cost~~determine ~~of sales~~whether ~~results~~we ~~when~~act ~~the~~as ~~estimated~~principal ~~net~~or ~~realizable~~agent ~~value of specific inventory items declines below cost. Management regularly reviews our investment~~ in ~~inventories~~each ~~for such declines in value~~arrangement.

This assessment focuses on whether control of the transportation service is obtained prior to transferring the service to the customer. Based on this evaluation of the control model, we concluded that it acts as the principal and, accordingly we recognize revenue on a gross basis. In the event we act as an agent, such revenue will be recognized net of the cost of purchased transportation.

All revenue earned from contracts are presented net of discounts, allowances, and applicable taxes

Warrant Liability

We classify the Series A and B warrants issued in our December 2024 public offering as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statement of operations. The fair value of these warrants requires significate estimates by management derived from unobservable inputs. Deviations from these estimates could ~~result~~have in a ~~significate~~significant ~~difference~~affect toon our financial results.

Recent Accounting Pronouncements

In ~~November~~May ~~2023~~2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2023~~2025- 0703, Business ~~Segment~~Combinations ~~Reporting~~ (Topic ~~280~~805): ~~Improvements to~~and ~~Reportable~~Consolidation ~~Segment Disclosures~~ (~~“ASU~~Topic ~~2023-07”~~810). This ASU ~~requires~~provides ~~disclosure~~that ofa ~~significant~~reporting ~~segment~~entity ~~expenses~~involved ~~that~~in a business ~~are~~combination ~~regularly~~effected ~~reviewed~~primarily by the ~~chief~~exchange ~~operating~~of ~~decision~~equity ~~maker~~interests ~~and~~must ~~included~~consider ~~within~~the ~~each~~factors ~~reported~~in ~~measure~~Accounting ofStandards ~~segment~~Codification ~~profit~~(“ASC”) 805-10-55-12 orthrough ~~loss.~~55-15 ~~The standard~~to ~~also~~determine ~~requires~~which ~~disclosure~~entity ofis the ~~composition~~accounting ofacquirer ~~other~~regardless ~~segment~~of ~~items~~whether ~~included in~~ the ~~measure~~legal ofacquiree ~~segment~~is ~~profit~~a ~~or loss that are~~Variable ~~not~~Interest ~~separately~~Entity ~~disclosed~~(“VIE”). ~~All~~The ~~disclosure~~amendments ~~requirements~~in ~~under~~ ASU ~~2023~~2025-0703 ~~are~~must ~~also~~be ~~required~~applied ~~for~~prospectively ~~public~~to ~~entities~~any ~~with~~business acombination ~~single~~that ~~reportable~~occurs ~~segment.~~after ~~The~~the ~~ASU~~initial isadoption ~~effective~~date. ~~for~~ASU ~~our~~2025-03 ~~Annual~~is ~~Report~~effective ~~on Form 10-K~~ for ~~the~~fiscal ~~year~~years ~~ended~~beginning after December 3115, ~~2024~~2026, ~~and~~including ~~subsequent~~ interim periods, ~~with~~within ~~early~~those fiscal years. Early adoption is permitted. We ~~adopted~~are ~~ASU 2023-07~~currently ~~effective~~evaluating ~~December~~the ~~31,~~impact ~~2024~~of ~~with~~this ~~additional~~standard ~~disclosures~~on ~~detailed~~our inconsolidated ~~the~~financial statements ~~subsequent~~and ~~notes~~related disclosures.

In ~~December~~May ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0904, ~~Income~~ ~~Taxes~~Compensation – Stock Compensation (Topic ~~740~~718): ~~Improvements~~and toRevenue ~~Income~~from ~~Tax~~Contracts ~~Disclosures.~~with Customers ~~This~~(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 ~~enhance~~reduce diversity in practice and improve existing guidance, primarily by revising the ~~usefulness~~definition of ~~income~~a ~~tax~~“performance ~~disclosures~~condition” byand ~~requiring~~eliminating ~~entities~~a toforfeiture ~~disclose~~policy ~~specific~~election ~~rate~~for ~~reconciliations,~~service ~~amount~~conditions ofassociated ~~income~~with ~~taxes~~share-based ~~separate~~consideration bypayable ~~federal~~to ~~and~~a ~~individual~~customer. ~~tax~~In ~~jurisdictions~~addition, ~~and~~the ASU clarifies that the ~~amount~~guidance ofin ~~income~~ASC ~~(loss)~~606 on ~~from~~the ~~continuing~~variable ~~operations~~consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether ~~before~~an ~~income~~award’s ~~tax~~grant ~~expense~~date ~~(benefit)~~has ~~disaggregated~~occurred” ~~between~~(as ~~federal,~~determined ~~state~~under ~~and~~ASC ~~foreign~~718). ASU ~~2023~~2025-0904 is effective for usfiscal ~~for~~years ~~our~~beginning ~~fiscal~~after ~~year~~December ~~beginning January 1~~15, ~~2025~~2026, ~~with~~including ~~early~~interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of ~~adopting~~ this standard on our consolidated financial statements and related disclosures.

In ~~November~~July ~~2024~~2025, the FASB issued ASU ~~2024~~2025-0305, ~~Income~~ ~~Statement~~Financial –Instruments ~~Reporting Comprehensive Income~~—~~Expense~~ ~~Disaggregation Disclosures~~Credit Losses (~~Subtopic~~Topic ~~220-40~~326)., ~~This~~which ~~ASU~~provides ~~requires~~a ~~disclosure~~practical expedient for measuring expected credit losses on ancurrent ~~annual~~receivables and ~~interim~~contract ~~basis~~assets arising under Topic 606, inRevenue ~~the~~from Contracts ~~notes~~with Customers. The ASU allows entities to assume that the ~~financial~~macroeconomic ~~statements, of~~conditions ~~disaggregated~~existing ~~information~~at ~~about~~the ~~specific~~balance ~~categories~~sheet ~~underlying~~date will ~~certain~~remain ~~income~~unchanged ~~statement~~over ~~expense~~the ~~line~~remaining ~~items~~life of those assets. The ~~guidance~~amendments isare effective for ~~annual~~fiscal ~~periods~~years beginning after December 15, ~~2026~~2025, ~~and~~including interim periods ~~with~~within ~~annual~~those ~~reporting~~fiscal ~~periods~~years. ~~beginning~~Early ~~after~~adoption ~~December~~is ~~15, 2027, on a retrospective basis~~permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20). This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. Adoption can be on a prospective or retrospective basis. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.42

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

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

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

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

5343

Comparison of the ~~Year~~Years Ended December 31, ~~2024~~2025 and ~~the Nine-Month Transition Period Ended December 31, 2023~~2024

Net Sales

Net sales consist ~~primarily~~ of sales ~~of our Singing Machine karaoke products. We~~ generated ~~only~~by ~~a minimal amount of sales from~~ our SemiCab business. Net sales ~~decreased~~increased $54,~~704~~094,000 to $234,~~494~~391,000 for the year ended December 31, 2025, ~~2024~~ compared to $29297,~~198,~~000 for the ~~nine-month~~ ~~transition~~year ~~period~~ ended December 31, ~~2023~~2024. The ~~decrease~~increase in net sales was due primarily to ~~decreases~~the addition of ~~$7,700,000~~net in sales ~~to Walmart that resulted from us not participating in Walmart’s national Black Friday promotion and $1,200,000 in sales~~ ~~due~~generated toby ~~the loss of retail shelf space at Target. The decrease of $8~~SMCB,~~900,000~~ ~~from~~which ~~those~~we ~~two~~acquired ~~customers~~on ~~was~~May ~~partially offset by an increase of $3~~2,~~196,000~~ ~~in sales to Costco and other customers~~2025. We expect net sales ~~of our Singing Machine karaoke products~~ to decrease over the next 12 months due to the negative impact on our business of 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 through ~~from~~ our growing customer base. Asin aIndia ~~result,~~and ~~total~~as ~~net~~we ~~sales~~begin ~~are expected~~ to ~~increase~~generate ~~over~~business in the ~~next~~United ~~12 months~~States and Europe.

Cost of ~~Goods Sold~~Sales

Cost of ~~goods~~sales ~~sold~~ consists primarily of ~~costs~~freight, ~~for~~handling ~~raw materials~~ and ~~the~~servicing ~~manufacturing~~costs ofthat ~~our~~we ~~Singing~~incur ~~Machine karaoke products. We incurred only a minimal amount of costs~~ in connection with our SemiCab business. Cost of ~~goods~~sales increased ~~sold decreased~~ $45,~~295~~215,000 to $185,~~713~~706,000 for the year ended December 31, ~~2024~~2025, compared to $23491,~~008,~~000 for the ~~nine-month~~year ~~transition period~~ ended December 31, ~~2023~~ 2024. The increase ~~decrease~~ in cost of ~~goods~~sales ~~sold~~ was due primarily to athe ~~decrease~~addition of $3freight,~~553,000~~ ~~for~~handling ~~product~~and ~~manufacturing~~servicing costs. ~~Our~~incurred ~~decrease in~~by ~~net sales resulted in a corresponding decrease in products manufactured~~SMCB, ~~resulting~~which ~~in lower manufacturing costs. The decrease was also due to a non-cash inventory impairment charge of $1,827,000 that~~ we ~~recorded during the nine-month transition period ended~~acquired ~~December~~on ~~31,~~May ~~2023 that negatively impacted our cost of goods sold during the nine-month transition period ended December 31~~2, ~~2023~~2025. ~~This~~ ~~was partially offset by an increase of $1,663,000 for our inventory reserve.~~ We expect ~~cost~~costs of ~~goods~~sales ~~sold~~ to ~~remain~~increase ~~at similar levels~~ over the next 12 months, ~~subject~~in toconnection ~~uncertainty~~with ~~surrounding~~ the ~~recently~~increase ~~implemented~~in ~~tariffs~~net onsales ~~our~~that ~~products~~we ~~manufactured in~~expect ~~China~~to generate from our SemiCab business.

Gross Profit

Gross profit decreased $1,409,000 to $4,781,000, or 20.4% of net sales, for the year ended December 31, 2024 compared to $6,190,000, or 21.2% of net sales, for the nine-month transition period ended December 31, 2023. The decrease in gross profit was primarily due to a decrease of $5,704,000 for net sales, partially offset by a decrease of $4,295,000 in cost of goods sold. This decrease was partially offset by an increase in higher margin sales of newer streaming technology karaoke machines as a percentage of total net sales. We expect gross profit to improve over the next 12 months as costs of goods sold remain at similar levels, subject to uncertainty surrounding the recently implemented tariffs on our products manufactured in China, and sales of our higher margin, newer streaming technology karaoke machines increase as a percentage of total net sales.

Operating Expenses

Operating expenses consist of selling expenses, general and administrative expenses, and impairment of goodwill.

Selling Expenses

Selling expenses consist primarily of marketing and advertising ~~expenses~~activities that we ~~incur~~engage in ~~connection~~from ~~with~~time ~~advertising campaigns and online advertising initiatives that we engage in~~ to ~~generate~~time ~~sales of our Singing Machine karaoke products. We did not incur any selling expenses~~ in connection with our SemiCab business. Selling expenses ~~decreased~~were $~~843~~4,000 ~~to $2,874,000~~ for the year ended December 31, ~~2024~~ ~~from~~2025. ~~$3,717,000~~We ~~for~~did ~~the~~not ~~nine-month~~incur ~~transition~~any ~~period~~selling ~~ended~~expenses ~~December~~for ~~31,~~the ~~2023.~~year ~~The decrease was primarily due to a decrease of~~ended ~~$666~~December 31,~~000~~ ~~in online marketing and social media advertising campaigns~~2024. We expect selling expenses to ~~decrease~~increase substantially over the next 12 months as we ~~engage~~being into ~~fewer,~~devote ~~but~~ more ~~focused,~~resources to marketing and advertising ~~initiatives~~activities ~~and~~to assupport ~~we navigate~~ the ~~negative~~growth ~~impact~~ of ~~recently implemented~~our ~~tariffs~~SemiCab onbusiness ~~sales~~in ofIndia, ~~our~~the ~~karaoke~~United ~~products~~States and Europe.

General and Administrative Expenses

General and administrative expenses consist primarily of payroll expenses, legal and accounting expenses, ~~warehouse expenses~~ and ~~rent expense~~other ~~associated~~corporate ~~with our Singing Machine business, and general and administrative~~ expenses ~~incurred in the development and growth of our SemiCab business~~. General and administrative expenses increased $31,~~624~~973,000 to $126,~~240~~629,000 for the year ended December 31, ~~2024~~ 2025, compared to $84,~~616~~656,000 ~~during~~for the ~~nine-month transition period~~ year ended December 31, ~~2023~~2024. The increase was due primarily to increases ofin ~~$1,903,000 for general and administrative~~ expenses incurred in ~~the~~connection ~~development~~with ~~and~~the ~~growth~~operation of our SemiCab ~~business and $923,000 for warehouse expenses~~. We expect general and administrative expenses to ~~decrease~~increase over the next 12 months as we ~~implement actions~~continue ~~designed~~ to ~~reduce~~invest ~~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~~ in ~~connection with capital-raising activities that we engage in as needed to fund our business and expenses that we incur to fund~~ the growth and development of our SemiCab business.

