Derivative Liability (Tables)

12 Months Ended

Dec. 31, 2024

Derivative Liability

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 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:

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

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:

	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:

	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