Algorhythm achieved several milestones during the third quarter, marked by strategic realignment and growth initiatives across its two key operating subsidiaries:
Additionally, the Company anticipates completing the acquisition of SMCB Solutions Private Limited (“SemiCab India”) during Q4 2024. SemiCab India continues to serve Fortune 500 clients under both pilot and scalable long-term contracts. In the karaoke division, Singing Machine is actively focusing on OEM partnerships across automotive, television, and set-top-box markets, aligning with its broader strategy to prioritize technology-driven solutions while reducing reliance on traditional retail relationships.
Third Quarter Operational Results
Third quarter operational highlights were as follows:
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Revenues: Sales for Q3 2024 totaled $10.6 million, compared to $15.9 million in Q3 2023, a decline of $5.3 million (33%). The decrease reflects a strategic focus on higher-margin products, reducing promotional pricing strategies with two top-five customers. Sales were also impacted by general inflationary pressures and softened demand for audio and in-home entertainment.
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Operating Expenses: Operating expenses for Q3 2024 were $1.1 million, down from $3.6 million in Q3 2023. This includes a $3.9 million non-cash gain from early termination of an operating lease. Excluding non-cash items, the Company incurred $1.3 million in additional operating expenses related to SemiCab’s acquisition and increased legal and professional fees.
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Balance Sheet: Shareholders’ equity improved significantly, increasing from a deficit of $(0.9) million as of June 30, 2024, to $2.7 million as of September 30, 2024.
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Net Income: The Company reported net income of $1.2 million for Q3 2024, compared to $0.1 million for the same period in 2023.
Conference Call Details:
Management will host a conference call at 10:00 am Eastern time to discuss the financial results and provide a business update.
Date: Wednesday, November 20, 2024
Time: 10:00 a.m. ET
Dial-in number: (888)-800-3146
Conference ID: RIME
An audio rebroadcast of the call will be available later in the day at: https://ir.algoholdings.com/
About Algorhythm Holdings
Algorhythm Holdings, Inc. is a diversified holding company with two primary investments. The first is SemiCab, an emerging leader in the AI-driven global logistics industry. The second is The Singing Machine Company, the world’s leading brand in the consumer karaoke market.
SemiCab is a cloud-based Collaborative Transportation Platform built to achieve the scalability required to predict and optimize millions of loads and hundreds of thousands of trucks. To orchestrate collaboration across manufacturers, retailers, distributors, and their carriers, SemiCab uses real-time data from API-based load tendering and pre-built integrations with TMS and ELD partners. To build fully loaded round trips, SemiCab uses AI/ML predictions and advanced predictive optimization models. On the SemiCab platform, shippers pay less and carriers make more while not having to change a thing.
Since 2020, SemiCab has enabled major retailers, brands and transportation providers to address these common supply-chain problems globally. SemiCab's Orchestrated Collaboration™ AI model has proven to increase transportation capacity, improve asset utilization, reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show the technology has the capability of saving shippers tens of billions of dollars annually through optimization. Further, SemiCab’s technology also has the potential to play a key role in the improved sustainability model globally. Based on its proven ability to improve truck utilization rates from 65% to over 90%, this results in a dramatic reduction in the carbon footprint of the industry. The optimization of existing truck utilization can add approximately 30% more trucking capacity without adding more trucks, drivers or driven miles which addresses common problems plaguing the industry like severe driver shortage and road congestion. Trucking optimization could also eliminate approximately 25% of CO2 emissions attributable to road freight.
For additional information regarding SemiCab: http://www.semicab.com
The Singing Machine Company, Inc. is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry's widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.
Investor Relations Contact:
investors@algoholdings.com
www.algoholdings.com
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as "expects," "anticipates," "believes," "will," "will likely result," "will continue," "plans to," "potential," "promising," and similar expressions. These statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements, including the risk factors described from time to time in the Company's reports to the SEC, including, without limitation the Company’s Transition Report on Form 10-KT for the transition period from April 1, 2023 to December 31, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this press release. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this press release to conform our statements to actual results or changed expectations, or as a result of new information, future events or otherwise.
