Financial Data and Key Metrics Changes - Sales for the three months ended June 30, 2025, increased to $2,700,000 from $2,400,000 for the corresponding period last year, primarily due to the addition of SemiCap India [13] - Gross profit for the same period increased to $954,000 from $324,000, with gross margin rising to 35% from 13% [14] - Net loss for the three months ended June 30 decreased to $809,000 from $6,200,000 for the comparable period last year [16] Business Line Data and Key Metrics Changes - The Singing Machine business accounted for $1,500,000 of sales, while the SemiCap business accounted for $1,200,000 [13] - SemiCap's revenue run rate has tripled to more than $7,000,000 since January 2025, with expectations to generate between $2,000,000 and $2,500,000 in the third quarter [14] - Fleet expansion increased from 140 to 450 trucks, increasing the annualized revenue run rate to approximately $23,000,000 [8] Market Data and Key Metrics Changes - SemiCap secured five new contracts with major fast-moving consumer goods companies in India [7] - Four existing clients expanded their geographic lanes and volume by over 100%, with some cases upwards of 200% [8] - The average annualized revenue run rate increased by almost 300% to approximately $7,000,000 [8] Company Strategy and Development Direction - The strategic sale of the Singing Machine business was aimed at reducing cash burn and reallocating resources to the high-growth SemiCap business [5][17] - The company is focusing on scaling SemiCap aggressively, which operates in a massive addressable market with significant growth potential [6] - The company plans to invest in the growth and development of SemiCap while expecting a reduction in general and administrative expenses due to the sale of Singing Machine [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in SemiCap's growth trajectory, anticipating continued contract wins and geographic expansion [18] - The company does not foresee tariffs impacting the SemiCap business, as it is not directly exposed to tariffs like the Singing Machine business was [26][28] - Management indicated that the focus on SemiCap will allow for better capital allocation and operational efficiency [43] Other Important Information - The Singing Machine sale generated $4,500,000 in total consideration, reducing liabilities by approximately $4,000,000 [5] - The company is in the process of establishing a factoring facility in India to address working capital needs [37] Q&A Session Summary Question: Guidance on profit margins and operating expenses for Q4 - Management anticipates total operating expenses to decrease significantly due to the sale of Singing Machine, with margins expected to be in the range of 5% to 10% for SemiCap [22][24] Question: Impact of tariffs on SemiCap business - Management clarified that SemiCap is not exposed to tariffs as it does not import physical products, and they expect continued demand from large multinational customers [26][28] Question: Plans for raising capital for SemiCap growth - Management acknowledged the need for additional working capital to fund SemiCap's growth, indicating that equity sales may be part of the strategy [34][36] Question: Customer expansion and growth opportunities - Management highlighted strong demand from existing customers and potential new customer acquisitions, with plans for geographic expansion beyond India [48][49] Question: Distinction between SemiCap and digital freight brokers - Management emphasized that SemiCap is not just a digital freight broker but a platform designed to optimize truck utilization and reduce empty miles, addressing a significant issue in the transportation industry [55][57]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ALGORHYTHM HOLDINGS, INC. (Exact name of registrant as specified in its charter) FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-41405 (State or other jurisdiction o ...

Core Insights - Algorhythm Holdings, Inc. announced a significant expansion of its Master Services Agreement with a major consumer packaged goods (CPG) manufacturer in India, which has annual revenues exceeding $84 billion [1] - The expansion will allow SemiCab India to provide managed transportation services on over 40 lanes, marking a 200% increase in the number of lanes currently serviced [2] - A new pilot program for a "drop & hook" freight model will be implemented, aimed at improving efficiency and reducing downtime for drivers [3][5] Company Developments - SemiCab India is set to go live with the expanded services in June 2025, leveraging its Collaborative Transportation Platform to support the drop and hook model [4] - The drop and hook model is expected to cut turnaround times by up to 80%, increasing monthly miles per truck from an average of 3,200 miles to 5,000 miles with minimal additional costs [4] - The CEO of SemiCab Holdings expressed optimism about the growth opportunities this collaboration presents, highlighting the competitive advantage it will provide in the Indian market [3][5] Industry Context - The drop and hook model, while widely adopted in the United States, has faced challenges in India due to infrastructure and operational constraints, which SemiCab aims to overcome [3] - The expansion of services and the introduction of the drop and hook model are expected to set a precedent for other companies within the National Digital Freight Exchange (NDFE) in India [5] - SemiCab's AI-enabled platform is designed to optimize logistics and distribution, addressing common supply-chain issues faced by major retailers and brands globally [7]

