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EQUITY METHOD INVESTMENT
 9 Months Ended
Sep. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
EQUITY METHOD INVESTMENT

14. EQUITY METHOD INVESTMENT

 

Equity Investments in Unconsolidated Entity – Algorhythm Holdings, Inc. (f/k/a The Singing Machine Company) (“SMC”)

 

The following table summarizes the changes in the Company’s equity investments in an unconsolidated entity, SMC, included in other assets on the condensed consolidated balance sheet, during the nine months ended September 30, 2024:

     
Rollforward investment in unconsolidated entity  Amount 
Beginning balance - January 1, 2024  $1,957,000 
Loss from investment in unconsolidated entity   (1,957,000)
Ending balance - September 30, 2024  $- 

 

There was no activity in the investment in the unconsolidated entity account during the three months ended September 30, 2024, prior to the transition from the equity method of accounting on September 5, 2024, as described below. Consequently, the beginning balance, activity, and ending balance for this period were all zero.

 

On September 5, 2024, three of the Company’s employees resigned from the board of directors of SMC. As a result of the resignations, and as the Company owned less than 20% of SMC at the time, the Company no longer had the ability to exert significant influence over the operating and financial policies of SMC. The Company discontinued the equity method of accounting for the investment in SMC on September 5, 2024. As a result, the Company changed its accounting for SMC to an investment in marketable equity securities and recognized the investment at fair value, with a gain of $1.3 million recognized as revenue from lending and trading activities in the condensed consolidated statement of operations and comprehensive loss.