ALGORHYTHM HOLDINGS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | September 30, 2024 | | | December 31, 2023 | |
| | | (Unaudited) | | | | |
| | | | | | | | | |
| Assets | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash | | $ | 621,000 | | | $ | 6,703,000 | |
| Accounts receivable, net of allowances of $266,000 and $174,000, respectively | | | 4,330,000 | | | | 7,308,000 | |
| Due from Banks | | | 22,000 | | | | - | |
| Accounts receivable, related party | | | 157,000 | | | | 269,000 | |
| | | | | | | | | |
| Inventory | | | 7,328,000 | | | | 6,871,000 | |
| Returns asset | | | 1,081,000 | | | | 1,919,000 | |
| Prepaid expenses and other current assets | | | 867,000 | | | | 136,000 | |
| Total Current Assets | | | 14,406,000 | | | | 23,206,000 | |
| | | | | | | | | |
| Property and equipment, net | | | 318,000 | | | | 404,000 | |
| Operating leases - right of use assets | | | 137,000 | | | | 3,926,000 | |
| Other non-current assets | | | 41,000 | | | | 179,000 | |
| Intangible assets, net | | | 1,356,000 | | | | - | |
| Goodwill | | | 3,354,000 | | | | - | |
| Total Assets | | | 19,612,000 | | | $ | 27,715,000 | |
| | | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | $ | 8,743,000 | | | $ | 7,616,000 | |
| Accrued expenses | | | 4,303,000 | | | | 2,614,000 | |
| Refund due to customer | | | 462,000 | | | | 1,743,000 | |
| Customer prepayments | | | - | | | | 687,000 | |
| Reserve for sales returns | | | 2,212,000 | | | | 3,390,000 | |
| Merchant cash advances payable | | | 303,000 | | | | - | |
| Notes payable | | | 50,000 | | | | - | |
| Current portion of notes payable to related parties | | | 265,000 | | | | - | |
| | | | | | | | | |
| Current portion of operating lease liabilities | | | 135,000 | | | | 84,000 | |
| Other current liabilities | | | 15,000 | | | | 75,000 | |
| Total Current Liabilities | | | 16,488,000 | | | | 16,209,000 | |
| | | | | | | | | |
| Other liabilities | | | - | | | | 3,000 | |
| Notes payable to related parties, net of current portion | | | 385,000 | | | | - | |
| Operating lease liabilities, net of current portion | | | - | | | | 3,925,000 | |
| Total Liabilities | | | 16,873,000 | | | | 20,137,000 | |
| | | | | | | | | |
| Commitments and Contingencies | | | | | | | | |
| | | | | | | | | |
| Shareholders’ (Deficit) Equity | | | | | | | | |
| Preferred stock, $1.00 par value; 1,000,000 shares authorized; no shares issued and outstanding | | | - | | | | - | |
| Common stock $0.01 par value; 100,000,000 shares authorized; 11,079,678 issued and 9,752,755 shares outstanding at September 30, 2024 and 6,418,061 issued and outstanding at December 31, 2023. | | | 98,000 | | | | 64,000 | |
| Additional paid-in capital | | | 35,995,000 | | | | 33,429,000 | |
| Accumulated deficit | | | (33,206,000 | ) | | | (25,915,000 | ) |
| Non-controlling interest | | | (148,000 | ) | | | - | |
| Total Algorhythm Holdings Shareholders’ Equity | | | 2,739,000 | | | | 7,578,000 | |
| | | | | | | | | |
| Total Liabilities and Shareholders’ Equity | | $ | 19,612,000 | | | $ | 27,715,000 | |
See notes to the condensed consolidated financial statements
ALGORHYTHM HOLDINGS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Nine Months Ended | |
| | | September 30, 2024 | | | September 30, 2023 | | | September 30, 2024 | | | September 30, 2023 | |
| | | | | | | | | | | | | |
| Net Sales | | $ | 10,622,000 | | | $ | 15,931,000 | | | $ | 15,488,000 | | | $ | 21,939,000 | |
| | | | | | | | | | | | | | | | | |
| Cost of Goods Sold | | | 8,247,000 | | | | 12,197,000 | | | | 12,287,000 | | | | 16,582,000 | |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 2,375,000 | | | | 3,734,000 | | | | 3,201,000 | | | | 5,357,000 | |
| | | | | | | | | | | | | | | | | |
| Operating Expenses | | | | | | | | | | | | | | | | |
| Selling expenses | | | 653,000 | | | | 1,169,000 | | | | 1,830,000 | | | | 2,426,000 | |
| General and administrative expenses | | | 4,339,000 | | | | 2,459,000 | | | | 8,552,000 | | | | 7,403,000 | |
| Net (gain) loss on early termination of operating lease | | | (3,874,000 | ) | | | - | | | | 4,000 | | | | - | |
| Total Operating Expenses | | | 1,118,000 | | | | 3,628,000 | | | | 10,386,000 | | | | 9,829,000 | |
| | | | | | | | | | | | | | | | | |
| Income (Loss) from Operations | | | 1,257,000 | | | | 106,000 | | | | (7,185,000 | ) | | | (4,472,000 | ) |
| | | | | | | | | | | | | | | | | |
| Other (Expenses) Income | | | | | | | | | | | | | | | | |
| Gain on disposal of fixed assets | | | - | | | | 44,000 | | | | - | | | | 44,000 | |
| Gain from Employee Retention Credit Program refund | | | - | | | | - | | | | - | | | | 704,000 | |
| Interest expense | | | (283,000 | ) | | | (53,000 | ) | | | (328,000 | ) | | | (122,000 | ) |
| Total Other (Expenses) Income, net | | | (283,000 | ) | | | (9,000 | ) | | | (328,000 | ) | | | 626,000 | |
