Algorhythm Holdings, Inc. (RIME) presents a deeply negative liquidation posture at December 31, 2025. Total assets of $12.7M are overwhelmed by total liabilities of $14.6M, producing a book deficit of approximately $1.9M inclusive of noncontrolling interest. Under liquidation haircuts, recovery to equity is materially worse than book. The asset side is dominated by restricted cash of $6.1M (largely the DACA Account collateralizing the Streeterville Pre-Paid Purchases, limiting free access), unrestricted cash of $1.6M, intangibles net of $2.0M (zero liquidation recovery), goodwill of $2.7M (zero recovery), and PP&E of $22K (negligible). Applying standard haircuts: cash and equivalents at 100% yield approximately $7.7M combined, but the $4.5M in the DACA Account is contractually pledged and cannot be withdrawn freely below the PPP2 Minimum Balance Amount — effectively constrained collateral, not free cash. AR of approximately $1.6M gross (net after $113K allowance) at 90-95% recovery adds roughly $1.4M. All intangibles ($2.0M net, including customer relationships and reacquired rights from the May 2025 SMCB acquisition) and goodwill ($2.7M) carry zero liquidation value. The capitalized software ($419K gross) similarly recovers zero. Against this, liabilities at face value total $14.6M, with current liabilities of $14.4M including accounts payable of $1.4M, accrued liabilities of $1.6M, and notes payable carrying aggregate face value of approximately $10.4M (Streeterville Pre-Paid Purchases #1-3 totaling $10.3M principal plus smaller 1800 Diagonal and Boot Capital notes of $0.2M combined and Agile Capital of $54K). The Streeterville facility is secured by all company assets and guaranteed by operating subsidiaries, meaning in a liquidation scenario Streeterville has senior lien priority over all assets. The SemiCab, Inc. promissory note ($1.75M face, due in two tranches at one-year and 18-month anniversaries of May 2025 closing) adds further liability. The noncontrolling interest deficit of $1.7M reflects the 20% stake held by SemiCab management (Kapoor/Sehgal) in SemiCab Holdings. Material changes from the prior 10-Q (period ended September 30, 2025): the Singing Machine discontinued operations are fully resolved with zero balance sheet residual; the Streeterville Pre-Paid Purchase #3 ($1.1M) was added in December 2025; and the Series A/B warrant derivative liability of $16.6M that burdened the December 31, 2024 balance sheet was eliminated by reclassification to equity in Q1 2025, removing a major liability overhang. However, the company replaced that liability structure with $10.4M in secured debt. The valuation allowance against deferred tax assets increased $4.2M to $12.2M, confirming management's own assessment that no tax asset is realizable. The filing discloses going concern doubt. Post-balance-sheet, Streeterville exercised its right to purchase shares across all three outstanding Pre-Paid Purchases (PPP #2 and #3 fully repaid by February and January 2026 respectively; PPP #1 balance reduced to $1.1M), and a fourth Pre-Paid Purchase of $10.4M was entered in February 2026 — not on the December 31, 2025 balance sheet but materially changes the post-filing liability stack. Net liquidation recovery to equity is negative by at minimum $5-7M under standard haircuts, and likely worse given the DACA collateral constraints.
▼ Community Notes