PART I – FINANCIAL INFORMATION This section provides comprehensive financial information, including statements, notes, management's discussion, market risk, and controls Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, liquidity, accounting policies, segment information, and recent transactions like the SMCB acquisition Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets from $18.302 million at Dec 31, 2024, to $12.695 million at June 30, 2025. Total liabilities also significantly decreased from $28.823 million to $9.885 million, primarily due to the reclassification of warrant liability to equity. Shareholders' equity shifted from a deficit of $(10.521) million to a positive $2.810 million Condensed Consolidated Balance Sheets (USD) | Metric | Dec 31, 2024 (USD) | Jun 30, 2025 (USD) | Change (USD) | | :-------------------------------- | :----------------- | :----------------- | :------------- | | Total Assets | 18,302,000 | 12,695,000 | (5,607,000) | | Total Liabilities | 28,823,000 | 9,885,000 | (18,938,000) | | Total Shareholders' Equity (Deficit) | (10,521,000) | 2,810,000 | 13,331,000 | | Cash | 7,550,000 | 1,134,000 | (6,416,000) | | Warrant liability | 16,603,000 | - | (16,603,000) | | Goodwill | 786,000 | 4,418,000 | 3,632,000 | - Significant decrease in total liabilities primarily due to the reclassification of warrant liability to additional paid-in capital8 - Goodwill increased substantially from $786,000 to $4,418,000, largely due to the acquisition of SMCB840 Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, net sales increased to $2.716 million from $2.440 million in the prior year, and gross profit significantly improved to $954,000 from $324,000. The company reduced its net loss from $(6.119) million to $(809,000) for the quarter. For the six months, net sales slightly decreased, but net loss also decreased from $(8.486) million to $(10.103) million, primarily due to a large non-cash loss from the change in fair value of warrant liability in 2025 Condensed Consolidated Statements of Operations (USD) | Metric | 3 Months Ended Jun 30, 2025 (USD) | 3 Months Ended Jun 30, 2024 (USD) | YoY Change (USD) | 6 Months Ended Jun 30, 2025 (USD) | 6 Months Ended Jun 30, 2024 (USD) | YoY Change (USD) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :---------------- | :-------------------------------- | :-------------------------------- | :---------------- | | Net Sales | 2,716,000 | 2,440,000 | 276,000 | 4,709,000 | 4,866,000 | (157,000) | | Cost of Goods Sold | 1,762,000 | 2,116,000 | (354,000) | 3,255,000 | 4,040,000 | (785,000) | | Gross Profit | 954,000 | 324,000 | 630,000 | 1,454,000 | 826,000 | 628,000 | | Loss from Operations | (782,000) | (6,154,000) | 5,372,000 | (3,592,000) | (8,441,000) | 4,849,000 | | Net Loss | (809,000) | (6,119,000) | 5,310,000 | (10,103,000) | (8,486,000) | (1,617,000) | | Net Loss Available to Common Shareholders | (585,000) | (6,119,000) | 5,534,000 | (9,776,000) | (8,486,000) | (1,290,000) | | Basic and Diluted EPS | (0.24) | (190.68) | 190.44 | (4.40) | (264.44) | 260.04 | - The significant improvement in net loss for the three months ended June 30, 2025, was primarily driven by a decrease in operating lease impairment expense (from $3,878,000 to $0)10130 - The six-month net loss increased due to a $6,468,000 change in fair value of warrant liability in 2025, which was not present in 20241077 Condensed Consolidated Statements of Stockholders' Equity Shareholder's equity transitioned from a deficit of $(10.521) million at December 31, 2024, to a positive $2.810 million at June 30, 2025. This improvement was largely due to the exercise of Series B warrants, which resulted in $15.214 million in additional paid-in capital, and the reclassification of Series A warrants to equity, adding $7.857 million Condensed Consolidated Statements of Stockholders' Equity (USD) | Metric | Dec 31, 2024 (USD) | Jun 30, 2025 (USD) | Change (USD) | | :-------------------------------- | :----------------- | :----------------- | :------------- | | Total Algorhythm Holdings Shareholders' Equity (Deficit) | (10,521,000) | 2,810,000 | 13,331,000 | | Common Stock Shares Outstanding | 470,825 | 2,514,571 | 2,043,746 | | Additional Paid-in Capital | 39,682,000 | 63,854,000 | 24,172,000 | | Accumulated Deficit | (49,172,000) | (58,948,000) | (9,776,000) | - Exercise of Series B warrants contributed $15,214,000 to additional paid-in capital14 - Reclassification of Series A warrants to equity added $7,857,000 to additional paid-in capital14 - Common stock shares outstanding increased significantly from 470,825 to 2,514,571, partly due to the exercise of Series B warrants and the acquisition of SMCB14 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities remained relatively stable at approximately $(5.4) million for the six months ended June 30, 2025 and 2024. However, net cash used in investing activities significantly increased to $(1.359) million in 2025 from $(6,000) in 2024, primarily due to share repurchases and advances to SMCB. Net cash provided by financing activities improved to $379,000 in 2025 from a net use of $(42,000) in 20
Algorhythm Holdings Inc.(RIME) - 2025 Q2 - Quarterly Report