Algorhythm Holdings, Inc.

Derivative Litigation

On December 21, 2023, Ault Lending, LLC (“Ault Lending”), a wholly owned subsidiary of Ault Alliance, Inc., which was at one time one of our largest stockholders, filed a derivative shareholder action in Delaware Chancery Court against us, our board of directors, Stingray Group and Regalia Ventures for alleged breach of fiduciary duty in approving a recent above-market private placement equity transaction. The complaint alleges that we and our board of directors followed an inadequate process in evaluating the private placement transaction that we completed in November 2023 and that we and our board of directors entered into the transaction with an intent to dilute Ault’s ownership stake in us. Ault Lending is seeking the following relief from the Court: (i) declarations that the defendant directors breached their fiduciary duties, and that Stingray Group and Regalia Ventures aided and abetted those breaches, (ii) rescinding our sale of shares to Stingray Group and Regalia Ventures, and (iii) awarding damages and attorney’s fees to Ault Lending. The defendants have retained Delaware counsel to represent them in this matter and we have filed a motion to dismiss the suit.

OAC Flatiron & OAC Adelphi Litigation

On July 26, 2024, OAC 111 Flatiron, LLC and OAC Adelphi, LLC, filed a civil action in the Supreme Court of the State of New York against MICS Nomad LLC, a subsidiary of ours, and us for alleged breach of lease, seeking monetary damages including unpaid rent, future unpaid rent, and other expenses related to the lease. The complaint alleges the defendants breached the lease in various material respects. On September 25, 2024, we entered into a Settlement Agreement for a full release and dismissal of the complaint within five business days of our payment of $250,000. We made full payment of the settlement amount on October 25, 2024, and OAC Flatiron and OAC Adelphi filed a discontinuance with prejudice with the court on October 29, 2024.

Blue Yonder Litigation

On February 11, 2025, Blue Yonder, Inc. (“Blue Yonder”) filed a civil action in the Superior Court of the State of Arizona against us for breach of contract and to enforce a stipulated judgment entered against SemiCab, Inc. In connection with the acquisition of the SemiCab business from SemiCab, Inc., we assumed a judgment against SemiCab in favor of Blue Yonder, Inc. associated with damages resulting from a breach of contract for IT subscription-based services. The judgment was in the amount of $509,119. The complaint alleges that because we assumed SemiCab, Inc.’s liabilities related to Blue Yonder, Blue Yonder can enforce the judgment against us. We have retained counsel to represent us in this matter.