Fort Lauderdale, FL, June 03, 2025 (GLOBE NEWSWIRE) -- Algorhythm Holdings, Inc. (“Algorhythm”) (NASDAQ: RIME), an AI-driven technology and consumer electronics holding company, today announced that its subsidiary, SMCB Solutions Private Limited (“SemiCab India”), has recently signed four new pilot agreements and four contract expansions with eight enterprise-scale customers in India. Under the new and expanded contracts, SemiCab India will provide enterprise-level shipping services through its AI-powered, ...

Mr. Kapoor Brings more than 30 Years of Supply-Chain, Logistics Technology and Go-To-Market Leadership to the Board Fort Lauderdale, FL, May 20, 2025 (GLOBE NEWSWIRE) -- Algorhythm Holdings, Inc. ("Algorhythm") (NASDAQ: RIME) – an AI technology and consumer electronics holding company, today announced the appointment of Ajesh Kapoor to its board of directors effective May 19, 2025. Mr. Kapoor brings more than 30 years of logistics and supply chain technology innovation and leadership to the Company's Board. ...

Financial Data and Key Metrics Changes - Sales decreased to $2 million in Q1 2025 from $2.4 million in Q1 2024, primarily due to lower sales of karaoke products, which are seasonal and affected by inflation [14][15] - Gross profit remained stable at $500,000, with gross margin improving from 21% to 25% due to a decrease in returns [15] - Stockholders' equity improved to $3.3 million as of March 31, 2025, from a deficit of $11.6 million at December 31, 2024, after the reclassification of warrant liabilities [19][18] Business Line Data and Key Metrics Changes - The semi cap business in India saw sales grow almost fivefold, doubling the number of clients and serving three of the top ten and five of the top fifty largest consumer packaged goods companies [10][11] - The company has increased its fleet to over 500 trucks and anticipates annualized revenue capacity in India to exceed $20 million [11] Market Data and Key Metrics Changes - The National Digital Freight Exchange (NDFE) represents a significant opportunity with over $1.4 billion in annual freight spend, with an initial addressable market of approximately $400 million identified for optimization [7][36] Company Strategy and Development Direction - The company is prioritizing the semi cap business, particularly in India, for near-term growth, while seeking strategic alternatives for the karaoke business due to ongoing challenges [22][23] - The acquisition of SemiCAD India is viewed as a critical opportunity, leveraging government support and collaboration with major multinational companies to address freight inefficiencies [5][6] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges from inflation, trade wars, and supply chain issues affecting the karaoke business, while expressing optimism about growth in the semi cap sector [15][22] - The company expects substantial revenue growth from the semi cap business over the next twelve months as it expands its customer base [15] Other Important Information - The company completed a reverse stock split in February 2025, affecting all reported financial numbers [13] - A one-time noncash charge of $6.5 million was recorded due to changes in the fair value of warrants, impacting stockholders' equity [16][18] Q&A Session Summary Question: Software development needs for SemiCap - Management indicated that the software platform acquired is already commercially secure and does not require significant further investment for development [26][28] Question: Business operations outside India - Management confirmed that the US division of SemiCap was also acquired, with plans to introduce a new business model in the US market soon [29][30] Question: Addressable market size and timing - Management stated that the $400 million addressable market in India could be targeted aggressively within the next two to three years, primarily leveraging existing customers [36][38]

