Algorhythm Holdings Reports Decline in Financial Performance, Net Income Improvement in Q3 2024

As of September 30, 2024, Algorhythm Holdings, Inc. (formerly The Singing Machine Company, Inc.) reported a significant decline in financial performance compared to the previous fiscal period. Total current assets decreased to $14.4 million from $23.2 million at the end of 2023, while total assets fell to $19.6 million from $27.7 million. Total liabilities also decreased to $16.9 million from $20.1 million. However, the accumulated deficit increased to $(33.2 million) from $(25.9 million), and total shareholders' equity dropped to $2.7 million from $7.6 million.

In terms of revenue, net sales for the third quarter of 2024 were $10.6 million, down from $15.9 million in Q3 2023. For the nine months ended September 30, 2024, net sales totaled $15.5 million, a decrease from $21.9 million in the same period of the previous year. The decline in sales was primarily attributed to lower sell-through results with major retailers, particularly Walmart. Gross profit for Q3 2024 was $2.4 million, down from $3.7 million in Q3 2023, reflecting the decrease in net sales.

Despite the revenue decline, the company reported a net income of $1.2 million for Q3 2024, a significant improvement from a net income of $97,000 in Q3 2023. This was largely due to a gain of approximately $3.9 million recognized from the early termination of an operating lease. However, for the nine months ended September 30, 2024, the company reported a net loss of $(7.5 million), compared to a loss of $(5.3 million) in the same period of 2023.

Strategically, the company underwent a name change effective September 5, 2024, and changed its ticker symbol from "MICS" to "RIME" on September 8, 2024. Additionally, on July 3, 2024, Algorhythm completed an asset purchase from SemiCab, Inc., acquiring substantial assets and liabilities related to an AI-driven transportation platform, which included issuing shares and a membership interest in SemiCab LLC.

The company also faced challenges, including a civil action settlement related to a lease agreement, resulting in a $250,000 payment. Furthermore, management expressed substantial doubt about the company's ability to continue as a going concern, citing a history of recurring operating losses and insufficient funds to support planned operations for the next year. As of September 30, 2024, cash on hand was approximately $621,000, a decrease from $3.2 million a year earlier.