| | | | | | | | | | | | | | | | | |
| Income (Loss) Before Income Tax Benefit | | | 974,000 | | | | 97,000 | | | | (7,513,000 | ) | | | (3,846,000 | ) |
| | | | | | | | | | | | | | | | | |
| Income Tax Benefit (Provision) | | | - | | | | - | | | | - | | | | (1,502,000 | ) |
| | | | | | | | | | | | | | | | | |
| Consolidated Net Income (Loss) | | | 974,000 | | | | 97,000 | | | | (7,513,000 | ) | | | (5,348,000 | ) |
| | | | | | | | | | | | | | | | | |
| Net (income) loss attributable to non-controlling interest | | | 221,000 | | | | - | | | | 221,000 | | | | - | |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) Available to Common Stockholders | | $ | 1,195,000 | | | $ | 97,000 | | | $ | (7,292,000 | ) | | $ | (5,348,000 | ) |
| | | | | | | | | | | | | | | | | |
| Income (Loss) per common share | | | | | | | | | | | | | | | | |
| Basic and diluted | | $ | 0.13 | | | $ | 0.03 | | | $ | (0.99 | ) | | $ | (1.44 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted Average Common and Common | | | | | | | | | | | | | | | | |
| Equivalent Shares: | | | | | | | | | | | | | | | | |
| Basic and diluted | | | 9,095,504 | | | | 4,220,259 | | | | 7,341,204 | | | | 3,726,259 | |
See notes to the condensed consolidated financial statements
ALGORHYTHM HOLDINGS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | |
| | | For the Nine Months Ended | |
| | | September 30, 2024 | | | September 30, 2023 | |
| | | | | | | |
| Cash flows from operating activities | | | | | | | | |
| Net loss | | $ | (7,513,000 | ) | | $ | (5,348,000 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Depreciation | | | 159,000 | | | | 289,000 | |
| Amortization of intangible assets | | | 44,000 | | | | - | |
| Provision for estimated cost of returns | | | 839,000 | | | | 1,095,000 | |
| Provision for inventory obsolescence | | | - | | | | 271,000 | |
| Credit losses | | | 92,000 | | | | 104,000 | |
| Gain on termination of operating lease | | | (246,000 | ) | | | - | |
| Net gain from disposal of property and equipment | | | - | | | | (42,000 | ) |
| Stock based compensation | | | 616,000 | | | | 174,000 | |
| Amortization of right of use assets | | | 194,000 | | | | 520,000 | |
| Change in net deferred tax assets | | | - | | | | 1,399,000 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | 3,079,000 | | | | (3,982,000 | ) |
| Due from banks | | | (22,000 | ) | | | (152,000 | ) |
| Accounts receivable - related parties | | | (303,000 | ) | | | 117,000 | |
| Inventories | | | (456,000 | ) | | | (3,424,000 | ) |
| Prepaid expenses and other current assets | | | (718,000 | ) | | | 87,000 | |
| Other non-current assets | | | 151,000 | | | | (248,000 | ) |
| Accounts payable | | | 394,000 | | | | 10,442,000 | |
| Accrued expenses | | | (198,000 | ) | | | (486,000 | ) |
| Refunds due to customers | | | (1,967,000 | ) | | | 1,212,000 | |
| Reserve for sales returns | | | (1,180,000 | ) | | | (646,000 | ) |
| Operating lease liabilities | | | 116,000 | | | | (622,000 | ) |
| Payment of early termination fee on operating lease termination settlement | | | (150,000 | ) | | | - | |
| Net cash (used in) provided by operating activities | | | (7,069,000 | ) | | | 760,000 | |
| Cash flows from investing activities | | | | | | | | |
| Purchase of property and equipment | | | (70,000 | ) | | | (163,000 | ) |
| Cash received from purchase of SemiCab Inc | | | 17,000 | | | | - | |
| Disposal of property and equipment | | | - | | | | 55,000 | |
| Net cash used in investing activities | | | (53,000 | ) | | | (108,000 | ) |
| | | | | | | | | |
| Cash flows from financing activities | | | | | | | | |
| Proceeds from sale of stock, net of offering costs | | | 1,489,000 | | | | 1,640,000 | |
| Payments on merchant cash advances payable | | | (327,000 | ) | | | - | |
| Net payment from revolving lines of credit | | | - | | | | (1,761,000 | ) |
| Other | | | (122,000 | ) | | | (113,000 | ) |
| Net cash provided by (used in) financing activities | | | 1,040,000 | | | | (234,000 | ) |
| Net change in cash | | | (6,082,000 | ) | | | 418,000 | |
| | | | | | | | | |
| Cash at beginning of year | | | 6,703,000 | | | | 2,795,000 | |
| Cash at end of period | | $ | 621,000 | | | $ | 3,213,000 | |
| | | | | | | | | |
| Supplemental disclosures of cash flow information: | | | | | | | | |
| Cash paid for interest | | $ | 320,000 | | | | 80,000 | |
| Non-Cash investing and financing cash flow information: | | | | | | | | |
| Common stock issued for purchase of SemiCab Inc | | $ | 569,000 | | | $ | - | |
| Equipment purchased under capital lease | | $ | - | | | $ | 55,000 | |
| Right of use assets exchanged for lease liabilities | | $ | 136,000 | | | $ | 3,874,000 | |
See notes to the condensed consolidated financial statements
