RIME

Thank you, and good morning, everyone. Welcome to Algorhythm Holdings' first quarter 2026 earnings conference call. With me on today's call are Gary Atkinson, the company's Chief Executive Officer, and Alex Andre, the company's Chief Financial Officer and General Counsel. Before we begin, I would like to remind everyone that the remarks made on this call may contain forward-looking statements within the meanings of the Federal Securities Law. Forward-looking statements include statements regarding our expected future financial performance, the growth of our SemiCab business, our customer pipeline, our annualized revenue run rate, our Apex SaaS platform, our liquidity and capital resources, and our outlook for the remainder of 2026. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

For a discussion of these risks, please refer to Algorhythm Holdings' annual report on Form 10-K for the year ended December 31st, 2025, and our quarterly report on Form 10-Q for the quarter ended March 31st, 2026, both filed with the Securities and Exchange Commission. Gentlemen, you may begin.

Thank you. Good morning, everybody. We appreciate you joining us today. The first quarter of 2026 was an exciting first three months for our company. We are operating at a moment when the global logistics industry is starting to fully grasp what we are building, which is an orchestration layer for enterprise shippers and logistics service providers to improve their truck utilization through artificial intelligence and network optimization. The conversations we are having with shippers, logistics service providers, and analysts have shifted meaningfully over the past several quarters. That shift has accelerated our business development cycle and opened doors to new customers and compelling new partnerships. Before walking through the quarter, I would like to restate the core problem that SemiCab is solving. This is a message that we intend to deliver consistently because it is the foundation of everything we are doing.

First, the global trucking transportation market is enormous, estimated at approximately $3 trillion per year and growing. Second, the industry remains massively inefficient. On average, roughly one out of every three miles driven by a truck is empty. These empty miles cost shippers and carriers hundreds of billions of dollars annually, in addition to the hidden costs of unnecessary congestion, wasted fuel, and avoidable carbon emissions. Third, SemiCab is uniquely positioned to address this problem. We are one of the first freight tech platforms to implement a multi-enterprise collaborative optimization model directly into the core of our platform. Our optimization engine is designed natively to continuously seek to optimize every load that we process, identifying multi-stop round trips and assigning them to one truck in order to reduce empty miles. Finally, we're seeing the proof.

In real-world case studies in India, we have demonstrated the ability to reduce empty miles by up to 70%. Put simply, our AI-powered technology addresses a $3 trillion global industry, we believe it can eliminate a meaningful portion of the empty mile inefficiency that costs the industry hundreds of billions of dollars every year. Our model is disruptive, in a way that creates a benefit for every participant. Shippers save money, carrier fleets become more efficient and more profitable, consumers ultimately avoid the pass-through cost of empty miles. For these reasons, I firmly believe that we are at the forefront of the next step change in freight tech. That is freight as an orchestrated network. With that backdrop, let me turn to the quarter itself.

We are off to a strong start to the year with the first quarter delivering tangible progress, which resulted in a record quarter as a pure-play AI logistics company. We drove improvements across 3 areas. 1, we achieved over 70% sequential growth in revenue quarter-over-quarter, a materially strengthened balance sheet, and an expanding customer base that we believe will drive our growth through the remainder of this year and beyond. Behind our first quarter numbers is a customer base that continues to expand. During the first quarter, we delivered a total of 5,716 loads across 14 customers and grew our dedicated truck fleet by 30% from December through March. We started 2026 with some of the largest shippers in India, Procter & Gamble, Unilever, Kellanova, and Asian Paints.

During the quarter, we added beloved brands like Coca-Cola India and MTR Foods as new customers of our managed services in India, alongside a deepening roster of shippers that includes Marico and Bajaj Electricals. In January, we announced a significant expansion of our master service agreement with Apollo Tyres, the second-largest tire manufacturer in India and a top 10 global player in the tire industry. We anticipate further customer activity over the balance of the year, and we look forward to updating you as these announcements are made. On the capital market side, in February of this year, we closed a $9.5 million secured prepaid purchase financing to support the continued growth of SemiCab. We also fully repaid two prior prepaid purchases and most of a third prior prepaid purchase with our capital provider during the quarter.

