UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 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 incorporation or organization)		(I.R.S. Employer Identification Number)

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

33309

(954) 596-1000

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Stock,

$0.01 par value per share

RIME

NASDAQ Capital Market

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

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

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

Large accelerated filer	☐	Accelerated filer ☐
Non-accelerated filer	☒	Smaller reporting company ☒
		Emerging growth company ☐

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

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

As of August 15, 2025, there were 2,514,571 shares of the issuer’s common stock, $0.01 par value per share, outstanding.

ALGORHYTHM HOLDINGS, INC.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024	2

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (Unaudited)	3

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024 (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II – OTHER INFORMATION		37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Algorhythm Holdings, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2025			December 31, 2024
	(unaudited)

Assets

Current Assets
Cash	$	1,134,000		$	7,550,000
Accounts receivable, net of allowances of $101,000 and $274,000, respectively		2,317,000			4,373,000
Accounts receivable, related party		124,000			212,000
Accounts receivable		124,000			212,000
Note receivable - related party		-			701,000
Inventory		2,733,000			2,186,000
Returns asset		93,000			1,621,000
Prepaid expenses and other current assets		1,219,000			120,000
Total Current Assets		7,620,000			16,763,000

Property and equipment, net		252,000			284,000
Other non-current assets		90,000			124,000
Intangible assets, net		315,000			345,000
Goodwill		4,418,000			786,000
Total Assets	$	12,695,000		$	18,302,000

Liabilities and Shareholders’ Equity

Current Liabilities
Accounts payable	$	1,996,000		$	3,808,000
Accrued expenses		3,295,000			4,224,000
Refund due to customer		1,232,000			38,000
Reserve for sales returns		521,000			3,355,000
Warrant liability		-			16,603,000
Promissory notes payable,net		379,000			-
Current portion of promissory note payable - SemiCab, Inc.		1,500,000			-
Promissory note payable		1,500,000			-
Current portion of notes payable to related parties		265,000			265,000
Other current liabilities		62,000			145,000
Total Current Liabilities		9,250,000			28,438,000

Notes payable to related parties, net of current portion		385,000			385,000
Promoissory note payable - SemiCab, Inc., net of current portion		250,000			-
Total Liabilities		9,885,000			28,823,000

Commitments and Contingencies		-			-

Shareholders’ Equity (Deficit)
Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2025 and December 31, 2024		-			-
Common stock, $0.01 par value; 800,000,000 and 100,000,000 shares authorized; 2,514,571 and 470,825 shares issued and outstanding at June 30, 2025 and December 31, 2024		25,000			5,000
Additional paid-in capital		63,854,000			39,682,000
Accumulated deficit		(58,948,000	)		(49,172,000	)
Non-controlling interest		(1,363,000	)		(1,036,000	)
Treasury stock, 10,990 and 0 shares reserved at June 30, 2025 and December 31, 2024		(758,000	)		-
Total Algorhythm Holdings Shareholders’ Equity (Deficit)		2,810,000			(10,521,000	)

Total Liabilities and Shareholders’ Equity (Deficit)	$	12,695,000		$	18,302,000

See notes to the condensed consolidated financial statements

Algorhythm Holdings, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
	For the Three Months Ended						For the Six Months Ended
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024

Net Sales	$	2,716,000		$	2,440,000		$	4,709,000		$	4,866,000

Cost of Goods Sold		1,762,000			2,116,000			3,255,000			4,040,000

Gross Profit		954,000			324,000			1,454,000			826,000

Operating Expenses
Selling expenses		234,000			547,000			998,000			1,177,000
General and administrative expenses		1,502,000			2,053,000			4,048,000			4,212,000
Operating lease impairment expense		-			3,878,000			-			3,878,000
Total Operating Expenses		1,736,000			6,478,000			5,046,000			9,267,000

Loss from Operations		(782,000	)		(6,154,000	)		(3,592,000	)		(8,441,000	)

Other Expenses
Change in fair value of warrant liability		-			-			(6,468,000	)		-
Interest expense		(27,000	)		(17,000	)		(43,000	)		(45,000	)
Total Other Expenses		(27,000	)		(17,000	)		(6,511,000	)		(45,000	)

Loss Before Income Tax Benefit		(809,000	)		(6,171,000	)		(10,103,000	)		(8,486,000	)

Income Tax Benefit		-			52,000			-			-

Net Loss		(809,000	)		(6,119,000	)		(10,103,000	)		(8,486,000	)

Net loss attributable to non-controlling interest		224,000			-			327,000			-

Net Loss Available to Common Shareholders	$	(585,000	)	$	(6,119,000	)	$	(9,776,000	)	$	(8,486,000	)

Income (Loss) Per Common Share
Basic and diluted	$	(0.24	)	$	(190.68	)	$	(4.40	)	$	(264.44	)

Weighted Average Common and Common
Equivalent Shares:
Basic and diluted		2,472,464			32,090			2,224,047			32,090

See notes to the condensed consolidated financial statements

Algorhythm Holdings, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

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

	Shares		Amount		Capital			Interest			Stock			Deficit			Total
	Common Stock				Additional Paid-in			Non- Controlling			Treasury			Accumulated
	Shares		Amount		Capital			Interest			Stock			Deficit			Total
Balance at March 31, 2025		2,394,829	$	24,000	$	63,577,000		$	(1,139,000	)	$	(758,000	)	$	(58,363,000	)	$	3,341,000

Net loss		-		-		-			(224,000	)		-			(585,000	)		(809,000	)
Stock-based compensation		-		-		(38,000	)		-			-			-			(38,000	)
Common stock issued for acquisition of SMCB		119,742		1,000		315,000			-			-			-			316,000

SEC Form 10-Q filed by Algorhythm Holdings Inc.