Impairment of Goodwill

Impairment of goodwill consists of the expense that we incurred from the write down of the goodwill that we recorded in connection with the acquisition of substantially all of the assets of SemiCab, Inc.’s ~~business~~ on July 3, ~~2025~~2024. We recorded impairment of goodwill of $3,592,000 for the year ended December 31, 2024. We did not record any impairment of goodwill for the ~~nine-month~~year ~~transition period~~ ended December 31, ~~2023~~2025. We do not expect to incur any write down of goodwill over the next 12 months.

Other Expenses

Other expenses consists primarily of loss on the issuance of warrants that we incurred in connection with the public offering of ~~securities~~ securities that we completed on December 6, 2024, and interest expense that we incurred in connection with shares of common stock that we issued to investors in our October 2024 notes offering and other financing transactions. We incurred only a minimal amount of other expenses in connection with our SemiCab business. Other expenses ~~increased~~decreased $103,~~187~~227,000 to $107,~~442~~215,000 for the year ended December 31, ~~2024~~2025, compared to to $~~255~~10,442,000 for the ~~nine-month~~year ~~transition period~~ ended December 31, ~~2023~~2024. The ~~increase~~decrease was due primarily to ~~increases~~decreases of $82,~~889~~087,000 for ~~non-cash~~ ~~losses~~the loss that we incurred in connection with the issuance and change in fair value of the Series A and Series B warrants that we sold in the public offering of securities that we completed on December 6, 2024, and $1,588,000 for non-cash interest expense that we incurred in connection with ~~shares~~ shares of common stock that we issued to investors in our various financing transactions during 2024. We expect other expenses to decrease substantially over the next 12 months.

Net Loss Attributable to Non-Controlling Interest

Net loss attributable to non-controlling interest consists of the loss allocated to SemiCab, Inc., which ~~owns~~owned a 20% of the outstanding membership interests of SemiCab Holdings until May 2, 2025, and Ajesh Kapoor and Vivek Sehgal, who collectively owned 20% of the outstanding membership interests of SemiCab Holdings beginning May 2, 2025. SemiCab Holdings owns our SemiCab business. We acquired our SemiCab business from SemiCab, Inc. on July 3, 2024, and, as part of the transaction, granted SemiCab, Inc. a 20% membership interest in SemiCab Holdings. The net loss attributable to non-controlling interest of $701,000 for the year ended December 31, 2025 represents the amount of loss incurred by SemiCab Holdings that was allocated to SemiCab Inc. between January 1, 2025 and May 2, 2025, and to Ajesh Kapoor and Vivek Sehgal through their collective 20% membership interest in SemiCab Holdings between May 2, 2025 and December 31, 2025. The net loss attributable to non-controlling interest of $1,110,000 for the year ended December 31, 2024 represents the amount of loss incurred by SemiCab Holdings that was allocated to SemiCab, Inc. through its 20% membership interest in SemiCab Holdings between July 3, 2024 and December 31, 2024. We expect net loss attributable to non-controlling interest to increase over the next 12 months as we continue to invest in the development and growth of our SemiCab business.

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 $1,110,000 represents the amount of loss incurred by SemiCab that was allocated to SemiCab, Inc. through its 20% membership interest in SemiCab Holdings. 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.45

Liquidity And Capital Resources

Since our inception, we have funded our operations primarily through cash generated by our operations, private sales of equity securities and the use of short- and long-term debt. As of ~~December~~March 3125, ~~2024~~2026, our cash and restricted cash balance was approximately $710,~~550~~939,000.

Net cash used byin operating activities attributable to continuing operations was $87,~~556~~309,000 during the year ended December 31, ~~2024~~2025, compared to ~~net cash provided by operating activities of~~ $~~411~~3,985,000 during the ~~nine-month~~year ~~transition period~~ ended December 31, ~~2023~~2024. The ~~difference~~increase of $83,~~967~~324,000 was due primarily to ~~increases~~an increase of $172,~~969~~087,000 for the ~~net~~ loss ~~and~~that ~~$4,135,000~~we ~~for~~incurred ~~refunds~~in ~~due~~connection towith ~~customers,~~the ~~and~~issuance ~~a decrease of $11,811,000 for accounts payable~~ and ~~accrued~~change ~~expenses.~~in ~~This~~fair ~~was~~value ~~partially offset by increases~~ of ~~$8,889,000~~the ~~for~~Series ~~losses~~A onand ~~the~~Series ~~issuance~~B of warrants that we ~~incurred~~ sold in ~~connection with~~ the public offering of securities that we completed on December 6, 2024, and to an increase of $83,~~442~~592,000 ~~for~~related ~~accounts~~to the impairment ~~receivable~~of $3goodwill from the purchase of SemiCab,~~352,000~~ ~~for~~Inc ~~inventory~~recorded during the year ended December 31, ~~and~~2024. This was partially offset by a decrease of $3,~~592~~674,000 for ~~impairment~~loss offrom ~~goodwill~~continuing operations.

Net cash used byin investing activities attributable to continuing operations was $21,~~245~~770,000 during the year ended December 31, ~~2024~~2025, compared to $142,175,000 during the ~~nine-month~~year ~~transition period~~ ended December 31, ~~2023~~2024. The ~~increase~~decrease of $2405,~~231,~~000 was due primarily to ~~increases~~decreases of $1605,~~777,~~000 for advances to to SMCB under our loan agreement with them, ~~and~~$593,000 for cash received in connection with our acquisition of SMCB on May 2, 2025, and $415,000 for pre-acquisition advances to SemiCab. This was partially offset by increases of $758,000 ~~Inc~~for repurchases of shares of our common stock and $419,000 for the capitalization of internal use software costs.

Net cash provided by financing activities attributable to continuing operations was $119,~~648~~686,000 ~~for~~during the year ended December 31, ~~2024~~2025, compared to $311,~~411~~648,000 ~~for~~during the ~~nine-month~~ ~~transition~~year ~~period~~ ended December 31, ~~2023~~2024. The ~~increase~~decrease of $81,~~237~~962,000 was due primarily to andecreases ~~increase~~ of $912,~~403~~932,000 for proceeds ~~received~~ from the sale of common stock, ~~net~~and ofwarrants ~~offering costs,~~ and $2,000,000 for proceeds from the issuance of senior secured notes, net of discounts. This was partially offset by an increase of $210,~~353~~213,000 for ~~repayments~~proceeds offrom the ~~senior~~issuance ~~secured~~of promissory notes and a decrease of $~~631~~2,578,000 for payments onof ~~merchant~~senior ~~cash~~secured ~~advances~~notes ~~payable~~and debt issuance costs.

Our ~~primary~~limited cash resources along with our recent history of recurring operating losses and decreases in working capital create substantial doubt about our ability to continue as a going concern. To date, our capital needs have been met through cash generated by our operations, sales of our equity securities and the use of short- and long-term debt to fund our operations. We have used these sources of capital ~~since~~to ~~September~~pay 30virtually all of the costs and expenses that we have incurred to date. These costs and expenses have been comprised primarily of the professional fees, ~~2024~~employee ~~are~~compensation ~~set~~expenses, ~~forth~~and ~~below~~general and administrative expenses discussed above. We intend to continue to rely upon each of these sources to fund our operations and expansion efforts, including additional acquisitions of controlling or non-controlling financial interests in other complementary businesses and companies during the next 12 months.

On October 22, 2024, we entered into a securities purchase agreement with various accredited investors pursuant to which we sold original issue discount senior secured notes in the aggregate principal amount of $2,352,941 for aggregate gross proceeds of $2,000,000. We issued a total of 11,500 shares of our common stock to the investors. We registered the resale of these shares in a registration statement on Form S-1 that was declared effective by the SEC on December 6, 2024.46

On December 6, 2024, we sold 21,000 shares of our common stock and pre-funded warrants to purchase 258,412 shares of our common stock in lieu of receiving shares of common stock to accredited investors. Each share of our common stock or pre-funded warrant in lieu thereof was sold together with a Series A warrant to purchase one share of our common stock and a Series B warrant to purchase one share of our common stock at an offering price of $34 per share of common stock or pre-funded warrant. We issued Series A warrants for a total of 279,412 shares of common stock and Series B warrants for a total of 279,412 shares of common stock. Univest Securities served as our exclusive placement agent in connection with the offering. We paid Univest Securities a cash fee equal to seven percent of the aggregate gross proceeds received in the offering and a non-accountable expense allowance equal to one percent of the aggregate gross proceeds received in the offering and reimbursed Univest Securities for various expenses incurred in connection with the offering. The offering was made pursuant to that certain registration statement on Form S-1, file no. 333-283178, as amended, that we originally filed with the SEC on November 12, 2024, and that was declared effective by the SEC on December 6, 2024. We received net proceeds of $8,370,000 from the offering after deducting placement agent fees and other offering expenses.

On December 18, 2024, we sold 120,337 shares of our common stock to institutional investors in a registered direct offering at a purchase price of $16.62 per share. Univest Securities served as our exclusive placement agent in connection with the offering. We paid Univest Securities a cash fee equal to eight percent of the aggregate gross proceeds received in the offering, and reimbursed Univest Securities for various expenses incurred in connection with the offering. The offering was made pursuant to that certain registration statement on Form S-3, file no. 333-269183 that we originally filed with the SEC on January 11, 2023, and that was declared effective by the SEC on January 20, 2023. We received net proceeds of $1,665,000 from the offering after deducting placement agent fees and other offering expenses.

To date, our capital needs have been met through cash generated by our operations, sales of our equity securities and the use of short- and long-term debt to fund our operations. We have used these sources of capital to pay virtually all of the costs and expenses that we have incurred to date. These costs and expenses have been comprised primarily of the professional fees, employee compensation expenses, and general and administrative expenses discussed above. We intend to continue to rely upon each of these sources to fund our operations and expansion efforts, including additional acquisitions of controlling or non-controlling financial interests in other complementary businesses and companies during the next 12 months.

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

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

Nasdaq Compliance

On August 26, 2024, ~~the~~ we received a letter from the Nasdaq ~~Listing~~advising ~~Qualification~~us ~~Staff~~that ofwe did not meet the ~~Nasdaq~~minimum ~~indicating~~$1.00 ~~that~~per weshare ~~were~~bid price requirement ~~not~~for incontinued ~~compliance~~inclusion ~~with~~on the Nasdaq pursuant to Nasdaq Marketplace Listing Rule 5550(a)(2). ~~because~~To demonstrate compliance with this requirement, the closing bid price ~~per~~of ~~share for~~ our common stock ~~had~~needed ~~closed~~to ~~below~~ be at least $1.00 per share for ~~more~~a ~~than~~minimum 30of 10 consecutive business days. ~~We were given until~~ before February 24, 2025~~, to regain compliance with the rule~~.

On ~~December~~August 3026, 2024, we received ~~notice~~an additional letter from the ~~staff~~Nasdaq indicating that ~~the~~our ~~bid~~stockholders’ ~~price~~equity ~~for~~as ~~our~~reported ~~common~~in ~~stock~~our ~~had~~Quarterly ~~closed~~Report ~~below~~on ~~$0.~~Form 10-Q ~~per share~~ for the ~~13-consecutive~~quarterly ~~trading day~~ period ended ~~December~~June 2730, 2024 ~~and~~, ~~accordingly,~~did wenot ~~would~~satisfy ~~be subject to~~ the ~~provisions~~continued ~~contemplated~~listing requirement under Nasdaq Listing Rule ~~5810~~5550(cb)(31)~~(A)(iii)~~, ~~and~~which ~~its~~requires ~~securities~~that ~~would~~a listed company’s stockholders’ equity be ~~subject~~at toleast ~~delisting~~$2,500,000. We reported a stockholders’ deficit of approximately $872,000 on June 30, 2024 in that quarterly report. Pursuant to the listing rule and instructions from Nasdaq, we ~~unless~~submitted wea ~~timely~~plan ~~request~~to aregain ~~hearing~~compliance ~~before~~with the ~~Nasdaq~~listing ~~Hearings~~rule ~~Panel~~and were given an extension until November 14, 2024 to evidence compliance through a public filing.

On ~~March~~November 2519, ~~2025~~2024, we ~~received~~filed aour ~~letter~~Quarterly ~~from~~Report ~~The~~on ~~Nasdaq~~Form ~~stating~~10-Q ~~that~~for weour ~~had~~fiscal ~~regained~~quarter ~~compliance~~ended September 30, 2024 with the ~~minimum~~SEC. ~~bid price~~Therein, ~~requirement~~we reported stockholders’ equity of approximately $12,700,000.00 ~~per~~That ~~share~~same ~~for~~day ~~continued~~we ~~listing~~filed ona ~~the~~Form ~~Nasdaq,~~8-K aswith ~~set~~the ~~forth~~SEC instating ~~Nasdaq~~that ~~Listing~~we ~~Rule~~believed we ~~5550(a)(2).~~had Weregained ~~will be~~compliance ~~subject~~with tothe astockholders’ ~~mandatory~~equity ~~panel~~requirement. ~~monitor~~On ~~for~~November a22, ~~period~~2024, ofwe ~~one~~received ~~year~~a letter from ~~March~~the 25Nasdaq indicating that, ~~2025.~~based ~~If,~~on ~~within~~the ~~that~~Form ~~one~~10-~~year~~Q ~~monitoring~~that ~~period~~we filed on November 19, 2024, the Nasdaq ~~Listing~~had ~~Qualifications~~determined ~~staff finds~~ that we ~~are~~were ~~again~~in ~~out of~~ compliance with the ~~minimum~~stockholders’ ~~bid~~equity ~~price~~rule. ~~requirement,~~The ~~notwithstanding~~ Nasdaq ~~Listing~~advised ~~Rule~~us ~~5810(c)(2),~~that ~~then~~it ~~the~~would ~~staff~~continue ~~will~~to ~~issue~~monitor aour ~~delist~~ongoing ~~determination~~compliance ~~letter~~with ~~and~~the westockholders’ equity ~~will~~requirement ~~have~~and, anif ~~opportunity~~at tothe ~~request a~~time ~~new~~of ~~hearing~~our ~~with~~next ~~the~~periodic ~~initial~~report, ~~Nasdaq~~we ~~hearing~~fail ~~panel~~to orcomply awith ~~newly~~the ~~convened~~requirement, ~~hearing~~we ~~panel~~may ifbe ~~the~~subject ~~initial~~to ~~panel is unavailable~~delisting.