These actions, combined with the equity issued in connection with these facilities, are the principal drivers of the improvement in our cash positions and our stockholders' equity. We will continue to evaluate financing and capital allocation choices carefully, with the goal of supporting the growth of the business while remaining mindful of dilution and cost of capital. One final point before I turn the call over to Alex. I want to address one item that I know some of you have noted in our 10-Q and in a recent 8-K filing. Last May of 2025, as part of the purchase price consideration for the acquisition of SemiCab India, we issued a promissory note to SemiCab, Inc., the seller. In recently filed reports, we noted that we did not make the initial $1.5 million payment that was due earlier this month.

I want to be clear on two points, because I do not want there to be any ambiguity about how we're thinking about this. First, this is not a liquidity issue. We ended the quarter with $10.9 million of cash on our balance sheet and had almost $9.4 million of cash on hand as of May 12th. We had the financial capacity to repay this note on May 2nd if we elected to do so. We have chosen instead not to redeploy that working capital towards debt repayment at this time because we believe that capital is better, more productively invested in scaling the SemiCab business through expanding our managed services footprint in India and supporting the rollout of our Apex SaaS platform. This was a deliberate capital allocation decision, not a forced one.

Second, we are in active and constructive dialogue with the note holder. We have received a 45-day forbearance, and during that period we are working to restructure the payment schedule under the note in a way that we believe will be workable for both parties and will better align the notes repayment timeline with our operating priorities and capital plan. We will provide further disclosure on the outcomes of those discussions through our future SEC filings. This is a balance sheet item that we are actively managing and we do not view it as a material impediment to the business. I want to address this head on so there's no question about where the company stands, why we made the decision, and the path that we are pursuing to resolve.

With that said, I'd like now to turn the call over to Alex Andre, our CFO, to walk through the first quarter financials. Go ahead, Alex.

Thank you, Gary. Hello, everyone. The quarterly report we filed with the SEC earlier this morning presented our financial results for the 3 months ended March 31, 2026 and 2025. Our financial results were heavily impacted by 2 major transactions that we completed during 2025. On May 2, we acquired SMCB Solutions Private Limited, which is our SemiCab India business, which owns and operates the entire India business segment. The financial results of SMCB are reflected in our financial statements for the 1st quarter of 2026, are not reflected in our financial results for the 1st quarter of 2025, as we had not yet acquired the company at that time. On August 1, we sold our legacy consumer electronics business.

Under applicable GAAP provisions, we reflected all financial results attributed to the consumer electronics business as discontinued operations in our financial statements. As a result, our balance sheet income statement and statement of cash flows only reflect the financial results of our continuing operations, including the operations of SemiCab. The financial results of the consumer electronics business for all periods reported in our financial statements are reflected in select items referencing discontinued operations. Moving on to our financial results for the first quarter of 2026. Net sales for the quarter increased 1,850% to $2.4 million from $123,000 for the first quarter of 2025, primarily due to the acquisition of SemiCab's Indian subsidiary, SMCB, on May second of last year.

SemiCab's legacy U.S. business was responsible for $123,000 in revenue that we generated during the first quarter of 2025. Net sales increased 71% sequentially from $1.4 million for the 3 months ended December 31, 2025. The increase in quarter-over-quarter net sales was due to increased sales generated by SMCB. We recently announced that SemiCab's annualized revenue run rate had increased to more than $12 million during the first quarter of 2026. During the remainder of this year, we expect our revenue to continue to increase, with SemiCab's annualized revenue run rate expected to increase to between $15 million and $20 million by the end of 2026.

This will be largely attributable to growth in our SemiCab India managed services business, but will also reflect some revenue that we expect to begin generating in the U.S. and Europe from SemiCab's new Apex SaaS business that we announced this past fall. Gary will discuss our SaaS business later in this call. Gross loss for the first quarter of 2026 was $680,000, compared to $6,000 for the first quarter of 2025. Gross loss is a function of the revenue that SemiCab generates from the managed services that it provides in India, and the freight handling and servicing costs that comprise its cost of sales that it incurs in connection with the provision of those services.

Under the managed services model, SemiCab pays for access to trucks and generates revenue by using those trucks to complete shipments for its customers. It enters into contracts for access to trucks when it enters into new territories in India, then begins generating revenue in these territories as it acquires customers there and is awarded more routes. It takes time for SemiCab to acquire customers and expand its routes to fully utilize the trucks that it has under contract. During this time, SemiCab incurs costs for the trucks that it has under contract while its revenue scales more gradually as it begins to acquire customers. Consequently, gross margins are negative.