Financial Data and Key Metrics Changes - Sales decreased to $2 million in Q1 2025 from $2.4 million in Q1 2024, primarily due to lower sales of karaoke products, which are discretionary purchases affected by inflation and seasonal trends [13][14] - Gross profit remained stable at $500,000, with gross margin improving from 21% to 25% due to a decrease in returns [14] - Stockholders' equity improved to $3.3 million as of March 31, 2025, from a deficit of $11.6 million at December 31, 2024, after the reclassification of warrant liabilities [18][16] Business Line Data and Key Metrics Changes - The semi cap business in India saw sales grow almost fivefold, doubling the number of clients and serving three of the top ten and five of the top fifty largest consumer packaged goods companies globally [9][10] - The company has increased its fleet access to over 500 trucks and anticipates annualized revenue capacity in India to exceed $20 million [10] Market Data and Key Metrics Changes - The National Digital Freight Exchange (NDFE) represents a significant opportunity with a total freight spend of over $1.4 billion annually, with approximately $400 million identified for optimization [7][32] - The company is positioned to benefit from the shift of manufacturing from China to India, which is expected to enhance domestic growth [21] Company Strategy and Development Direction - The company is prioritizing the semi cap business, particularly in India, for near-term growth, while exploring strategic alternatives for its consumer electronics karaoke business [22] - The acquisition of SemiCAD India is viewed as a critical opportunity, leveraging government support and collaboration with major multinational companies to address freight inefficiencies [5][6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the karaoke business due to supply chain issues and tariff uncertainties but expressed optimism about the growth potential in the semi cap sector [20][21] - The company expects substantial revenue growth from the semi cap business over the next twelve months as it expands its customer base [14] Other Important Information - The company completed a reverse stock split in February 2025, affecting all reported financial numbers [12] - A one-time noncash charge of $6.5 million was recorded due to the remeasurement of warrants, impacting the income statement [16] Q&A Session Summary Question: State of software development for SemiCap - Management indicated that the software platform acquired is already commercially secure and operational, requiring minimal further investment for development [25][26] Question: Business operations outside of India - Management confirmed that the US division of SemiCap was also acquired, with plans to introduce a new business model in the US market soon [28][29] Question: Addressable market size and growth timeline - Management clarified that the $400 million addressable market in India is expected to be targeted aggressively over the next two to three years, primarily leveraging existing customer relationships [31][32]

Core Insights - Algorhythm Holdings, Inc. reported a net loss of $9.2 million for Q1 2025, a significant increase from a net loss of $2.4 million in Q1 2024, primarily due to a $6.4 million increase in non-cash expenses related to warrants [6][7][24] - The company generated revenue of $2.0 million in Q1 2025, down from $2.4 million in the same period last year, attributed mainly to lower sales in its karaoke business [5][6] - The acquisition of SemiCab India is expected to positively impact revenue, with an annualized revenue run rate projected to double by year-end [4][5] Financial Performance - Revenue for Q1 2025 was $2.0 million, a decrease of 16.7% from $2.4 million in Q1 2024 [5][6] - Gross profit margin increased to 25.1%, up from 20.7% in the prior year, with gross profit remaining relatively stable at $0.5 million [6][23] - Operating loss increased to $2.8 million in Q1 2025 from $2.3 million in Q1 2024, while adjusted net loss was $3.2 million compared to $2.4 million in the previous year [6][7][24] Business Developments - The acquisition of SemiCab India, which operates an AI-enabled transportation platform, is a strategic pivot for the company into AI logistics services [4][14] - SemiCab India is currently generating an annualized revenue run rate of $4.6 million, with potential to quadruple this figure to over $23 million by the second half of 2025 [4] - The company plans to expand its fleet to over 1,000 vehicles by the end of 2025 to meet increasing demand [4] Balance Sheet Highlights - As of March 31, 2025, the company had cash on hand of $3.3 million, down from $7.6 million at the end of 2024 [6][20] - Total assets decreased to $10.5 million from $18.3 million at the end of 2024, while total liabilities also decreased to $7.1 million from $28.8 million [20][21] - The company reported a significant reduction in inventory by 14%, from $2.2 million at the end of 2024 to $1.9 million [6][21]

