Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Schedule of Loss Before Income Taxes

The Company’s loss before income taxes for the year ended December 31, 2024 and the nine months ended December 31, 2023 is as follows:

	2024			2023
United States	$	(24,414,000	)	$	(6,173,000	)
Foreign		47,000			(225,000	)
	$	(24,367,000	)	$	(6,398,000	)

Schedule of Deferred Tax Assets and Liabilities

The Company did not have any provision for income taxes for the year ended December 31, 2024 or the nine months ended December 31, 2023.

ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

The Company’s net deferred tax assets as of December 31, 2024 and 2023 are as follows:

	December 31, 2024			December 31, 2023
NOL Federal Carryforward	$	4,085,000		$	1,291,000
State NOL Carryforward		1,426,000			469,000
Inventory differences		355,000			1,173,000
Impairment of GoodWIll - Semi Cab		674,000			-
Stock option compensation expense (SFAS 123R)		179,000			159,000
Intangibles - Semi Cab		253,000			-
ROU Liability		14,000			1,022,000
Section 163(j)		694,000			151,000
Allowance for doubtful accounts		40,000			45,000
Reserve for estimated returns		476,000			384,000
Accrued vacation		20,000			8,000
	$	8,216,000		$	4,702,000
Less: valuation allowance		(8,039,000	)		(3,600,000	)
Net deferred tax asset	$	176,000		$	1,103,000
Depreciable and amortizable assets		(39,000	)		(67,000	)
ROU Asset		(14,000	)		(1,000,000	)
Warrant Liability		(92,000	)		-
Prepaid expenses		(32,000	)		(35,000	)
Net deferred tax liability	$	(176,000	)	$	(1,103,000	)
	$	-		$	-

Schedule of Deferred Tax Assets and Liabilities

The Company’s net deferred tax assets as of December 31, 2024 and 2023 are as follows:

	December 31, 2024			December 31, 2023
NOL Federal Carryforward	$	4,085,000		$	1,291,000
State NOL Carryforward		1,426,000			469,000
Inventory differences		355,000			1,173,000
Impairment of GoodWIll - Semi Cab		674,000			-
Stock option compensation expense (SFAS 123R)		179,000			159,000
Intangibles - Semi Cab		253,000			-
ROU Liability		14,000			1,022,000
Section 163(j)		694,000			151,000
Allowance for doubtful accounts		40,000			45,000
Reserve for estimated returns		476,000			384,000
Accrued vacation		20,000			8,000
	$	8,216,000		$	4,702,000
Less: valuation allowance		(8,039,000	)		(3,600,000	)
Net deferred tax asset	$	176,000		$	1,103,000
Depreciable and amortizable assets		(39,000	)		(67,000	)
ROU Asset		(14,000	)		(1,000,000	)
Warrant Liability		(92,000	)		-
Prepaid expenses		(32,000	)		(35,000	)
Net deferred tax liability	$	(176,000	)	$	(1,103,000	)
	$	-		$	-

Schedule of Tax Provision

The actual tax provision differs from the “expected” tax for the year ended December 31, 2024 and the nine months ended December 31, 2023 (computed by applying the U.S. Federal Corporate tax rate of 21% to income before taxes) as follows:

	December 31, 2024			December 31, 2023
Expected tax expense (benefit)	$	(5,117,000	)	$	(1,344,000	)
State income taxes, net of Federal income tax effect		(1,574,000	)		(326,000	)
Permanent differences		(441,000	)		104,000
Permanent difference loss on issuance of warrants		2,441,000				-
Tax rate differential on foreign earnings		13,000			59,000
Change in valuation allowance		4,428,000			1,495,000
Other		250,000			11,000
Actual tax (benefit) provision	$	-		$	-