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

Off-Balance Sheet Arrangements

As of December 31, ~~2024~~2025, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 8. Financial Statements and Supplementary Data.

Our audited consolidated financial statements at and for the ~~year~~years ended December 31, ~~2024~~2025 and ~~the nine-month period ended December 31~~2024, ~~2023,~~ respectively, begin on page F-1 of this report located immediately after the signature page hereto. As a smaller reporting company, we are not required to provide supplementary financial information.

5948

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet management’s objectives.

As of December 31, ~~2024~~2025, we carried out an evaluation of the effectiveness of our disclosure controls and procedures as defined by Rule 13a-15(e) under the Exchange Act under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, ~~2024~~2025, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes policies and procedures that:

(a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

(b) 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; and

(c) 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.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design safeguards to reduce, though not eliminate, this risk.

Our management used the framework set forth in the report entitled Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, our management concluded that our internal control over financial reporting was not effective at December 31, ~~2024~~2025, due to the existence of material weaknesses in our internal controls.

A material weakness is a control deficiency, or a combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Our management, in consultation with our independent registered public accounting firm, concluded that the following material weaknesses existed in the following areas as of December 31, ~~2024~~2025:

1. We lacked sufficient resources in our accounting department restricting our ability to review and approve certain material journal entries which increases the likelihood that a material misstatement of interim or annual financial statements might not be prevented.

2. 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.

3. Due to our lack of sufficient resource restrictions in our accounting department, we have not established a three-way match of documents or other controls precise enough to detect a material misstatement in revenue.

To remediate these material weaknesses, we intend to conduct a thorough review of the accounting department to ensure that the staff has the appropriate training and experience. We may hire one or more accounting persons to assist us with our accounting and financial reporting function. We also intend to implement more comprehensive written policies and procedures that address separation of duties and proper accounting and financial reporting.

61Notwithstanding 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, 2025 and 2024, and our statements of operations, stockholders’ deficit and cash flows for the years ended December 31, 2025 and 2024.

Notwithstanding 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.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only our management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Rule 10b5-1 Trading Arrangements

During the three-month period ended December 31, ~~2024~~2025, none of our officers or directors adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

Not applicable.

6251

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

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

Name	Age	Positions Held
Gary Atkinson	43	Chief ~~Financial~~Executive Officer, Secretary and ~~Director~~Chairman of the Board of Directors
Alex Andre	5051	Chief Financial Officer and General Counsel
Bernardo Melo	4849	~~Chief Revenue Officer and~~ Director
Harvey Judkowitz	8081	Director
Joseph Kling	95	Director
Ajesh Kapoor	59	Director
Mathieu Peloquin	54	Director
Scott Thorn	46	Director
Jay B. Foreman	63	Director
Kapil Gupta	58	Director

Board of Directors

We believe that our board of directors should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe that experience, qualifications or skills in the following areas are most important: (i) organizational leadership and vision; (ii) strategic, financial and operational planning; (iii) AI technology and ~~consumer~~freight, ~~electronics~~logistics and distribution industry experience; (iv) corporate restructuring and performance enhancement; (v) corporate finance; 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.

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

Gary 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. Mr. 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.

We 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 inwith ~~the~~capital ~~consumer electronics industry~~markets.

Bernardo 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. 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.52

63Bernardo 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.

We believe that Mr. Melo is qualified to serve as a member of our board of directors because of his substantial sales and marketing expertise ~~as well as his significant experience in the consumer electronics industry~~.

Harvey Judkowitz has served as a member of our board of directors since March 2004 and serves as the Chairman of our Audit Committee. He is licensed as a certified professional accountant in New York and Florida and has owned his own accounting firm since 1988. He also served as the Chief Executive Officer and Chairman of our board of directors of UniPro Financial Services, a diversified financial services company, up until the company was sold in September 2005. Prior to that he served as the President and Chief Operating Officer of Photovoltaic Solar Cells, Inc., a producer of photovoltaic solar cells.

We believe that Mr. Judkowitz is qualified to serve as a member of our board of directors because of his organizational leadership and management skills and his accounting expertise.

~~Joseph~~Ajesh ~~Kling~~Kapoor has served as the Chief Executive Officer of SemiCab Holdings, a ~~member~~subsidiary of ours that owns and operates our ~~board~~SemiCab ofAI logistics ~~directors~~and distribution business, since ~~May~~July ~~2017.~~2024 ~~Mr.~~and ~~Kling~~is ~~has~~the ~~spent~~Founder ~~his~~and ~~entire~~Chief ~~career~~Executive inOfficer ~~the~~of ~~toy~~SemiCab, ~~industry~~Inc., a company that ~~Mr.~~he ~~Kling~~founded ~~most~~in ~~recently~~July ~~served~~2018 asthat anpreviously ~~M&A~~owned ~~consultant~~our SemiCab AI logistics and distribution business. He has also served as a member of our ~~the~~ board of directors ofsince ~~Russ~~May ~~Berrie~~2025. &From CoApril ~~(currently known~~2015 asto ~~Kids~~July ~~Brands~~2018, ~~Inc~~Mr.) Kapoor served as the Vice President of Product Management of GT Nexus, a ~~designer,~~division ~~importer~~of Infor, ~~marketer~~the ~~and~~world’s ~~distributor~~largest ofcloud-based ~~infant~~B2B ~~and~~multi-enterprise ~~juvenile~~network ~~consumer~~and ~~products,~~execution platform for global 21trade ~~years~~and ~~advising on~~supply ~~the~~chain ~~acquisition~~management, ofand ~~several~~from ~~toy~~April ~~companies.~~2012 ~~Mr.~~to ~~Kling~~March ~~also~~2015, served as a ~~member~~Senior Director of ~~the~~GT ~~board~~Nexus. ofEarlier ~~directors~~in ofhis career, ~~Crown~~Mr. ~~Crafts,~~Kapoor aserved ~~large~~as ~~distributor~~ Global Head of ~~infant,~~Supply ~~toddler,~~Chain ~~and~~Advisory ~~juvenile~~Services ~~consumer~~of ~~products~~the Retail, CPG and ~~Lancit~~Transportation ~~Media~~Industry ~~Entertainment,~~segments of aWipro ~~children’s~~Technologies, ~~and~~a ~~family~~multi-national ~~media~~technology ~~production~~ company that ~~was~~provides ~~formerly~~information ~~listed~~technology, onconsulting ~~the~~and ~~Nasdaq~~business process services. ~~Prior~~He towas ~~that,~~also hethe ~~served~~Co-Founder asand ~~the~~ Chief ~~Executive~~Technology Officer of ~~View-Master Ideal~~GEOCOMtms, ana ~~iconic~~division ~~stereoscopic toy~~of ~~company~~Blue ~~that~~Yonder ~~was~~Group, ~~publicly~~Inc. ~~traded~~that onprovides optimization ~~the~~software ~~Nasdaq~~to ~~and~~manage ~~which~~multiple-stop ~~was~~daily ~~later~~delivery ~~acquired~~fleet byrouting ~~Tyco~~and ~~Toys in 1989~~scheduling. ~~Notably,~~ Mr. ~~Kling~~Kapoor ~~has~~received ~~been~~a ~~involved~~ BE in ~~many~~Mechanical Engineering ~~major~~from ~~toy~~the ~~company~~Indian ~~acquisitions~~Institute of ~~brands~~Technology, ~~such~~Roorkee, asan ~~Melissa~~MBA &from ~~Doug~~Panjab University, and ~~Brio~~an MS in Operations Research from the Georgia Institute of Technology.

We believe that Mr. ~~Kling~~Kapoor is qualified to serve as a member of our board of directors because of his ~~success~~extensive logistics and ~~relationships~~supply ~~in the toy~~chain ~~industry,~~technology ~~his~~innovation ~~deep understanding of consumer products,~~ and ~~his~~leadership experience ~~with mergers and acquisitions in the toy industry~~.

~~Mathieu~~Scott ~~Peloquin~~Thorn has served as a member of our board of directors since ~~December~~October ~~2021~~2025. Mr. ~~Peloquin~~Thorn has served as the ~~Senior Vice-~~President~~, Marketing~~ and ~~Communications~~Chief atOperating Officer ~~Stingray~~of ~~Group~~InvitedHome, ~~since~~a ~~2013~~leading luxury hospitality and ~~oversees~~real ~~marketing,~~estate ~~communication~~services ~~strategies,~~company ~~content~~operating ~~and~~in ~~investor~~premier ~~relations~~U.S. ski destinations, since October 2024. Prior to ~~joining Stingray Group~~that, ~~Mr.~~he ~~Peloquin~~ served as the ~~Vice~~Co-Founder ~~President~~and ofChief ~~Marketing~~Strategy atOfficer ~~Transcontinental~~of ~~Media~~Open ~~Inc.~~Book ~~and~~Extracts, ~~Vice~~a ~~President~~cGMP-certified manufacturer of ~~Transcontinental~~premium ~~Media~~federally ~~Inc.’s~~legal ~~Digital~~hemp-derived ~~Marketing~~cannabinoid ~~Solutions~~ingredients ~~Group~~and ~~from~~wellness ~~2010~~products, tofrom ~~2013.~~February He2019 ~~also~~to ~~held~~October ~~several~~2024. ~~executive~~Earlier ~~positions~~in athis ~~Reader’s~~career, ~~Digest~~Scott ~~Magazines~~served ~~Canada~~as ~~Limited~~a ~~and~~Managing ~~co-founded~~Director ~~Equinox~~of ~~Marketing~~Douglas ~~Services.~~Wilson ~~Mr.~~Companies, ~~Peloquin is~~ a ~~certified~~leading ~~public~~provider ~~account, certified~~of ~~management~~specialized ~~accountant~~business, receivership, and ~~holds~~real aestate ~~Bachelor of Commerce from the School of Management of the Université du Québec à Montréal~~services.

~~We 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.~~53

64We believe that Mr. 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.

~~Jay~~Kapil B.Gupta ~~Foreman~~ has served as a member of our board of directors since ~~May~~October ~~2022~~2025. Mr. ~~Foreman~~Gupta ~~has~~is ~~served~~a asseasoned ~~the~~global ~~Chief~~technology ~~Executive~~and ~~Officer~~business ofleader ~~Basic~~with ~~Fun!,~~more ~~which~~than ~~sells~~20 ~~children’s~~years ~~toys~~of ~~under~~experience ~~the~~driving ~~Tonka™~~innovation, ~~Carebears™,~~operational ~~K’NEX™~~excellence, ~~Lincoln Logs™,~~ and ~~Playhut™~~ ~~brands,~~large-scale ~~since~~digital hetransformation ~~founded~~ across the ~~company~~public inand ~~2009~~private sectors. ~~Prior~~He tohas ~~that,~~served heas ~~founded~~the ~~several~~Service ~~toy~~Line ~~companies,~~Leader ~~including~~for ~~Play-By-Play Toy’s~~Application ~~and~~Operations ~~Novelties,~~– aPublic ~~designer~~Markets ~~and~~(US) ~~distributor~~at ofIBM, a ~~stuffed~~global ~~toys~~technology innovator, ~~and~~since ~~more~~April ~~recently~~2025. ~~Play~~He ~~Along~~has ~~Toys,~~also served as a ~~leading~~Project ~~toy~~Executive ~~company~~for ~~which was~~California’s ~~subsequently~~Medicaid ~~sold~~Program tosince May ~~Jakks~~2017. ~~Pacific~~Earlier in ~~2004~~his career, Mr. HeGupta ~~currently~~held ~~chairs~~senior ~~the~~leadership ~~Toy~~roles ~~Industry~~at ~~trade~~Cambridge ~~show~~Solutions, ~~committee~~a ~~which~~leading isprovider ~~responsible~~of ~~for~~software ~~the~~solutions ~~world-famous~~for NYsupply ~~Toy~~chain, ~~Fair~~purchasing, and ~~has~~performance ~~also~~management, ~~served~~and onTalisma ~~the~~Corporation, ~~boards~~a ofleading ~~directors~~provider of ~~the~~a ~~Toy~~digital ~~Association~~customer engagement platform, and ~~Licensing~~served ~~Merchandisers~~as ~~association~~a Manager at KPMG LLP, a leading global provider of audit, tax, and advisory services.