Financial Performance - Net sales decreased by $433,000 to $1,993,000 for the three-month period ended March 31, 2025, compared to $2,426,000 for the same period in 2024, primarily due to the loss of retail shelf space at two major customers[128] - Gross profit decreased to $500,000, or 25.1% of net sales, for the three-month period ended March 31, 2025, compared to $502,000, or 20.7% of net sales, for the same period in 2024[128] - Net loss available to common stockholders was $9,191,000, or $4.66 per share, for the three-month period ended March 31, 2025, compared to $2,367,000, or $73.76 per share, for the same period in 2024[129] - Total assets decreased from $18,302,000 at December 31, 2024, to $10,461,000 at March 31, 2025[129] Operating Expenses - Operating expenses increased by $521,000 to $3,310,000 for the three-month period ended March 31, 2025, primarily due to growth and development expenses for the SemiCab business[128] - Selling expenses increased by $134,000 to $764,000 for the three-month period ended March 31, 2025, compared to $630,000 for the same period in 2024, primarily due to increased online marketing and social media advertising campaigns[137] - General and administrative expenses rose by $387,000 to $2,546,000 for the three-month period ended March 31, 2025, from $2,159,000 in the same period of 2024, mainly due to expenses related to the development and growth of the SemiCab business[138] - Other expenses surged by $6,456,000 to $6,468,000 for the three-month period ended March 31, 2025, compared to $28,000 for the same period in 2024, primarily due to a non-cash loss from the change in fair value of warrants[139] Cash Flow - Net cash used by operating activities was $3,108,000 during the three-month period ended March 31, 2025, an increase of $551,000 from $2,557,000 in the same period of 2024[143] - Net cash used by investing activities was $673,000 for the three-month period ended March 31, 2025, with no cash flows from investing activities in the same period of 2024[144] - Net cash used by financing activities increased to $473,000 for the three-month period ended March 31, 2025, compared to $21,000 for the same period in 2024, primarily due to repayments of promissory notes[145] - As of March 31, 2025, the company's cash balance was $3,296,000[142] Future Outlook - The company expects net sales of Singing Machine products to decrease over the next 12 months due to tariffs on products manufactured in China, while revenue from the SemiCab business is expected to increase[132] - The company plans to invest in the SemiCab business to develop it into a significant revenue producer, focusing on technology research and development, marketing, and hiring qualified employees[125] - The company intends to continue relying on cash generated from operations, equity sales, and debt to fund operations and expansion efforts, including potential acquisitions[146] Acquisitions - The company completed the acquisition of the India component of the SemiCab business on May 2, 2025, following the acquisition of the U.S. component on July 3, 2024[126] Compliance - The company received a letter from Nasdaq on March 25, 2025, confirming compliance with the minimum bid price requirement of $1.00 per share for continued listing[151] Non-controlling Interest - Net loss attributable to non-controlling interest was $103,000 for the three-month period ended March 31, 2025, reflecting losses incurred by SemiCab allocated to SemiCab, Inc. through its 20% membership interest[140] One-time Charges - The company incurred a one-time, non-cash charge of $6,468,000 for the change in fair value of warrants related to a public offering completed on December 6, 2024[130]

Core Insights - Algorhythm Holdings, Inc. has acquired SemiCab Solutions Private Ltd., enhancing its presence in the rapidly growing Indian logistics market [1][2] - The acquisition provides access to a significant multinational customer base and scalable growth opportunities through SemiCab's AI platform [4][6] Company Overview - Algorhythm Holdings is a diversified technology-driven holding company with a focus on AI technology and consumer electronics [9] - SemiCab is recognized as an emerging leader in the global logistics and distribution industry, utilizing AI to optimize supply chain operations [10] Acquisition Details - Algorhythm's subsidiary, SemiCab Holdings, LLC, acquired 9,999 of the 10,000 equity shares of SemiCab India for a $1.75 million promissory note and 119,742 shares of common stock [2] - This acquisition marks Algorhythm's second transaction with SemiCab, Inc., following the acquisition of its U.S. business in July 2024 [1] Market Context - India's logistics sector, valued at $1.3 trillion, is undergoing modernization, supported by government initiatives like the Gati Shakti National Master Plan [5] - The National Digital Freight Exchange (NDFE) has selected SemiCab as its AI logistics partner, indicating strong institutional support for the company's technology [5] Performance Metrics - SemiCab India has more than doubled its annualized revenue run rate from approximately $1.8 million to approximately $4.5 million since January 2025, with expectations to double again by year-end [6] - The platform improves freight utilization rates from approximately 65% to up to 90% and reduces total shipping costs by up to 10% [7] Strategic Advantages - The acquisition allows Algorhythm to tap into existing contracts with leading FMCG companies in India, providing a pathway to scale operations significantly [6] - SemiCab's AI platform enhances visibility in the transportation network, enabling real-time collaboration between shippers and transporters [8]