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Business Combination | 12 Months Ended
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Dec. 31, 2024
Previously Reported [Member] |
Business Combination | Note 4 – Business Combination On June 11, 2024, the Company, its wholly-owned subsidiary, SemiCab Holdings, SemiCab, Inc., Ajesh Kapoor and Vivek Sehgal entered into an asset purchase agreement pursuant to which the Company agreed to purchase substantially all of the assets, and assume certain specified liabilities, of SemiCab, Inc. On July 3, 2024 (the “Acquisition Date”), the parties completed the acquisition and, on that date, the Company issued 3,209 shares of the Company’s common stock and a 20% membership interest in SemiCab Holdings to SemiCab, Inc. The Company acquired SemiCab, Inc.’s business to diversify the Company’s business. ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 and 2023 Pursuant to the terms of the asset purchase agreement that the Company entered into on June 11, 2024, the Company entered into an option agreement that granted SemiCab Holdings the right to acquire all of the issued and outstanding equity securities of SMCB, which is a subsidiary of SemiCab, Inc., for 1,605 shares of the Company’s common stock. The Company did not exercise this right and the option agreement expired unexercised on August 31, 2024. In connection with the asset purchase agreement, effective July 3, 2024, SemiCab Holdings entered into employment agreements with Ajesh Kapoor and Vivek Sehgal. Mr. Kapoor’s agreement is for a term of three years with an annual base salary of $140,000 for 2024, $240,000 for 2025, and $300,000 for 2026. Mr. Sehgal’s agreement is for a term of three years with an annual base salary of $105,000 for 2024, $210,000 for 2025, and $240,000 for 2026. Both executives’ salaries are subject to annual review by the board of managers of SemiCab Holdings. The value of the consideration paid by the Company to SemiCab, Inc. for the SemiCab business was $983,000. The 3,209 shares issued to SemiCab, Inc. were valued at $494,000 on the Acquisition Date based on the trading price of the Company’s common stock on the Acquisition Date discounted for a lack of marketability. The Company recognized a non-controlling interest at fair value as of the Acquisition Date in the amount of $74,000, representing the value of the 20% membership interest in SemiCab Holdings that was issued to SemiCab, Inc. in the transaction. The 20% membership interest was valued at the Acquisition Date based on the fair value of the implied value of SemiCab Holdings based on the value of the Company’s common stock issued on the Acquisition Date. The Company recorded a measurement period adjustment during the fourth quarter of 2024 that reduced the value of finite lived intangible assets acquired in the transaction by $1,050,000. This had the effect of increasing goodwill by $1,050,000. ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 and 2023 The following table presents the allocation of the consideration transferred to the assets acquired and liabilities assumed based on their fair values: Schedule of Consideration Transferred to the Assets Acquired and Liabilities Assumed
Consideration: |  |  |  |
Equity consideration |  | $ | 494,000 |
Fair value of non-controlling interest |  |  | 74,000 |
Total equity consideration |  |  | 568,000 |
Effective extinguishment of advances to SemiCab, Inc. |  |  | 415,000 |
Total consideration |  | $ | 983,000 |
Identifiable net assets acquired: |  |  |  |
Cash |  | $ | 17,000 |
Accounts receivable |  |  | 193,000 |
Prepaid expenses and other current assets |  |  | 13,000 |
Property and equipment, net |  |  | 3,000 |
Other non-current assets |  |  | 14,000 |
Customer relationships (nine9 year estimated useful life) |  |  | 25,000 |
Trade name (nine9 year estimated useful life) |  |  | 25,000 |
Developed technology (six6 year estimated useful life) |  |  | 325,000 |
Accounts payable and accrued expenses |  |  | (2,679,000 | )
Merchant cash advances payable |  |  | (631,000 | )
Notes payable to related parties |  |  | (650,000 | )
Other current liabilities |  |  | (50,000 | )
Net assets acquired |  |  | (3,395,000 | )
Goodwill |  | $ | 4,378,000 |

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