We believe that Mr. ~~Foreman~~Gupta is qualified to serve as a member of our board of directors because of his extensive ~~history and~~ experience in ~~the~~as ~~toy~~a ~~business,~~global ~~including~~technology leader ~~his~~offering deep ~~knowledge~~technical ofexpertise ~~licensing, operations, sales~~ and ~~marketing,~~strategic ~~M&A,~~business ~~and capital markets~~acumen.

Nomination of Directors

Our Nominating and Corporate Governance Committee ishas ~~responsible~~the ~~for~~responsibility ~~identifying~~relating ~~individuals qualified~~ to ~~become~~assisting ~~directors.~~the ~~The~~Board ~~Nominating and~~in, ~~Corporate~~among ~~Governance~~other ~~Committee seeks to identify director candidates based on input provided by several sources, including~~things: (i) ~~members~~identifying ofand ~~our~~screening ~~Nominating~~individuals ~~and~~qualified ~~Corporate~~to ~~Governance~~become ~~Committee,~~members ~~(ii)~~of our ~~other~~board of directors, ~~(iii)~~consistent ~~our~~with ~~stockholders,~~criteria ~~(iv)~~approved ~~our~~by ~~Chief Executive Officer and Chairman of~~ our board of directors, ~~and~~ (vii) ~~third~~recommending ~~parties~~to ~~such as professional search firms. In evaluating potential candidates for director,~~ the ~~Nominating~~Board ~~Committee considers~~ the ~~entirety~~approval of ~~each~~nominees ~~candidate’s credentials. Qualifications~~ for ~~consideration as a~~ director, ~~nominee~~(iii) ~~may~~developing ~~vary~~and ~~according~~recommending to ~~the~~our ~~particular~~board ~~areas~~ of ~~expertise~~directors ~~being~~a ~~sought~~set of ascorporate agovernance ~~complement~~guidelines, toand ~~the~~(iv) ~~existing~~overseeing ~~composition~~the evaluation of our board of ~~directors. However, at a minimum, candidates for~~ director ~~must possess:~~.

When 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:

	●	high personal and professional ethics and integrity;

	●	the ability to exercise sound judgment;

	●	the ability to make independent analytical inquiries;

	●	the willingness and ability to devote adequate time and resources to diligently perform board of directors and committee duties; and

	●	the appropriate and relevant business experience and acumen.

In addition to these minimum qualifications, the Nominating Committee also takes into account when considering whether to nominate a potential director candidate the following factors

	●	whether the person possesses specific industry expertise and familiarity with general issues affecting our business;
	●	whether the person’s nomination and election would enable the Board to have a member that qualifies as an “audit committee financial expert” as such term is defined by the Securities and Exchange Commission (the “SEC”) in Item 401 of Regulation S-K;

	●	whether the person possesses specific industry expertise and familiarity with general issues affecting our business;

	●	whether the person’s nomination and election would enable the Board to have a member that qualifies as an “audit committee financial expert” as such term is defined by the Securities and Exchange Commission (the “SEC”) in Item 401 of Regulation S-K;

	●	whether the person would qualify as an “independent director”, as such term is defined in the Nasdaq’s stock market rules;

	●	the importance of continuity of the existing composition of our board of directors to provide long term stability and experienced oversight; and

	●	the importance of diversification among our board of directors, in terms of both the individuals involved and their various experiences and areas of expertise.

● whether the person would qualify as an “independent director”, as such term is defined in the Nasdaq’s stock market rules; ● the importance of continuity of the existing composition of our board of directors to provide long term stability and experienced oversight; and ● the importance of diversification among our board of directors, in terms of both the individuals involved and their various experiences and areas of expertise.

Committees of the Board of Directors

Our 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.

Below 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.

Audit Committee

The members of our Audit Committee are Messrs. Judkowitz, ~~Kling~~Thorn, and ~~Foreman~~Gupta. Mr. Judkowitz serves as the ~~Chairperson~~Chairman of our Audit Committee. Each of Messrs. Judkowitz, ~~Kling~~Thorn, and ~~Foreman~~Gupta is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq applicable to audit committee members. Our board of directors has determined that Mr. Judkowitz qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the Nasdaq.

Our Audit Committee has the responsibility for, among other things: (i) selecting, retaining and overseeing our independent registered public accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm’s internal quality control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the integrity of our financial statements, (v) reviewing and discussing with our independent auditors any other matters required to be discussed by PCAOB Auditing Standard No. 1301, (vi) reviewing, approving and overseeing any transaction between us and any related person and any other potential conflict of interest situations, (vii) overseeing our internal audit department, (viii) reviewing, approving and overseeing related party transactions, and (ix) establishing and overseeing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. The Audit Committee charter can be found online at https://ir.algoholdings.com/investor-governance.55

Compensation Committee

The members of our Compensation Committee are Messrs. Judkowitz, ~~Kling~~Thorn and ~~Foreman~~Gupta. Mr. ~~Kling~~Judkowitz ~~serving~~serves as the Chairman of our Compensation Committee. 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://~~ir.~~algoholdings.com/~~investor-~~governance.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Messrs. Judkowitz, ~~Kling~~Gupta and ~~Foreman~~Thorn. Mr. ~~Foreman~~Thorn serves as the Chairman of our Nominating and Corporate Governance Committee. 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, (iiiii) 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.

~~Executive Committee~~56

The members of our Executive Committee are Messrs. Foreman, Judkowitz, Peloquin and Atkinson. Mr. 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 directors. 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.

Executive Officers

Gary 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”.

Alex Andre has served as our Chief Financial Officer and General Counsel since February 2025. Mr. Andre brings us nearly 25 years of executive management, financial, legal and operational experience. He most recently served as the Chief Financial Officer of Lemnature AquaFarms Corporation, a plant-based ingredients manufacturer for the food, beverage and nutrition markets, from October 2022 to September 2023. Prior to that, Mr. Andre served as the Chief Financial Officer and General Counsel of M.H. Enterprises, Inc., the owner and franchisor of the Teriyaki Madness^® restaurant brand, from March 2021 to September 2022. Before that, he served as the Chief Financial Officer of ARC Group, Inc., a national, multi-brand, multi-unit restaurant holding company, from July 2019 to March 2021, and as its General Counsel from October 2019 to March 2021. Earlier in his career, Mr. Andre served as an accountant for KPMG LLP before serving as a corporate & securities attorney for regional and international law firms.

Bernardo 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”.

No Family Relationships

There is no family relationship between any director and executive officer or among any directors or executive officers.

Involvement in Certain Legal Proceedings

None of our directors and executive officers have been involved in any of the following events during the past ten years that we consider to be material to an evaluation of their respective abilities or integrity:

● any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; ● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); ● being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; ● being found by a court of competent jurisdiction in a civil action, the SEC or the CFTC to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ● being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or ● being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

6757

● being found by a court of competent jurisdiction in a civil action, the SEC or the CFTC to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ● being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or ● being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Code of Ethics

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Ethics is designed to deter wrongdoing and promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications that we make; (iii) compliance with applicable governmental laws, rules and regulations; (iv) prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (v) accountability for adherence to the code. Our Code of Ethics is available on our website at https://~~ir.~~algoholdings.com/~~investor-~~governance.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and persons who beneficially own more than 10% of the outstanding shares of our common stock, to file reports of ownership and changes in ownership concerning their shares of our common stock with the SEC and to furnish us with copies of all Section 16(a) forms they file. We are required to disclose delinquent filings of reports by such persons.

Based solely upon a review of Forms 3, Forms 4, and Forms 5 furnished to us pursuant to Rule 16a-3 under the Exchange Act, we believe that 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, 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. Messrs. Judkowitz, Melo and Thorn each subsequently filed a Form 4 to disclose these transactions.

Insider Trading Policy and Procedures

We have adopted an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by us and our officers, directors and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and all listing standards applicable to us. Each of our executive officers, directors and employees is required to read and sign our insider trading policy. A copy of our insider trading policy is attached hereto as Exhibit 19.1.

Under the policy, directors, executive officers, employees and other related persons may not: (i) buy, sell or engage in other transactions in our shares of common stock while they are aware of material non-public information; (ii) buy or sell securities of other companies while aware of material non-public information about those companies that they became aware of as a result of business dealings between us and those companies; or (iii) disclose material non-public information to any unauthorized persons outside of us. The policy restricts trading and other transactions for a limited group of our employees (including executives and directors) to defined window periods that follow our quarterly and annual earnings releases. Additionally, our executive management will also issue notices of black-out trading periods if they are aware of material transactions that they anticipate closing in the near future.

Item 11. Executive Compensation.

Summary Compensation Table

The following table provides information regarding the compensation earned by or paid to our named executive officers during our fiscal years ended December 31, ~~2024~~2025 and ~~the nine-month transition period ended December 31, 2023~~2024.

Name and Principal Position	Year / Period	Salary ($)		Bonus ($)		~~All~~Stock ~~Other~~Awards ~~Compensation~~($) (1)		~~Total~~Option Awards ($) (1)		All Other Compensation ($) (2)		Total ($)
Gary Atkison	~~2024~~2025		215,000		32132,~~250~~500		~~6,285~~-0-		~~253,535~~-0-		5,800		353,300
Chief Executive Officer	~~2023~~2024		~~165~~215,~~385~~000		~~-0-~~32,250		~~4,142~~-0-		~~169,527~~-0-		6,285		253,535
Richard Perez (2)	2024		174,596		-0-		-0-		174,596
Alex Andre (3)	2025		244,000		-0-		66,000		66,000		6,200		382,200
Chief Financial Officer
Chief Financial Officer & General Counsel
Lionel Marquis (3)	2024		134,100		10,000		8,755		152,855
Richard Perez (4)	2025		27,000		44,000		-0-		-0-		-0-		71,000
Former Chief Financial Officer	2023		161,538		100,000		6,462		268,000
Chief Financial Officer	2024		174,596		-0-		-0-		-0-		-0-		174,596
Bernardo Melo	2024		215,000		57,552		10,902		283,454
Bernardo Melo (5)	2025		124,000		221,000		-0-		-0-		5,800		350,800
Chief Revenue Officer	~~2023~~2024		~~165~~215,~~385~~000		4757,~~988~~552		~~8,535~~-0-		~~221,908~~-0-		10,902		283,454

(1)	~~Consists~~Represents the grant date fair value of ~~401(k)~~the ~~matching~~awards ~~contributions~~calculated ~~that~~in weaccordance with ASC Topic 718, Compensation – Stock Compensation. A summary of the assumptions made ~~during~~in the ~~respective~~valuation ~~years~~of these awards is provided in our consolidated financial statements beginning on page F-1 of this report.
(2)	~~Mr.~~Consists ~~Perez~~of ~~was~~401(k) ~~appointed~~matching ascontributions ~~our~~that ~~Chief~~we ~~Financial~~made ~~Officer~~during onthe ~~January~~respective ~~3, 2024 and was terminated as our Chief Financial Officer on February 13, 2025~~years.
(3)	Mr. ~~Marquis~~Andre ~~resigned~~was appointed as our Chief Financial Officer and General Counsel on ~~December~~February 3113, ~~2023~~2025.
(4)	Mr. Perez was appointed as our Chief Financial Officer on January 3, 2024 and was terminated as our Chief Financial Officer on February 13, 2025.
(5)	Mr. Melo was terminated as our Chief Revenue Officer effective August 1, 2025.

Outstanding Option and Stock Awards

The following table sets forth information with respect to outstanding grants of options to purchase our common stock under stock option awards issued to the named executive officers as of December 31, ~~2024~~2025:

Name

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)

Option Exercise Price ($)

Option Expiration Date

Number of Shares or Units of Stock That Have Not Vested (#)

~~Market Value of Shares or Units of Stock That Have Not Vested ($)~~

~~Equity~~Market ~~Incentive~~Value ~~Plan Awards: Number~~ of ~~Unearned~~ Shares, ~~Units~~ or ~~Other~~Units ~~Rights~~of Stock That Have Not Vested (#$)

Equity Incentive Plan Awards: ~~Market~~Number ~~or Payout Value~~ of Unearned Shares, Units or Other Rights That Have Not Vested ($#)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

Gary Atkinson

-0-

N/A

1,440

3/31/~~2026~~26

~~N/A~~

N/A

~~N/A~~

N/A

-0-

N/A

2,820

5/3/~~2027~~27

~~N/A~~

N/A

~~N/A~~

N/A

-0-

N/A

800

5/24/~~2032~~32

~~N/A~~

N/A

~~N/A~~

N/A

-0-

N/A

1,730

8/16/~~2032~~32

~~N/A~~

N/A

~~N/A~~

N/A

Lionel Marquis

N/A

1,440

3/31/2026

N/A

Alex Andre

23,818

-0-

N/A

2.78

2/13/35

23,818

N/A

24,056

N/A

2,820

5/3/2027

N/A

Lionel Marquis

-0-

N/A

1,440

3/31/26

N/A

800

5/24/2032

N/A

-0-

N/A

2,820

5/3/27

N/A

1,730

8/16/2032

N/A

-0-

N/A

800

5/24/32

N/A

Bernardo Melo

N/A

1,020

6/30/2025

N/A

-0-

N/A

1,730

8/16/32

N/A

1,920

8/10/2026

N/A

Bernardo Melo

-0-

N/A

1,020

6/30/25

N/A

2,820

5/3/2027

N/A

-0-

N/A

1,920

8/10/26

N/A

1,320

12/25/2031

N/A

-0-

N/A

2,820

5/3/27

N/A

800

5/24/2032

N/A

-0-

N/A

1,320

12/25/31

N/A

1,730

8/16/2032

N/A

-0-

N/A

800

5/24/32

N/A

-0-

N/A

1,730

8/16/32

N/A

6960

Employment Agreements

Effective April 22, 2022, we entered into employment agreements with Gary Atkinson to serve as our Chief Executive Officer and Bernardo Melo to serve as our Chief Revenue Officer. The agreements are for a term of three years with automatic renewals for successive one-year terms, unless either party provides notice of its intention not to extend. As compensation for their service as executives, the executives will each receive: (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”)~~; and (iii) eligibility to participate in our 2022 Equity Incentive Plan, or any successor plan.

