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Discontinued Operations

9 Months Ended

Sep. 30, 2025

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 19 – Discontinued Operations

On August 1, 2025, the Company entered into an asset purchase agreement with SMC and Stingray Music USA, Inc. (“Stingray USA”) pursuant to which Stingray USA purchased substantially all of the assets, and assumed most of the liabilities, associated with the Company’s Singing Machine business for $500,000. The transaction closed on August 1, 2025.

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 condensed consolidated balance sheets, the condensed consolidated statements of operations and the condensed consolidated statement of cash flows have been adjusted for prior periods to reflect the Singing Machine business as a discontinued operation.

The following table summarizes the results of the Singing Machine business as a discontinued operation in the condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024:

Algorhythm Holdings, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		For the Three Months Ended								For the Nine Months Ended
		September 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024

Net Sales		$	584,000			$	10,495,000			$	4,019,000			$	15,361,000

Cost of Goods Sold			399,000				8,088,000				2,033,000				12,128,000

Gross Profit			185,000				2,407,000				1,986,000				3,233,000

Operating Expenses
Selling expenses			100,000				653,000				1,098,000				1,830,000
General and administrative expenses			1,081,000				2,548,000				3,156,000				5,722,000
Net (gain) loss on early termination of operating lease			-				(3,874,000	)			-				4,000
Total Operating Expenses			1,181,000				(673,000	)			4,254,000				7,556,000

Income (Loss) from Operations			(996,000	)			3,080,000				(2,268,000	)			(4,323,000	)

Other Expenses
Interest expense			-				-				-				-
Loss on sale of Singing Machine business			(104,000	)			-				(104,000	)			-
Total Other Expenses			(104,000	)			-				(104,000	)			-

Income (Loss) Before Income Tax Benefit			(1,100,000	)			3,080,000				(2,372,000	)			(4,323,000	)

Income Tax			-				-				-				-

Net Income (Loss) from Discontinued Operations		$	(1,100,000	)		$	3,080,000			$	(2,372,000	)		$	(4,323,000	)

The following table summarizes the assets and liabilities of the discontinued operations as of September 30, 2025 and December 31, 2024:

		September 30, 2025				December 31, 2024

Assets

Current Assets
Cash		$	-			$	317,000
Accounts receivable, net			-				4,252,000
Accounts receivable, related party			-				212,000
Accounts receivable			-				212,000
Inventory			-				2,186,000
Returns asset			-				1,621,000
Prepaid expenses and other current assets			-				61,000
Total Current Assets of Discontinued Operations		$	-			$	8,649,000

Property and equipment, net			-				282,000
Other non-current assets			-				124,000
Total Non-Current Assets of Discontinued Operations		$	-			$	406,000

Liabilities

Current Liabilities
Accounts payable		$	-			$	3,421,000
Accrued expenses			-				2,478,000
Refund due to customer			-				38,000
Reserve for sales returns			-				3,355,000
Other current liabilities			426,000				95,000
Total Current Liabilities of Discontinued Operations		$	426,000			$	9,387,000