As it obtains customers in these territories and is awarded more routes from its customers, SemiCab more fully utilizes the trucks it has under contract. As the truck utilization rate increases, the greater amount of revenue is generated by the trucks, spreading a larger revenue base over the relatively same cost for the trucks it is using in the territories. As the network matures in each region and the truck utilization rate improves, the growth in revenue begins to outpace the increases in trucking costs. This drives a sharp improvement in gross margins. We view this initial ramp-up period as a necessary investment in long-term scale and profitability.

We expect gross loss as a percentage of revenue to decrease over the next 12 months as the growth in revenue that SemiCab generates under contracts with new customers and expanded contracts with existing customers exceeds the increase in cost of sales that it incurs as it enters into these contracts for access to additional trucks. Operating expenses increased $2.6 million to $3.7 million for the first quarter of 2026, from $1.1 million for the first quarter of 2025. The increase was due primarily to increases in stock-based compensation expense and operating expenses that we began incurring for our SemiCab business after we acquired SMCB in May of last year.

While we expect operating expenses associated with the growth and development of our SemiCab business to increase over the next 12 months, we expect total operating expenses to decrease as we incur less stock-based compensation expense and other operating expenses. Other expenses consist primarily of the loss on the change in fair value of warrants that we incurred in connection with the public offering of securities that we completed on December 6, 2024, and interest expense that we incurred in connection with other financing transactions that we have completed. Other expenses decreased $5.4 million to $1 million for the first quarter of 2026, from $6.5 million for the first quarter of 2025.

The decrease was due primarily to the loss of $6.5 million on the change in fair value of warrants that we incurred during the 3-month period ending March 31, 2025, in connection with the public offering of securities that we completed on December 6, 2024, partially offset by an increase of $1 million related to interest expense, including amortization of deferred debt costs incurred in connection with our other financing transactions, that we incurred during the 3-month period ending December 31, 2026. We expect other expenses to remain at similar levels over the next 12 months as we continue to incur interest expense in connection with the financing transactions that we have completed.

Net loss from continuing operations decreased $2.1 million to $5.4 million for the first quarter of 2026, from $7.5 million for the first quarter of 2025. The most significant contributor to the decrease in the loss from continuing operations was a decrease of $6.5 million for a non-cash charge for changes in the fair value of warrants liability, partially offset by increases in operating expenses that I just described. We expect the increases in projected revenue to help boost our bottom line, but expect our bottom line to be negatively impacted by increases in operating expenses associated with the growth and development of SemiCab. Finally, we are pleased to report that our balance sheet has strengthened significantly during the first quarter of 2026.

We had cash on hand of $10.9 million at March 31, 2026, which is up from $6.1 million at December 31, 2025. Had almost $9.4 million of cash on hand as of May 2, putting us in a strong cash position to support the growth and development of our business for the remainder of 2026. In addition, we returned to positive stockholders' equity of $3.2 million from a deficit of $1.9 million at the end of 2025, representing an increase of approximately $5 million, which exceeds the $2.5 million threshold required by Nasdaq's continued listing standards.

We intend to inform Nasdaq that our stockholders' equity now exceeds the $2.5 million threshold required by their continued listing standards. That concludes my overview of financial results for the first quarter of 2026. Gary?

Thank you, Alex. Before we open up the call to questions, I just wanna spend a moment on Apex, our software-as-a-service platform. Apex brings SemiCab's proven AI-driven collaborative logistics technology to third-party logistics providers and multi-enterprise shippers in the U.S. and other international markets. It is an asset-light recurring revenue model. It targets the U.S. full truckload market that exceeds $450 billion a year. It's designed to enhance, not replace, the transportation management systems that our customers already run. It is important to note that it is not designed to be a digital freight brokerage service. I wanna spend a moment on the timing of our progress in the U.S. because I know this is a question that we hear regularly from our shareholders, and I think it deserves a direct answer. Everyone is eager to see us announce deals here in the U.S.