In the event the employment of the executives is terminated by us without “Cause” or by the executives for “Good Reason” (as each such defined in the ~~Employment~~employment ~~Agreements~~agreements), Messrs. Atkinson and Melo will receive severance in a lump sum payment equal to two times the sum of the executive’s base salary and annual bonus for the year in which the termination occurs. The ~~Employment~~employment ~~Agreements~~agreements also ~~provides~~provide for payments to the executive of certain amounts in the event of the executive’s death or disability (as defined in the ~~Employment~~employment ~~Agreement~~agreements).

~~Effective~~Mr. ~~February~~Melo ~~13,~~was ~~2025,~~terminated ~~we entered into an employment agreement with Alex Andre to serve~~ as our Chief ~~Financial~~Revenue 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.~~August ~~Mr. Andre is eligible to receive an annual bonus of up to 30% of his annual base salary. Mr. Andre received a non-qualified stock option to purchase 23~~1,~~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. Andre’s continued service with us through each applicable vesting date.

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

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

On February 23, 2026, we entered into an amended and restated employment agreement with Gary Atkinson to continue serving as our Chief Executive Officer. The agreement supersedes and replaces the employment agreement that we entered into with Mr. Atkinson on April 22, 2022. 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.

Under the terms of the agreement, we agreed to pay Mr. Atkinson an annual a base salary of $360,000 per year. Mr. 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. Mr. 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.

Pursuant 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.

Executive Bonus Plan

On April 22, 2022, our Board of Directors approved a bonus plan for our executive officers. Under the plan, our executive officers are eligible to receive a cash bonus, stock options, and stock grants based on our earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the applicable fiscal year. The value of the cash bonus and number of shares of stock underlying stock options and stock grants increases as the ratio of EBITDA to net sales increases.

Director Compensation

The following table sets forth all compensation earned or paid to our directors who served during all or a portion of the year ended December 31, ~~2024~~2025.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($) (1)		~~Total~~Option Awards ($) (1)		Total ($)
Harvey Judkowitz		2734,~~000~~250		1021,000		3725,000		80,250
Joseph Kling		21,000		10,000		31,000
Gary Atkinson		-0-		-0-		-0-		0
Jay Foreman		27,500		10,000		37,500
Ajesh Kapoor (2)		-0-		-0-		-0-		0
Mathieu Peloquin		25,000		10,000		35,000
Bernardo Melo		-0-		42,000		25,000		67,000
Gary Atkinson		-0-		10,000		10,000
Scott Thorn (3)		9,750		42,000		25,000		76,750
Bernardo Melo		-0-		10,000		10,000
Kapil Gupta (3)		9,250		42,000		25,000		76,250
James Turner(2)		3,000		10,000		13,000
Mathieu Peloquin (3)		19,000		-0-		-0-		19,000
Kenneth Cragun(2)		3,000		10,000		13,000
Jay Foreman (4)		20,500		-0-		-0-		20,500
Henry Nisser(2)		3,000		-0-		3,000
Joe Kling (5)		19,500		-0-		-0-		19,500

(1)	Represents 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.
(2)	~~On September 5, 2024, Messrs~~Mr. ~~Turner,~~Kapoor ~~Cragun~~was ~~and~~appointed ~~Nisser~~to ~~resigned from~~ our board of directors on May 19, 2025.
(3)	Messrs. 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.
(4)	Mr. Foreman resigned from our board of directors on November 14, 2025.
(5)	Mr. Kling resigned from our board of directors on August 21, 2025.

7062

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

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

	●	An annual stock grant of stock equivalent in value to $10,000 for each completed full year of service or prorated for a partial year. The stock price at grant will be determined at the closing price on the day of the annual stockholder meeting.

	●	A $1,000 fee for each board meeting and annual meeting attended. Committee meetings and telephone board meetings will be compensated for with a $500 fee.

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

On 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:

	●	An 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.

On 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.

401(k) Plan

Effective January 1, 2001, we adopted a voluntary 401(k) plan. All employees with at least 90 days of service are eligible to participate in our 401(k) plan. We make a matching contribution of 100% of the first three percent of salary deferral contributions, plus 50% of the next two percent of salary deferral contributions, for each payroll period. The matching contributions that we make are vested in full immediately.

Clawback Policy

Our 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.

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

We have a strict policy of not granting securities to our executive officers, directors and employees when material nonpublic information is known or a material transaction is anticipated to occur.

The timing of equity award grants is determined with consideration to a variety of factors, including but not limited to, the achievement of pre-established performance targets, market conditions and internal milestones. We do not follow a predetermined schedule for the granting of equity awards. Instead, each grant is considered on a case-by-case basis to align with our strategic objectives and to ensure the competitiveness of our compensation packages.

In determining the timing and terms of an equity award, our board of directors and compensation committee consider material nonpublic information to ensure that such grants are made in compliance with applicable laws and regulations. Procedures utilized by our board of directors 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.

We are committed to maintaining transparency in ~~its~~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. We regularly review our policies and practices related to equity awards to ensure that they meet the evolving standards of corporate governance and continue to serve the best interests of us and our stockholders.

During the year ended December 31, 2024, no securities were granted to our named executive officers within four business days prior to, or one business day following, the filing or furnishing of a periodic or current report by us that disclosed material nonpublic information.64

71During the year ended December 31, 2025, no securities were granted to our named executive officers within four business days prior to, or one business day following, the filing or furnishing of a periodic or current report by us that disclosed material nonpublic information.

Item 12. Security Ownership Ofof Certain Beneficial Owners ~~And~~and Management ~~And~~and Related Stockholder Matters.

The following table and the notes thereto set forth, as of ~~April~~March 1427, ~~2025~~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, and (iv) each person or group that is known to us to be the beneficial owner of more than five percent of our common stock. This table is based upon information supplied by our officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Where information regarding stockholders is based on Schedules 13D and 13G, the number of shares owned is as of the date for which information was provided in such schedules.

The beneficial owners and number of securities beneficially owned have been determined in accordance with Rule 13d-3 under the Exchange Act and, in accordance therewith, includes all shares of our common stock that may be acquired by such beneficial owners within 60 days of ~~April~~March 1427, ~~2025~~2026 upon the exercise or conversion of any options, warrants or other convertible securities. Unless otherwise indicated and subject to community property laws where applicable, we believe that each person or entity named below has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by that person or entity, subject to the matters set forth in the footnotes to the table below, and has an address of c/o Algorhythm Holdings, Inc., 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL 33309.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)		Percentage of Class
Gary Atkinson (2)		~~160~~46,447		*
Alex Andre (3)		2345,~~818~~873		*
Bernardo Melo (2)		219		*
Bernardo Melo (4)		29,635		*
Harvey Judkowitz (2)		103		*
Harvey Judkowitz (5)		31,156		*
Joseph Kling (2)		31		*
Ajesh Kapoor		128,762		*
Mathieu Peloquin (2)		95		*
Scott Thorn (6)		29,298		*
Jay Foreman (2)		337		*
Kapil Gupta (7)		29,298		*
All officers and directors as a group (7 persons)		~~693~~340,469		*2.3	%

* Less than one percent.

(1) This table has been prepared based on 214,~~394~~651,~~829~~665 shares of our common stock outstanding on ~~April~~March 1427, ~~2025~~2026.

(2) Includes ~~for~~46,388 ~~the applicable person the following outstanding stock options to purchase~~ shares of ~~our~~ common stock ~~that are~~ underlying stock ~~option~~options ~~awards~~ issued under the 2022 Plan and other stock option awards which will be vested and exercisable within 60 days of April 14, 2025: (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.

~~(3) Includes a restricted stock award for 23,818 shares of common stock for which Mr. Andre holds the voting rights.~~65

72(3) Includes a restricted stock award for 23,818 shares of common stock for which Mr. Andre holds the voting rights and 22,055 shares of common stock underlying stock options, all of which were issued under the 2022 Plan.

⁽⁴⁾ 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.

⁽⁵⁾ 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.

⁽⁶⁾ 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.

⁽⁷⁾ 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.

2022 Equity Incentive Plan

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

The ~~maximum~~ number of shares of common stock that was initially available for issuance under the plan was 1,167 shares of common stock. On 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) ~~167~~ 167 shares, and (iii) such lesser number as our board of directors may determine. Any shares of common stock underlying awards that lapse, terminate, expire prior to exercise, are canceled or are forfeited are added to the number of shares of commons stock available for issuance under the plan.

AsOn ofNovember ~~December 31~~20, ~~2024~~2025, ~~there~~the ~~were~~plan ~~1,500~~was amended to provide that the number of shares of common stock ~~authorized~~available for issuance under the plan. Ofis 5,000,000 ~~this~~and ~~amount~~that, ~~awards~~commencing ~~representing~~ January 1,~~183~~ ~~shares~~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 ~~had~~on ~~been~~a ~~granted~~fully ~~under~~diluted basis as of the ~~plan~~end ~~and~~of ~~317~~our immediately preceding fiscal year, or (ii) an amount determined by the board of directors, provided that any shares ~~remained~~from any such increases in previous years that are not actually issued shall continue to be available for issuance under the plan.

~~The~~Accordingly, ~~following~~as ~~table~~of ~~summarizes~~December ~~our~~31, ~~equity~~2025, ~~compensation~~there were 5,000,000 shares of common stock authorized for issuance under the plan. ~~information~~Of this amount, awards representing 283,666 shares of common stock were outstanding as of December 31, ~~2024~~2025 and 4,716,334 shares remained available for issuance as of December 31, 2025. 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.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders:		352	$	1,228		318
Equity compensation plans not approved by security holders:		N/A		N/A		N/A
Total		352	$	1,228		318

73The 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 (a)		Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders:		1,319,229	$	10		4,716,334
Equity compensation plans not approved by security holders:		N/A		N/A		N/A
Total		1,319,229	$	10		4,716,334

Item 13. Certain Relationships and Related Transactions, and Director Independence.

A transaction may be a related person transaction if any of our directors, executive officers, owners of more than five percent of our common stock, or their immediate family were involved in a transaction in which we were or are to be a participant, and the amount involved 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. We engaged in the following related persons transactions since the beginning of our last fiscal year ~~or any currently proposed transaction~~.

Regalia Ventures Stock Transactions

On 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~~Regalia ~~Group~~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 ~~Stingray Group~~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 B. Foreman, who ~~serves~~served as a member of our board of directors until November 14, 2025.

Stingray Group Stock Transactions

On 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~~ 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~~ 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 ~~serves~~served as a member of our board of directors until October 6, 2025.

Stingray Holdings Music Subscription Agreement

We have a music subscription sharing agreement with Stingray Group. ~~For~~under ~~the~~which ~~year~~we ~~ended~~generated ~~December~~music ~~31,~~subscription ~~2024~~revenue of $64,000 and $780,000 during the ~~nine-month~~years ~~transition period~~ ended December 31, ~~2023,~~2025 ~~we received music subscription revenue of 780,000~~ and ~~$602~~2024,~~000,~~ respectively. As of December 31, ~~2024~~2025 and ~~2023~~2024, we had $~~212,000~~0 and $~~269~~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 ~~serves~~served as a member of our board of directors until October 6, 2025. 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.

SMCB

VIE Analysis

We determined that SMCB, which is was a subsidiary of SemiCab, Inc. until SemiCab Holdings acquired it on May 2, is2025, was a VIE as we ~~provide~~ provided financial support to SMCB. While not contractually obligated, SMCB ~~currently relies~~relied on our reimbursement of certain costs under a intercompany services agreement (“MSA”) whereby SMCB ~~agrees~~agreed to provide IT software development services to ~~SemiCab, Inc~~us. ~~US operations.~~ In exchange, under the MSA, we ~~grant~~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.

We further determined that we were are not the primary beneficiary of SMCB because we dodid 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.

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. 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 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~~ At December 31, 2024, wea total of $1,140,000 was outstanding under the loan agreement. During the period beginning January 1, 2025 and ending ~~had~~May ~~made~~2, ~~aggregate~~2025, the date we acquired 99.99% of the equity shares of SMCB, we made advances to SMCB in the amount of $1,~~777~~172,000. During the same ~~year ended December 31~~period, ~~2024,~~ SMCB charged $~~637~~304,000 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~~May 312, ~~2024~~2025, a total of $12,~~140~~008,000 of loans were outstanding under the loan agreement, and a total of $1492,~~360,~~000 remained available for future borrowings under the loan agreement as of ~~December~~May 312, ~~2024~~2025. As of ~~December~~May 312, ~~2024~~ 2025, SMCB had not made any interest payments due under the loan agreement. As a result, the loans were in default as of ~~December 31~~May 2, ~~2024~~2025.

