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Derivative Liability (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2025

Dec. 31, 2024

Schedule of Derivative Warrant Liabilities

The key inputs for the Series A warrant liabilities were as follows:

 Schedule of Derivative Warrant Liabilities 

Warrant Liability – Series A Warrants		January 17, 2025				December 31, 2024
Stock price on valuation date		$	8.38			$	18.00
Exercise price		$	8.38			$	34.00
Number of warrants			1,133,652				279,412
Remaining term (years)			4.88				4.93
Annual equity volatility			126.0	%			113.0	%
Annual volume volatility			377.0	%			379.0	%
Risk-free interest rate			4.32	%			4.29	%
Expected stockholder approval date			January 13, 2025				January 14, 2025
Expected stockholder approval probability			100	%			50	%

Schedule of fair value of the Derivative Liabilities

The following table provides a roll-forward of the fair value of the derivative liabilities described above during the six months ended June 30, 2025:

 Schedule of Fair Value of the Derivative Liabilities 

		Series A Warrants				Series B Warrants				Total Warrant Liabilities
Balance at December 31, 2024		$	5,456,000			$	11,147,000			$	16,603,000
Balance		$	5,456,000			$	11,147,000			$	16,603,000
Exercises			—				(15,214,000	)			(15,214,000	)
Loss on change in fair value			2,401,000				4,067,000				6,468,000
Reclassification to equity			(7,857,000	)			—				(7,857,000	)
Balance at June 30, 2025		$	—			$	—			$	—
Balance		$	—			$	—			$	—

Schedule of Shares of Common Stock Underlying Warrants

The following table provides a roll-forward of the number of shares of common stock underlying warrants issued during the six months ended June 30, 2025:

Schedule of Shares of Common Stock Underlying Warrants

		Series A Warrants				Series B Warrants				Other Warrants				Total
Balance at December 31, 2024			279,412				279,412				4,511				563,335
Balance			279,412				279,412				4,511				563,335
Exercises			—				(279,412	)			—				(279,412	)
Balance at June 30, 2025			279,412				—				4,511				283,923
Balance			279,412				—				4,511				283,923

Previously Reported [Member]

Schedule of Derivative Warrant Liabilities

 Schedule of Derivative Warrant Liabilities

Warrant Liability – Series A Warrants		Issuance Date				December 31, 2024
Stock price on valuation date		$	18.00			$	18.00
Exercise price		$	34.00			$	34.00
Number of warrants			279,412				279,412
Remaining term (years)			5.00				4.93
Annual equity volatility			113.0	%			114.0	%
Annual volume volatility			377.0	%			379.0	%
Risk-free interest rate			3.95	%			4.29	%
Expected stockholder approval date			January 14, 2025				January 14, 2025
Expected stockholder approval probability			50	%			50	%

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Warrant Liability – Series B Warrants		Issuance Date				December 31, 2024
Stock price on valuation date		$	18.00			$	18.00
Exercise price		$	68.00			$	68.00
Number of warrants			279,412				279,412
Remaining term (years)			2.50				2.43
Annual equity volatility			126.0	%			120.0	%
Annual volume volatility			409.0	%			416.0	%
Risk-free interest rate			4.00	%			4.17	%
Expected stockholder approval date			January 14, 2025				January 14, 2025
Expected stockholder approval probability			50	%			50	%

Schedule of fair value of the Derivative Liabilities

The following table provides a roll-forward of the fair value of the derivative liabilities described above:

 Schedule of fair value of the Derivative Liabilities

		Series A Warrants				Series B Warrants				Total Warrant Liabilities
Balance at December 31, 2023		$	—			$	—			$	—
Issuances			5,901,000				11,036,000				16,937,000
Exercises			—				—				—
Loss (gain) on change in fair value			(445,000	)			111,000				(334,000	)
Balance at December 31, 2024		$	5,456,000			$	11,147,000			$	16,603,000

Schedule of Shares of Common Stock Underlying Warrants

The following table provides a roll-forward of the number of shares of common stock underlying warrants issued during the year ended December 31, 2024 and the nine months ended December 31, 2023:

Schedule of Shares of Common Stock Underlying Warrants

		Pre-Funded Warrants				Series A Warrants				Series B Warrants				Other Warrants				Total
Balance at March 31, 2023			—				—				—				4,511				4,511
Issuances			—				—				—				—				—
Exercises			—				—				—				—				—
Balance at December 31, 2023			—				—				—				4,511				4,511
Issuances			258,412				279,412				279,412				—				817,236
Exercises			(258,412	)			—				—				—				(258,412	)
Balance at December 31, 2024			—				279,412				279,412				4,511				563,335

Schedule of fair value on a recurring basis

The following table details the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of December 31, 2024:

 Schedule of fair value on a recurring basis

December 31, 2024		Level 1				Level 2				Level 3
Liabilities
Warrant liabilities		$	—			$	—			$	16,603,000
Total liabilities		$	—			$	—			$	16,603,000

X

- Definition

Tabular disclosure of derivative liabilities at fair value.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 815
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4E
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480434/815-10-50-4E

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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-Paragraph 4A
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-URI https://asc.fasb.org/1943274/2147480434/815-10-50-4A

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 815
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-Section 50
-Paragraph 4B
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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

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-Section 50
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Tabular disclosure of the changes in the guarantor's aggregate product warranty liability, including the beginning balance of the aggregate product warranty liability, the aggregate reductions in that liability for payments made (in cash or in kind) under the warranty, the aggregate changes in the liability for accruals related to product warranties issued during the reporting period, the aggregate changes in the liability for accruals related to preexisting warranties (including adjustments related to changes in estimates), and the ending balance of the aggregate product warranty liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 460
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 8
-Subparagraph (c)
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Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-3

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