While I understand there might be a frustration over the perceived lack of progress here in the U.S., I feel strongly that we are making real progress. Our U.S. pipeline is expanding, and we are currently in active sales cycles with a number of some of the largest shippers and logistics service providers in the world. The feedback that we are receiving from these prospective customers on the Apex platform has been highly positive. They recognize the value proposition, they can see how the technology fits into their existing operation, and the conversations are progressing. That said, I do wanna set realistic expectations on timing.

Enterprise sales cycles with Fortune 500 shippers and the largest global logistics service providers are, by their very nature, long. These are sophisticated organizations with multiple stakeholders, internal evaluation processes, technical review, varied procurement cycles, and pilot design phases that just take time to work through. That is the reality of selling enterprise software into this customer base. It's not just unique to us. What I can tell you is that we are advancing through these cycles. The dialogue is constructive. We remain optimistic about our ability to convert our pipeline into signed US pilot contracts. When we have specific US customer wins to announce, we will announce them through our normal investor relations channels. We have a lot of work ahead of us. We are confident in our strategy, in our technology platform, and in the team that we are building to execute this plan.

I wanna thank all of our employees, our customers, our partners, and all of our shareholders for your continued support. With that said, operator, please, I'd like to now open it up for questions.

At this time, we will open up the question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad, and you'll be placed into the queue in the order received. You may remove yourself from the queue at any time by pressing pound and 1. Once again, to ask a question, please press star and 1 on your phone now. Once again, to ask a question, please press star and 1 on your phone now. At this time, I have no questions. I'll turn the program back to your presenters for some closing remarks.

Okay. Well, thank you, everybody. I appreciate everyone's time in joining us today and having continued interest in Algorhythm Holdings. We will look forward to updating you on our progress on our next scheduled earnings call. I'd like to thank everybody, and have a great day. Thank you.

Thank you. This does conclude today's Algorhythm Holdings first quarter earnings call. Thank you for your participation. You may disconnect at any time.

Good day, everyone, and welcome to the Algorhythm Holdings Full-Year 2025 Financial Results Earnings Call. My name is Elvis and I'll be your operator today. As a reminder, this call is being recorded. We have a brief safe harbor statement that will begin. This call contains forward-looking statements under U.S. Federal Securities Laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of these risks and uncertainties can be found in the reports filed with the Securities and Exchange Commission, including the cautionary statement provided in our current and periodic filings. Now, I'll turn the call over to your host, Gary Atkinson, company CEO. Please go ahead, Gary.

Thank you. Good morning, ladies and gentlemen, and thank you for joining our 2025 Year-End Earnings Call. My name is Gary Atkinson, CEO of Algorhythm Holdings, and I'm joined this morning by our CFO and General Counsel, Alex Andre. We're excited to share the momentum behind SemiCab, our AI-powered logistics platform, and the significant traction that we've gained this year. Over the past six weeks, we've seen an extraordinary surge in attention, both from the media and from within the logistics industry, all around our technology and its potential to solve one of freight's most persistent and costly problems today, which is empty miles. This wave of exposure has accelerated our commercial sales pipeline, attracted industry veterans to our company, and expanded our reach to key enterprise decision-makers at a scale that we had never anticipated.

Before diving into updates, I want to briefly reframe the core problem that we've been setting out to solve and why we believe SemiCab is positioned to lead the next wave in freight technology. Firstly, the global truckload market is the backbone of the world's economy. It is estimated to be a $3 trillion a year industry. However, it's still very deeply inefficient. Today, roughly one in every 3 mi that a truck drives is driven empty, resulting in close to $1 trillion in avoidable waste and inefficiency every year. The SemiCab platform is purpose-built to address this problem. Our collaborative AI platform continuously optimizes freight movement across multiple enterprises using our core planning, predicting, and execution engine to build continuous movements, or as we call round trips, to reduce waste. Finally, we've been seeing the results.

In a real-world production environment, we've shown that we can reduce empty miles by more than 70%, and we have the capability to handle 4x the freight volume without adding any additional headcount when compared to traditional freight brokers. Put simply, we're building a platform that can reshape how $3 trillion of freight flows globally, eliminating up to $700 billion in inefficiency. It's very rare to find a solution that simultaneously helps shippers save money, improves fleet utilization for carriers, and can reduce carbon emission for the environment. This is the kind of systemic change that SemiCab can enable. I believe we're on the verge of a larger shift that is starting to take place. A movement towards freight as an orchestrated network, as opposed to the current environment of freight as a series of independent transactions.