WeOn ~~performed~~May 2, 2025, the ~~credit~~loan ~~risk~~payable ~~assessment~~of $2,008,000 of ~~the~~SMCB ~~collectability~~and our loan receivable of ~~the~~$2,008,000 ~~notes~~were ~~receivable~~eliminated ~~from~~in ~~SMCB~~consolidation. atAs ~~December~~a 31result, no ~~2024~~such ~~pursuant~~loans topayable ~~ASC~~and ~~326-20~~loans receivable were outstanding on our condensed consolidated balance sheet at June 30, 2025. Also on May ~~Due~~2, to2025, ~~uncertainties~~revenue ~~associated~~generated ~~with~~by SMCB for services performed by SMCB under the ~~loans~~MSA of $304,000 weand ~~accrued~~expenses afor ~~reserve~~us infor services performed by SMCB under the ~~amount~~MSA of $~~439~~304,000 asduring 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.

74Sale of Singing Machine to Stingray USA

On 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 6, 2025. 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.

Review, Approval or Ratification of Transactions With Related Persons

We believe that the terms of all of our transactions with related parties are commercially reasonable and no less favorable to us than we could have obtained from an unaffiliated third party. Our audit committee is charged with the responsibility to review, approve and oversee any transaction between us and any related parties and to develop policies and procedures for the audit committee’s approval of related-party transactions. While we do not maintain a formal written policy with respect to related-party transactions, our audit committee and board of directors routinely review potential transactions that we have identified as related parties prior to the consummation of the transaction to ensure that the transaction is commercially reasonable and reflects market terms. Each transaction is reviewed to determine that a related party transaction is entered into by us with the related party pursuant to normal competitive negotiation and on terms no more favorable than with an unrelated third party. We also generally require, unless prohibited by law, that all related parties recuse themselves from negotiating and voting on behalf of us in connection with proposed transactions to which they would be a party.

Item 14. Principal Accountant Fees and Services.

Fees and Services

~~Marcum~~M&K CPAs PLLC has served as our independent registered public accounting ~~LLP~~firm since October 6, 2025. Berkowitz Pollack Brant, Advisors + CPAs served as our independent registered public accounting firm for the period ~~year~~commencing ~~ended~~June ~~December~~2, 312025, ~~2024~~ and ~~for~~ending ~~part~~October of6, 2025. CBIZ CPAs P.C. served as our ~~nine-month~~independent registered public accounting firm ~~transition~~for the period ~~ended~~commencing ~~December~~April 3125, ~~2023~~2025, and ending June 2, 2025. ~~EisnerAmper~~Marcum LLP served as our independent registered public accounting firm for ~~part~~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 ~~our~~performed ~~nine-month~~during ~~transition~~the ~~period~~year ended December 31, ~~2023~~2025. We paid audit fees of $ ~~404~~$25,000 to ~~Marcum~~Berkowitz ~~LLP~~Pollack Brant, Advisors + CPAs for services performed ~~for~~during the year ended December 31, ~~2024,~~2025. ~~and~~We paid audit fees of $~~215~~37,000 ~~for~~to ~~services~~CBIZ ~~performed~~CPAs P.C. for ~~our~~services ~~nine-month~~performed ~~transition~~during ~~period~~the year ended December 31, ~~2023~~2025. We paid audit fees of $3150,000 and $483,000 to ~~EisnerAmper~~Marcum LLP for services performed ~~for~~during ~~our~~the ~~nine-~~years ~~month transition period~~ ended December 31, ~~2023~~2025 and 2024, respectively.

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.

Fees	2025		2024
Audit fees	$	144,000	$	483,000
Audit-related fees		-0-		-0-
Tax fees		-0-		-0-
All other fees		-0-		-0-
Total fees	$	144,000	$	483,000

75Audit 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.

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

Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the auditors in accordance with this pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Financial Statements

The following consolidated financial statements and reports of our independent registered public accounting firms are filed as part of this report and incorporated by reference in Item 8. Financial Statements and Supplementary Data of this report:

● Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738). ● Report of Independent Registered Public Accounting Firm (PCAOB ID: 688). ● Consolidated Balance Sheets at December 31, ~~2024~~2025 and ~~2023~~2024. ● Consolidated Statements of Operations for the ~~Year~~Years Ended December 31, ~~2024~~2025 and ~~the Nine-Month Period Ended December 31, 2023~~2024. ● Consolidated Statements of Stockholders’ Deficit for the ~~Year~~Years Ended December 31, ~~2024~~2025 and ~~the Nine-Month Period Ended December 31, 2023~~2024. ● Consolidated Statements of Cash Flows for the ~~Year~~Years Ended December 31, ~~2024~~2025 and ~~the Nine-Month Period Ended December 31, 2023~~2024. ● Notes to Consolidated Financial Statements.

Financial Statement Schedules

All financial statement schedules have been omitted because the required information is either not applicable or has been presented in the consolidated financial statements.

Exhibits

The documents set forth below are filed as exhibits to this report. Where so indicated, exhibits that were previously filed with the SEC are incorporated by reference herein.

Exhibit No.		Description
1.1		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)
2.1		Asset 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 12, 2024).
1.2		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).
2.2		Amendment No. 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 5, 2024).
2.1		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).
3.1		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).
2.2		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).
3.2		Certificate 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).
3.1		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).
3.3		Corrected 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).
3.2		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).
3.4		Corrected 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).
3.3		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).
3.5		Certificate 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).
3.6		Certificate 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, 2022).
3.7		Certificate 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, 2022).
3.8		Certificate 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, 2022).
3.9		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).

7772

3.4		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).
3.10		Certificate 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).
3.5		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).
3.11		Amendment No. 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).
3.6		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).
3.12		Certificate 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).
3.7		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).
4.1		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).
3.8		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).
10.1		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).
3.9		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).
10.2+		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).
3.10		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).
10.3		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).
3.11		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).
3.12		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).
4.1		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).
10.1		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).

10.4		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).

10.5		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).

10.6		Security 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, 2024).

10.7		Operating 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, 2024).

10.8		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 27, 2024).

10.9		Amendment 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).

10.10		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).

10.11		Form of Original Issue Discount Senior Secured Note (incorporated by reference to Exhibit 10.2 in the Company’s Form 8-K filed with the SEC on October 24, 2024).

10.2		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).
10.3		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).
10.4+		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)
10.5+		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).
10.6+		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).
10.7		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).
10.8+		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).
10.9		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).
10.10		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).
10.11		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).
10.12		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).

10.12		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).

10.13		Stock 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).

10.14		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).

10.15		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).

10.16		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).

10.17		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).

10.18		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).

10.19		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).

10.20		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).

10.21		Placement 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, 2024).

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

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

10.24		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, Inc.’s Current Report on Form 8-K filed with the SEC on February 18, 2025).

10.25		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).

10.26		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).

10.27		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).

10.28‡		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).

10.29		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).

10.13		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).
10.14		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).
10.15		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).
10.16		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).
10.17		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).
10.18		Form of Original Issue Discount Senior Secured Note (incorporated by reference to Exhibit 10.2 in the Company’s Form 8-K filed with the SEC on October 24, 2024).
10.19		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)
10.20		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)
10.21		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).
10.22		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).
10.23		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).
10.24		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).

10.30		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).

10.31		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).

10.32		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).

10.33		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).

10.34		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).

10.35		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).

10.36+		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).

10.37		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).

10.38		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).

10.39		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).

10.40+		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).

10.41		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).

19.1*		Algorhythm Holdings, Inc. Insider Trading Policy

21.1*		List of subsidiaries of Algorhythm Holdings, Inc.

23.1*		Consent of M&K CPAS PLLC

23.2*		Consent of M&K CPAS PLLC

23.3*		Consent of M&K CPAS PLLC

23.4*		Consent of Marcum LLP

31.1*		Certification of Gary Atkinson, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.

31.2*		Certification of Alex Andre, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.

32.1**		Certifying Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

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

97		Algorhythm 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).

101.INS		Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

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

10.25		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).
10.26		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).
10.27		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).
10.28		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).
10.29+		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).
10.30		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).
10.31		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).
19.1*		Algorhythm Holdings Insider Trading Policy
21.1		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).
23.1*		Consent of Marcum LLP
31.1*		Certification of Gary Atkinson, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*		Certification of Alex Andre, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1**		Certifying Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

32.2**		Certifying Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
97		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).
101.INS		Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

+ 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.

Item 16. Form 10-K Summary.

None.

8275

SIGNATURES

In accordance with the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, Algorhythm Holdings, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALGORHYTHM HOLDINGS, INC.

Date: April 15, 2025	By:	/s/ Gary Atkinson
Date: April 1, 2026	By:	/s/ Gary Atkinson
		Gary Atkinson
		Chief Executive Officer
		(Principal Executive Officer)
Date: April 15, 2025	By:	/s/ Alex Andre
Date: April 1, 2026	By:	/s/ Alex Andre
		Alex Andre
		Chief Financial Officer & General Counsel
		(Principal Financial and Accounting Officer)

In accordance with the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Algorhythm Holdings, Inc. and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Gary Atkinson	Chief Executive Officer and Director	April 151, ~~2025~~2026
Gary Atkinson	(Principal Executive Officer)
/s/ Alex Andre	Chief Financial Officer and General Counsel	April 151, ~~2025~~2026
Alex Andre	(Principal Financial Officer)
/s/ Harvey Judkowitz	Director	April 151, ~~2025~~2026
Harvey Judkowitz
/s/ Joseph Kling	Director	April 15, 2025
/s/ Bernardo Melo	Director	April 1, 2026
Joseph Kling
/s/ Jay Foreman	Director	April 15, 2025
Jay Foreman
/s/ Mathieu Peloquin	Director	April 15, 2025
Mathieu Peloquin
/s/ Bernardo Melo	Director	April 15, 2025
Bernardo Melo
/s/ Ajesh Kapoor	Director	April 1, 2026
Ajesh Kapoor
/s/ Scott Thorn	Director	April 1, 2026
Scott Thorn
/s/ Kapil Gupta	Director	April 1, 2026
Kapil Gupta

8376

Algorhythm Holdings, Inc.

Index to Financial Statements

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)	F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738)	F-2
Consolidated Balance Sheets at December 31, 2024 and 2023	F-3
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)	F-3
Consolidated Statements of Operations for the Year Ended December 31, 2024 and the Nine-Month Period Ended December 31, 2023	F-4
Consolidated Balance Sheets at December 31, 2025 and 2024	F-4
Consolidated Statements of Stockholders’ Deficit for the Year Ended December 31, 2024 and the Nine-Month Period Ended December 31, 2023	F-5
Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024	F-5
Consolidated Statements of Cash Flows for the Year Ended December 31, 2024 and the Nine-Month Period Ended December 31, 2023	F-6
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2025 and 2024	F-6
Notes to Consolidated Financial Statements	F-7
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and 2024	F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024	F-8
Notes to Consolidated Financial Statements	F-9

F-1

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We 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.

We 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 applied. 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.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed 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 in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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

We 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. 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.

Our 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

The 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.

Going Concern

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

Auditing 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.

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

To 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.

/s/M&K CPAS, PLLC

We have served as the Company’s auditor since 2025

The Woodlands, TX

April 1, 2026

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Algorhythm Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance ~~sheets~~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, 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 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.

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.

Explanatory Paragraph – Going Concern

The 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. 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.

Basis for Opinion

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

We conducted our ~~audits~~audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the 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. As part of our ~~audits~~audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an ~~opinion~~ opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audits~~audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or 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~~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~~audit provides a reasonable basis for our opinion.

Critical Audit Matters

The 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.

Reserve for Sales Returns:

As 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.

We 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.

