Algorhythm Holdings Reports Significant Decline in Financial Performance for Q1 2025

Algorhythm Holdings, Inc. reported a significant decline in financial performance for the three months ended March 31, 2025, with net sales of $1.993 million, down from $2.426 million in the same period last year. The decrease in revenue was attributed primarily to the loss of retail shelf space at two major customers. Gross profit remained relatively stable at $500,000, representing 25.1% of net sales, compared to $502,000 or 20.7% of net sales in the prior year. However, the company faced increased operating expenses, which rose to $3.310 million from $2.789 million, leading to a loss from operations of $2.810 million, compared to a loss of $2.287 million in the previous year.

The company's net loss available to common stockholders surged to $9.191 million, or $4.66 per share, compared to a loss of $2.367 million, or $73.76 per share, in the prior year. This substantial increase in net loss was largely driven by a one-time, non-cash charge of $6.468 million related to the change in fair value of warrants issued during a public offering in December 2024. The total assets of Algorhythm Holdings decreased to $10.461 million from $18.302 million at the end of the previous fiscal year.

In terms of strategic developments, Algorhythm Holdings completed a reverse stock split of 1-for-200 on February 10, 2025, and increased its authorized shares from 100 million to 800 million. The company also announced the acquisition of SMCB, an AI logistics business, for $1.75 million, which is expected to enhance its operational capabilities in the logistics sector. This acquisition aligns with the company's strategy to expand its AI logistics and distribution services, particularly in India.

Operationally, the company reported a decrease in customer engagement metrics, with a notable decline in sales of its Singing Machine karaoke products. The Singing Machine segment generated $1.870 million in revenue, while the SemiCab segment contributed $123,000. The company continues to face challenges related to tariffs on products manufactured in China, which are expected to negatively impact sales in the coming year. Despite these challenges, Algorhythm Holdings anticipates growth in its SemiCab business as it expands its customer base.

Looking ahead, Algorhythm Holdings expects net sales to decline in the short term due to the impact of tariffs but anticipates growth in its SemiCab business. The company aims to reduce operating expenses and improve profitability through various initiatives. However, it acknowledges the need for additional capital to fund operations and expansion efforts, with no current arrangements in place for future financing. The management remains cautious about the company's ability to continue as a going concern, given its recent history of operating losses and liquidity challenges.