I will talk briefly about some of the growth and some of the full-year highlights and then turn the call over to Alex, who will then discuss the financial results. In 2025, we secured four new Fortune 500 clients in India and converted five pilot programs into multi-million dollar contract expansions. That momentum has pushed our annualized revenue run rate to nearly $10 million by year-end, and it is already meaningfully higher in the first quarter of 2026. In addition to that, during the first quarter of 2026, we have already achieved two new customers, MTR Foods and Coca-Cola India, plus an additional contract expansion in India. To date, every single one of our pilot customers that has joined our network has come back to us looking for an expansion. Whether it's a geographic expansion through more lanes or more volume.

These expansions are driven by real, recurring demand from globally recognized shippers. The shift from pilot to scale is accelerating, and we expect this trend to continue. With that, I'll now turn the call over to Alex, who will now walk you through some of the results for the 2025 year. Go ahead, Alex.

Thank you, Gary. Hello, everyone. The annual report that we filed with the SEC earlier this morning presented our financial results for the years ended December 31st, 2025 and 2024. Our 2025 financial results were heavily impacted by two major transactions that we completed this year. First, on May 2nd, we acquired SMCB Solutions Private Limited, which owns and operates our SemiCab India business segment. The financial results of SMCB are reflected in our financial statements for the period of May 2nd, 2025 through December 31st, 2025. Second, on August 1st, we sold our legacy consumer electronics business. Under applicable GAAP provisions, we reflected all financial results attributed to the consumer electronics business as discontinued operations in our financial statements.

As a result, our balance sheet, income statement, and statement of cash flows only reflect the financial results of our continuing operations, including the operations of SemiCab. The financial results of the consumer electronics business for all periods reported in our financial statements are reflected in select line items referencing discontinued operations. Moving on to our 2025 financial results. Sales for the year ended 2025 increased 1,370% to $4.4 million from $300,000 last year, primarily due to the acquisition of SemiCab's Indian subsidiary, SMCB, on May 2nd. During the eight months that we owned it during 2025, SMCB—SemiCab India delivered $4.4 million of revenue. SemiCab's legacy U.S. business was responsible for $300,000 of revenue that we generated during 2024.

We've recently announced that SemiCab's annualized revenue run rate had increased to almost $10 million during December 2025. During the next 12 months, we expect our revenue to increase substantially with SemiCab's annualized revenue run rate expected to increase to between $15 million and $20 million by the end of 2026. This will be largely attributable to growth in our SemiCab India managed services business, but will also reflect some revenue that we expect to begin generating from SemiCab's new SaaS business that we announced this past fall. Gary will discuss each of these business segments further later during this call. Gross loss for 2025 was $1.3 million, compared to $194,000 last year.

Gross loss is a function of the revenue that SemiCab generates from the managed services that it provides in India, and the freight handling and servicing costs that comprise its cost of sales that it incurs in connection with the provision of those services. Under the managed services model, SemiCab pays for access to trucks and generates revenue by using these trucks to complete shipments for its customers. It enters into contracts for access to trucks when it enters new territories in India, then begins generating revenue in these territories as it acquires customers there and is awarded more routes. It takes time for SemiCab to acquire customers and expand its routes to fully utilize trucks that it has under contract. During this time, SemiCab incurs costs for the trucks that it has under contract, while its revenue scales more gradually as it begins to acquire customers.

Consequently, gross margins are negative. As it obtains customers in these territories and is awarded more routes from its customers, SemiCab more fully utilizes the trucks it has under contract. As the truck utilization rate increases, a greater amount of revenue is generated by the trucks, spreading a larger revenue base over the relatively same cost of the trucks it is using in these territories. As the network matures in each region and the truck utilization rate improves, the growth in revenue begins to outpace the increases in trucking costs. This drives a sharp improvement in gross margins. We view this initial ramp-up period as a necessary investment in long-term scale and profitability.