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

/s/ Marcum LLP

Marcum ~~LLP~~llp

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

Philadelphia, Pennsylvania

April 15, 2025

F-23

Algorhythm Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

	December 31, 2024			December 31, 2023
	December 31, 2025			December 31, 2024
Assets
Current Assets
Cash	$	71,~~550~~632,000		$	67,~~703~~233,000
Accounts receivable, net of allowances of $274,000 and $174,000, respectively		4,373,000			7,308,000
Restricted cash		4,514,000			-
Accounts receivable, related party		212,000			269,000
Accounts receivable, net of allowances of $113,000 and $127,000, respectively		1,061,000			121,000
Accounts receivable		212,000			269,000
Accounts receivable, related party		-			701,000
Note receivable - related party		701,000			-
Accounts receivable		-			701,000
Note receivable		701,000
Prepaid expenses and other current assets		729,000			59,000
Inventory		2,186,000			6,871,000
Current assets of discontinued operations		-			8,649,000
Returns asset		1,621,000			1,919,000
Total Current Assets		7,936,000			16,763,000
Prepaid expenses and other current assets		120,000			136,000
Property and equipment, net		22,000			2,000
Total Current Assets		16,763,000			23,206,000
Other non-current assets		79,000			-
Property and equipment, net		284,000			404,000
Intangible assets, net		2,005,000			345,000
Operating leases - right of use assets		95,000			3,926,000
Goodwill		2,682,000			786,000
Other non-current assets		29,000			179,000
Non-current assets of discontinued operations		-			406,000
Intangible assets, net		345,000			-
Total Assets	$	12,724,000		$	18,302,000
Goodwill		786,000			-
Total Assets	$	18,302,000		$	27,715,000
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	31,~~808~~413,000		$	7387,~~616,~~000
Accrued expenses		41,~~224~~556,000			21,~~614~~746,000
Refund due to customer		38,000			1,743,000
Other current liabilities		69,000			-
Customer prepayments		-			687,000
Warrant liability		-			16,603,000
Reserve for sales returns		3,355,000			3,390,000
Promissory notes payable, net		9,102,000			50,000
Warrant liability		16,603,000			-
Current portion of notes payable to related parties		2,300,000			265,000
Current portion of notes payable to related parties		265,000			-
Current liabilities of discontinued operations		-			9,387,000
Notes payable		265,000			-
Total Current Liabilities		14,440,000			28,438,000
Other current liabilities		145,000			159,000
Long-term provision for employee benefits		144,000			-
Total Current Liabilities		28,438,000			16,209,000
Notes payable to related parties, net of current portion		-			385,000
Notes payable to related parties, net of current portion		385,000			-
Total Liabilities		14,584,000			28,823,000
Operating lease liabilities, net of current portion		-			3,925,000
Other liabilities		-			3,000
Total Liabilities		28,823,000			20,137,000
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		-			-
Preferred stock, $1.00 par value; 1,000,000 shares authorized; 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.		5,000			-
Common stock, $0.01 par value; 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		35,000			5,000
Additional paid-in capital		3965,~~682~~674,000			3339,~~493~~682,000
Accumulated deficit		(49,172,000	)		(25,915,000	)
Accumulated other comprehensive loss		(25,000	)		-
Non-controlling interest		(1,036,000	)		-
Accumulated deficit		(65,043,000	)		(49,172,000	)
Total Algorhythm Holdings Shareholders’ (Deficit) Equity		(10,521,000	)		7,578,000
Non-controlling interest		(1,743,000	)		(1,036,000	)
Total Liabilities and Shareholders’ (Deficit) Equity	$	18,302,000		$	27,715,000
Treasury stock, 10,990 and -0- shares reserved at December 31, 2025 and December 31, 2024		(758,000	)		-
Total Shareholders’ Deficit		(1,860,000	)		(10,521,000	)
Total Liabilities and Shareholders’ Deficit	$	12,724,000		$	18,302,000

See notes to the consolidated financial statements

F-34

Algorhythm Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended			Nine Months Ended
	December 31, 2025			December 31, 2024
	December 31, 2024			December 31, 2023
	Year Ended
Net Sales	$	23,494,000		$	29,198,000
	December 31, 2025			December 31, 2024
Cost of Goods Sold		18,713,000			23,008,000
Net Sales	$	4,391,000		$	297,000
Gross Profit		4,781,000			6,190,000
Cost of Sales		5,706,000			491,000
Gross Loss		(1,315,000	)		(194,000	)
Operating Expenses
Selling expenses		24,~~874,~~000			~~3,717,000~~-
General and administrative expenses		126,~~240~~629,000			84,~~616~~656,000
Impairment of goodwill		~~3,592,000~~-			-3,592,000
Total Operating Expenses		186,~~706~~633,000			128,~~333~~248,000
Loss from Operations		(13,925,000	)		(6,143,000	)
Loss From Operations		(7,948,000	)		(8,442,000	)
Other (Expense) Income
Other Expenses
Change in fair value of warrant liability		~~334~~(6,468,000	)		-334,000
Loss on issuance of warrants		~~(8,889,000~~-	)		-(8,889,000	)
Interest expense		(1,887,000	)		(299,000	)
Interest expense, net		(747,000	)		(1,887,000	)
Other income		-			44,000
Total Other Expenses		(7,215,000	)		(10,442,000	)
Total Other Expense		(10,442,000	)		(255,000	)
Loss From Continuing Operations Before Income Tax		(15,163,000	)		(18,884,000	)
Loss Before Income Tax Benefit		(24,367,000	)		(6,398,000	)
Income tax loss attributable to continuing operations		(47,000	)		-
Income Tax Provision		-			-
Net Loss From Continuing Operations		(15,210,000	)		(18,884,000	)
Net Loss		(24,367,000	)		(6,398,000	)
Net loss from discontinued operations		(1,362,000	)		(5,483,000	)
Net Loss Attributable to Non-controlling Interest		1,110,000			-
Net Loss		(16,572,000	)		(24,367,000	)
Net Loss Available to Common Stockholders	$	(23,257,000	)	$	(6,398,000	)
Net loss attributable to non-controlling interest		701,000			1,110,000
Loss per common share
Net Loss Available to Common Shareholders	$	(15,871,000	)	$	(23,257,000	)
Basic and diluted	$	(353.87	)	$	(263.04	)
Loss Per Common Share
Basic and diluted from continuing operations	$	(5.86	)	$	(270.44	)
Basic and diluted from discontinued operations		(0.55	)		(83.43	)
Basic and diluted	$	(6.41	)	$	(353.87	)
Weighted Average Common and Common
Equivalent Shares:
Basic and diluted		65,722			24,323
Weighted Average Common and Common Equivalent Shares:
Basic and diluted		2,475,293			65,722

See notes to the consolidated financial statements

F-45

Algorhythm Holdings, Inc. and Subsidiaries

~~STATEMENTS~~CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS’~~COMPREHENSIVE ~~(DEFICIT) EQUITY~~ LOSS

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

	December 31, 2025			December 31, 2024
	Year Ended
	December 31, 2025			December 31, 2024

Net Loss	$	(16,572,000	)	$	(24,367,000	)

Other comprehensive loss
Foreign currency translation adjustment		(31,000	)		-
Total Comprehensive Loss		(16,603,000	)		(24,367,000	)

Total comprehensive loss attributable to non-controlling interest		707,000			-

Total Comprehensive Loss Available to Common Shareholders	$	(15,896,000	)	$	(24,367,000	)

	Shares		Amount		Capital			Interest			Deficit			Total
	Common Stock				Additional Paid in			Non-Controlling			Accumulated
	Shares		Amount		Capital			Interest			Deficit			Total
Balance at March 31, 2023		15,837	$	-	$	29,848,000		$	-		$	(19,517,000	)	$	10,331,000
Net loss		-		-		-			-			(6,398,000	)		(6,398,000	)
Sale of common stock, net of offering costs		16,253		-		3,529,000			-			-			3,529,000
Stock based compensation		-		-		110,000			-			-			110,000
Other		-		-		6,000			-			-			6,000
Balance at December 31, 2023		32,090	$	-	$	33,493,000		$	-		$	(25,915,000	)	$	7,578,000
Balance		32,090	$	-	$	33,493,000		$	-		$	(25,915,000	)	$	7,578,000
Net loss		-		-		-			(1,110,000	)		(23,257,000	)		(24,367,000	)
Sale of common stock and pre-funded warrants, net of offering cost		418,927		4,000		4,881,000			-			-			4,885,000
Stock based compensation		5,099		-		630,000			-			-			630,000
Common stock issued for purchase of SemiCab Inc		3,209		-		494,000			-			-			494,000
Subsidiary interests issued for purchase of SemiCab Inc		-		-		-			74,000			-			74,000
Repurchase of common shares - related parties		-		-		(758,000	)		-			-			(758,000	)
Issuance of common stock with debt		11,500		1,000		942,000			-			-			943,000
Balance at December 31, 2024		470,825	$	5,000	$	39,682,000		$	(1,036,000	)	$	(49,172,000	)	$	(10,521,000	)
Balance		470,825	$	5,000	$	39,682,000		$	(1,036,000	)	$	(49,172,000	)	$	(10,521,000	)

See notes to the consolidated financial statements

F-56

Algorhythm Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

For the Year Ended December 31, 2025 and 2024


	Common Stock					Additional Paid-in			Treasury			Accumulated Other Comprehensive			Accumulated			Non-Controlling
	Shares			Amount		Capital			Stock			Loss			Deficit			Interest			Total
Balance at December 31, 2023		32,090		$	-	$	33,493,000		$	-		$	-		$	(25,915,000	)	$	-		$	7,578,000

Net loss		-			-		-			-			-			(23,257,000	)		(1,110,000	)		(24,367,000	)
Sale of common stock and pre-funded warrants, net of offering costs		418,927			4,000		4,881,000			-			-			-			-			4,885,000
Stock based compensation		5,099			-		630,000			-			-			-			-			630,000
Common stock issued for purchase of SemiCab, Inc.		3,209			-		494,000			-			-			-			-			494,000
Subsidiary interests issued for purchase of SemiCab, Inc.		-			-		-			-			-			-			74,000			74,000
Repurchase of common stock - related parties		-			-		(758,000	)		-			-			-			-			(758,000	)
Issuance of common stock with debt		11,500			1,000		942,000			-			-			-			-			943,000

Balance at December 31, 2024		470,825		$	5,000	$	39,682,000		$	-		$	-		$	(49,172,000	)	$	(1,036,000	)	$	(10,521,000	)

Net loss		-			-		-			-			-			(15,871,000	)		(701,000	)		(16,572,000	)
Foreign currency translation adjustment		-			-		-			-			(25,000	)		-			(6,000	)		(31,000	)
Exercise of Series B warrants		1,910,975			19,000		15,195,000			-			-			-			-			15,214,000
Stock-based compensation		186,701			3,000		431,000			-			-			-			-			434,000
Reclassification of Series A warrants to equity		-			-		7,857,000			-			-			-			-			7,857,000
Capital contribution		-			-		439,000			-			-			-			-			439,000
Common stock issued for acquisition of SMCB		119,742			1,000		315,000			-			-			-			-			316,000
Repurchase of common stock from related parties		(10,990	)		-		758,000			(758,000	)		-			-			-			-
Common stock issued as commitment fee		95,694			1,000		190,000			-			-			-			-			191,000
Common stock issued upon settlement of prepaid purchases		505,671			5,000		670,000			-			-			-			-			675,000
Conversion of promissory note payable into common stock		135,723			1,000		137,000			-			-			-			-			138,000
Other		201			-		-			-			-			-			-			-

Balance at December 31, 2025		3,414,542		$	35,000	$	65,674,000		$	(758,000	)	$	(25,000	)	$	(65,043,000	)	$	(1,743,000	)	$	(1,860,000	)

See notes to the consolidated financial statements

F-7

Algorhythm Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended			Nine Months Ended
	December 31, 2025			December 31, 2024
	December 31, 2024			December 31, 2023
	For the Year Ended
	December 31, 2025			December 31, 2024
Cash flows from operating activities
Net loss	$	(24,367,000	)	$	(6,398,000	)
Net loss from continuing operations	$	(15,210,000	)	$	(18,884,000	)
Adjustments to reconcile net loss to net cash (used in), provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		192,000			287,000
Net foreign currency translation adjustment		(31,000	)		-
Amortization of intangible assets		30,000			-
Depreciation and amortization of property and equipment and intangible assets		249,000			30,000
Impairment of goodwill from purchase of SemiCab Inc		3,592,000			-
Amortization of debt discount and issuance cost		212,000			1,520,000
Impairment on note receivable - SCMB		439,000			-
Reduction in SMCB loan in exchange for services		304,000			637,000
Reduction in SMCB loan in exchange for services		637,000			-
Loss on allowance for credit loss		-			439,000
Provision for estimated cost of returns		299,000			(1,364,000	)
Impairment of goodwill from purchase of SemiCab,Inc.		-			3,592,000
Change in fair value of warrant liability		~~(334~~6,468,000	)		-(334,000	)
Loss on issuance of warrants		~~8,889,000~~-			-8,889,000
Amortization of debt discount and issuance costs		1,520,000			-
Stock-based compensation		434,000			630,000
Provision for inventory obsolescence		918,000			1,798,000
Reserve for sales returns		(35,000	)		2,490,000
Credit losses		14,000			8,000
Non-cash effect on termination of operating lease		(280,000	)		-
Net gain from disposal of property and equipment		-			(44,000	)
Stock based compensation		630,000			110,000
Amortization of right of use assets		236,000			510,000
Changes in operating assets and liabilities:
Accounts receivable		3(621,~~114,~~000	)		(572,~~241,~~000	)
Accounts receivable - related parties		57,000			(30,000	)
Prepaid expenses and other current assets		(293,000	)		(46,000	)
Inventories		3,767,000			415,000
Other non-current assets		49,000			14,000
Prepaid expenses and other current assets		29,000			215,000
Accounts payable		654,000			(345,000	)
Other non-current assets		-			76,000
Accrued expenses		263,000			(199,000	)
Accounts payable		(4,540,000	)		5,847,000
Other current liabilities		69,000			-
Accrued expenses		(1,076,000	)		348,000
Provision for employee benefits		144,000			-
Prepaids from customers		-			103,000
Net cash used in operating activities attributable to continuing operations		(7,309,000	)		(3,985,000	)
Refunds due to customers		(2,392,000	)		1,743,000
Operating lease liabilities		105,000			(462,000	)
Net cash (used in) provided by operating activities		(8,556,000	)		411,000
Cash flows from investing activities
Purchase of property and equipment		(7014,000	)		~~(68,000~~-	)
Pre Acquistion advances to SemiCab		(415,000	)		-
Capitalization of internal use software costs		(419,000	)		-
Cash received from purchase of SemiCab Inc		17,000			-
Repurchase of shares of common stock		(758,000	)		-
Disposal of property and equipment		-			54,000
Pre-acquistion advances to SemiCab, Inc.		-			(415,000	)
Advances to SMCB		(1,777,000	)		-
Cash received from acquisition of SemiCab, Inc. assets		-			17,000
Net cash used in investing activities		(2,245,000	)		(14,000	)
Cash received from acquisition of SMCB		593,000			-
Advances to SMCB		(1,172,000	)		(1,777,000	)
Net cash used in investing activities attributable to continuing operations		(1,770,000	)		(2,175,000	)
Cash flows from financing activities
Proceeds from sale of common stock and warrants, net of offering costs		~~12,932,000~~-			312,~~529~~932,000
Payments on merchant cash advances payable		(631,000	)		-
Proceeds from issuance of senior secured notes, net of discounts		-			2,000,000
Proceeds from issuance of senior secured notes, net of discounts		2,000,000			-
Proceeds from issuance of promissory notes, net of offering costs and discounts		10,213,000			-
Payment of senior secured notes		(2,353,000	)		-
Payment of senior secured notes and debt issuance costs		-			(2,578,000	)
Payment of debt issuance costs		(225,000	)		-
Payment of promissory notes		(427,000	)		-
Other		(75,000	)		(118,000	)
Payment of promissory notes, related parties		(100,000	)		-
Net cash provided by financing activities		11,648,000			3,411,000
Payments on merchant cash advances payable		-			(631,000	)
Net change in cash		847,000			3,808,000
Other		-			(75,000	)
Cash at beginning of year		6,703,000			2,895,000
Net cash provided by financing activities attributable to continuing operations		9,686,000			11,648,000
Cash at end of period	$	7,550,000		$	6,703,000
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		845,000			122,000
Net cash provided by financing activities attributable to discontinued operations		-			-
Total cash used in discontinued operations		(1,694,000	)		(4,958,000	)
Net change in cash		(1,087,000	)		530,000
Cash and restricted cash at beginning of period		7,233,000			6,703,000
Cash and restricted cash at end of period	$	6,146,000		$	7,233,000
Supplemental disclosures of cash flow information:
Cash paid for interest	$	~~591~~246,000		$	44591,000
Non-Cash investing and financing cash flow information:
Common stock and subsidiary interests issued for purchase of SemiCab Inc	$	568,000		$	-
Reclassification of Series A warrants to equity	$	7,857,000		$	-
Right of use assets exchanged for lease liabilities	$	136,000		$	3,874,000
Common stock issued for exercise of Series B warrants	$	15,214,000		$	-
Issuance of common stock with debt	$	~~943,000~~-		$	-943,000
Repurchase of common shares - related parties	$	758,000		$	-
Repurchase of common shares- related parties	$	-			758,000
Effect of extinguishment of advances to SemiCab Inc.	$	415,000		$	-
Effect of extinguishment of advances to SemiCab, Inc.	$	-			415,000
Common stock issued for acquisition of SemiCab, Inc assets	$	-			568,000
Common stock issued for acquisition of SMCB	$	316,000		$	-
Promissory note issued for acquisition of SMCB	$	1,750,000		$	-
Common stock issued as commitment fee	$	191,000		$	-
Common stock issued upon settlement of prepaid purchases	$	675,000		$	-
Conversion of promissory note payable into common stock	$	138,000		$	-

See notes to the consolidated financial statements

F-68

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2024~~2025 and ~~2023~~2024

Note 1 – Nature of Business

Algorhythm Holdings, Inc. (f/k/a The Singing Machine Company, Inc.) (the “Company”) is an artificial intelligence (“AI”) technology ~~and consumer electronics holding~~ company ~~with~~focused ~~two~~on ~~primary~~the ~~business~~growth ~~units~~and –development ~~SemiCab~~of ~~and Singing Machine~~SemiCab. SemiCab is an AI-enabled software logistics ~~business~~and ~~operated~~distribution ~~through~~business that utilizes the Company’s ~~subsidiary,~~ SemiCab ~~Holdings, LLC.~~technology ~~Singing~~platform ~~Machine~~to isenable aretailers, ~~home~~brands ~~karaoke~~and ~~consumer~~transportation ~~products~~providers ~~business~~to ~~that~~address ~~designs~~common supply ~~and~~chain ~~distributes~~problems ~~karaoke~~globally. ~~products~~The ~~globally~~Company ~~to retailers~~operates ~~and~~its ~~ecommerce~~SemiCab ~~partners~~business through ~~the~~its ~~Company’s~~ subsidiary, ~~The~~SemiCab ~~Singing Machine Company~~Holdings, ~~Inc~~LLC.

~~The~~Prior ~~Company’s~~to ~~operations~~August ~~include~~1, ~~its~~2025, ~~wholly-owned~~the ~~subsidiaries,~~Company ~~SMC~~had ~~Logistics~~a second business, ~~Inc~~which was Singing Machine., Singing Machine was a ~~California~~home ~~corporation~~karaoke ~~(“SMCL”),~~consumer products ~~SMC-Music,~~business ~~Inc.,~~that adesigned ~~Florida~~and ~~corporation~~distributed ~~(“SMCM”),~~karaoke ~~SMC~~products ~~(HK)~~to ~~Limited,~~retailers aand ~~Hong~~ecommerce ~~Kong~~partners ~~company~~globally ~~(“SMH”)~~through its subsidiary, The Singing ~~Machine~~ Machine Company, Inc., aThe ~~Delaware~~Company ~~corporation~~sold (“its Singing Machine~~”),~~ ~~MICS~~business ~~Hospitality~~on ~~Holdings~~August 1, ~~Inc~~2025. Accordingly, athe ~~Delaware~~Company ~~corporation~~no ~~(“MICS Hospitality”),~~longer ~~MICS~~owns ~~Hospitality~~or ~~Management,~~operates the ~~LLC,~~Singing aMachine ~~Delaware~~business. ~~limited~~The ~~liability~~results ~~company~~of ~~(“MICS~~operations, ~~Hospitality~~cash ~~Management”)~~flows, and ~~MICS~~related ~~Nomad,~~assets ~~LLC,~~and aliabilities ~~Delaware~~of ~~limited~~the ~~liability~~Singing ~~company~~Machine ~~(“MICS~~business ~~NY”),~~have ~~and~~been classified ~~its~~as ~~80%-owned~~discontinued ~~subsidiary,~~operations ~~SemiCab~~in ~~Holdings,~~the ~~LLC, a~~Company’s ~~Nevada~~consolidated ~~limited~~financial ~~liability~~statements ~~company~~for ~~(“SemiCab~~all ~~Holdings”)~~periods presented.

~~During~~The Company’s ~~2023~~operations include its 80%-owned subsidiaries, ~~the~~SemiCab ~~Company’s~~Holdings, ~~board~~LLC, ofa ~~directors~~Nevada ~~approved~~limited liability company (“SemiCab Holdings”), and SMCB Solutions Private Limited, an Indian company (“SMCB”), and its wholly-owned subsidiaries, SMC Logistics, Inc., a ~~change~~California incorporation ~~the~~(“SMCL”), SMC-Music, Inc., a Florida corporation (“SMCM”), SMC (HK) Limited, a Hong Kong company (“SMH”), The Singing Machine Company’s, ~~fiscal~~Inc., ~~year~~a ~~end~~Delaware ~~from~~corporation ~~March~~(“SMC”), 31and RIME toHoldings, ~~December~~LLC 31(“Rime”).

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

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

Note 2 – ~~Liquidity,~~Sale ~~Going~~of ~~Concern~~Singing ~~and~~Machine ~~Management Plans~~Business

AsOn ofAugust ~~December 31~~1, ~~2024~~2025, the Company’s ~~cash~~entered ~~balance~~into ~~was~~an ~~$7,550,000.~~asset ~~This~~purchase ~~will~~agreement ~~not~~with beSMC ~~sufficient~~and toStingray ~~fund~~Music ~~its~~USA, ~~planned~~Inc. ~~operations~~(“Stingray ~~for~~USA”) atpursuant ~~least~~to ~~one~~which ~~year~~Stingray ~~after~~USA ~~the~~purchased ~~date~~substantially ~~the~~all ~~consolidated~~of ~~financial~~the ~~statements~~assets, ~~are~~and ~~issued.~~assumed ~~The~~most ~~Company~~of ~~has~~the aliabilities, ~~recent~~associated ~~history~~with ofthe ~~recurring operating~~Company’s ~~losses~~Singing ~~and~~Machine ~~decreases~~business infor ~~working capital~~$500,000. ~~These~~The ~~factors~~transaction ~~create~~closed ~~substantial~~on ~~doubt~~August ~~about~~1, ~~the~~2025. ~~Company’s~~Mathieu ~~ability~~Peloquin tois ~~continue~~the asSenior aVice-President, ~~going~~Marketing ~~concern~~and ~~for~~Communications atof ~~least~~Stingray ~~one~~Group ~~year~~and ~~after~~served ~~the~~as ~~date~~a ~~that~~member of the Company’s ~~audited~~board ~~consolidated~~of ~~financial~~directors ~~statements~~until ~~are~~October ~~issued~~6, 2025.

F-9

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025 and 2024

The Company determined that the sale of the Singing Machine business met the criteria under Accounting Standards Codification (“ASC”) 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”), to be classified as a discontinued operation as the sale represented a strategic shift that will have a significant effect on the Company’s operations and financial results. Accordingly, the Company accounted for the Singing Machine business as a discontinued operation in this Annual Report on Form 10-K. 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.

Note 3 – Liquidity, Going Concern and Management Plans

As 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 are issued.

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

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

In making this assessment, management performed a comprehensive analysis of the Company’s current circumstances, including its financial position, cash flow ~~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.

F-710

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2024~~2025 and ~~2023~~2024

Note 34 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries SMCL, SMCM, SMH, ~~Singing Machine”~~SMC, Rime ~~MICS Hospitality, MICS, MICS Hospitality Management, MICS NY,~~ and its eighty percent (80%)-owned ~~subsidiary~~subsidiaries, SemiCab Holdings and SMCB. All intercompany accounts and transactions have been eliminated in consolidation for all periods presented.

The Company evaluates its business relationships with related parties to identify potential Variable Interest Entities (“VIEs”) under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company will consolidate any VIE in which it is deemed to be the primary beneficiary of the VIE. The Company will be deemed to be the primary beneficiary of the VIE if the Company has a controlling financial interest in the VIE. A controlling financial interest has the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both characteristics are met and, then the Company will consolidate that VIE into its consolidated financial statements.

F-8

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

As 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.

Furthermore, if the Company provides or intends to provide financial or other support, whether explicitly or implicitly, to the VIE when not contractually required to, the Company must disclose the type and amount of the support along with the primary reasons for providing the support. Both qualitative and quantitative information about the Company’s involvement with the VIE must be disclosed, including the nature, purpose, size, and activities of the VIE and how the VIE is financed.

The Company determined that SMCB ~~Solutions~~was ~~Private Limited, an Indian Company (“SMCB”), is~~ a VIE because the Company ~~provides~~ provided financial support to SMCB in the form of a loan agreement to fund SMCB’s operations. The Company further determined that it iswas not the primary beneficiary of SMCB because the Company ~~does~~did not have the power to direct or control ~~SMCB~~’s significant activities related to its business. Accordingly, the Company ~~has~~did not ~~consolidated~~consolidate SMCB’s results of operations and financial position in its consolidated financial statements prior to May 2, 2025.

On 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.

F-11

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025 and 2024

Reclassification of Prior Periods Presentation

Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ materially from these estimates. Estimates are assessed each period and updated to reflect current information. 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.

Segment Reporting

Pursuant to ~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“~~ASC”) Topic 280, Segment Reporting (“ASC 280”), the Company’s Chief Executive Officer serves as the Company’s Chief Operating Decision Maker (“CODM”) ~~for the purposes of ASC 280~~. The CODM concluded that the Company operates two reportable segments. One segment consists of its SemiCab business and the other segment consists of its Singing Machine business. The CODM manages the Company’s operations and business separately for each operating segment and uses net loss to allocate resources, making operating decisions and evaluating financial performance. The CODM also uses net loss, along with non-financial inputs and qualitative information, to evaluate the Company’s performance, establish compensation, monitor budget versus actual results, and decide the level of investment in various operating activities and other capital allocation activities. See Note 15 – Segment Information and Revenue Disaggregation – Segment Information.

~~F-9~~Prior to August 1, 2025, the CODM determined that the Company operated in two reportable segments: (i) the SemiCab business, and (ii) the Singing Machine business. On August 1, 2025, the Company completed the sale of its Singing Machine business. Upon the completion of this transaction, the Company began operating as a single reportable segment consisting of its SemiCab business.

The CODM evaluates and manages the Company’s operations using net loss as the primary measure to allocate resources, make operating decisions, and assess financial performance. In addition, the CODM considers non-financial information and other qualitative factors when evaluating performance, establishing compensation, monitoring budget-to-actual results, and making capital allocation decisions.

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

Cash and Restricted Cash

The Company considers cash to include cash in banks and deposits with financial institutions that can be liquidated without prior notice or penalty. Cash is maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits.

Filing Compare · Algorhythm Holdings, Inc.