We expect gross loss as a percentage of revenue to decrease over the next 12 months as the growth in revenue that SemiCab generates from obtaining new customers and routes exceeds the increase in cost of sales that it incurs as it enters into contracts for access to additional trucks. Operating expenses for 2025 decreased almost 20% to $6.6 million from $8.2 million last year. The decrease was due primarily to a decrease of $3.6 million for impairment of goodwill that we recorded during 2024, partially offset by an increase of $2 million in general and administrative expenses. We expect general and administrative expenses to increase over the next 12 months as we continue to invest in the growth and development of our SemiCab business.

Net loss from continuing operations for 2025 decreased $3.7 million to $15.2 million from $18.9 million last year. Of these amounts, $6.5 million of our 2025 net loss and $8.9 million of our 2024 net loss consisted of 1x non-cash charges for warrants that we previously issued in capital-raising transactions. The decrease in net loss from continuing operations was due primarily to an increase of $5.2 million for cost of sales, partially offset by an increase of $4.1 million for revenue and a decrease in other expenses.

We expect our net loss from continuing operations to decrease over the next 12 months due to the previously described increase in revenue that we anticipate generating and our expectation that we will not incur any future losses related to warrant issuances. However, we expect this decrease to be partially offset by increases in the expenses we will incur in connection with the growth and development of our SemiCab business. Finally, we are pleased to report that our balance sheet has strengthened significantly over the past 12 months. We had cash on hand of $6.1 million at December 31st, 2025, and had $10.9 million of cash on hand as of March 25th, 2026, putting us in a strong cash position to support the growth and development of our business for the remainder of 2026.

Additionally, we reduced our liabilities by almost 50% between December 31st, 2024 and December 31st, 2025 through our reduction of our outstanding warrant liabilities. This reduction in our liabilities substantially improved our ratio of liabilities to total assets on our balance sheet. That concludes my overview of our 2025 financial results. Gary?

Thank you, Alex. Before I open it up for questions, I want to draw a distinction between our two complementary business models. First, we have our managed services business in India, and second, we have our recently announced Apex platform, which is our global SaaS offering. Our managed services business in India, as Alex mentioned, is generating all of our revenue today. There, we work with the India business segments of notable enterprise shippers such as Procter & Gamble, Unilever, Kellogg's, and recently announced Coca-Cola. In this managed services model, we don't own any of the trucks or employ any of the drivers. We act as a virtual carrier, sourcing trucks and directing their continuous movements through our platform. Contrast that with the new SemiCab Apex platform. We're bringing the same multi-enterprise network model directly to shippers and to 3PLs worldwide through a scalable technology-first subscription model.

Apex differs from managed services in the sense that it is high margin and asset light. It delivers recurring SaaS revenue with strong gross margins. It's also very easily globally deployable. It's relevant wherever empty miles are a problem, which is everywhere. It's also very easy to implement, and this is an extremely important point. We are not a TMS system. The SemiCab platform sits adjacent to existing TMS systems and can be integrated simply without a heavy IT lift. I believe Apex represents our future. It's a platform capable of powering millions of loads while saving shippers' money, keeping carriers' trucks fully utilized, and reducing unnecessary fuel consumption and reducing CO2 emission. We're laying the groundwork to generate recurring platform fees on every optimized truck movement across every geography. We're excited for what lies ahead, and we're grateful for all of your continued support.

With that now, I'd like to turn the call over for any questions.

If you'd like to ask a question, please press star one on your phone now, and you'll be placed into the queue in the order received. Again, everyone, star one for a question, and we'll pause briefly to form our queue. Our first question today comes from Theodore O'Neill of Litchfield Hills Research. Please go ahead.

Okay, thanks very much. Gary, on the SaaS business, can you give us some high-level overview of what the pipeline into that looks like, inquiries, and if you're building a dedicated sales team to support that product?

Yeah. Thanks, Theodore. I appreciate that question. You know, clearly, with all of the recent media attention that we've received over the last month and a half or so, it's been really transformative for the business. Not just from a visibility perspective, but we're now talking to some of the largest logistics service providers in the world. I mean, these are some of everyday household brands that are delivering packages to everybody's front door. Speaking with key C-level decision-makers that I think, quite frankly, you know, probably wouldn't have been talking to us months ago. The attention has been profound to what it is able to do for our SemiCab Apex platform, and that's really what makes me the most excited. We have a very strong pipeline now of commercial sales opportunities with some of these largest LSPs.

Now, that being said, you know, these guys, they don't move quickly, right? These are not the types of companies that will be turning around and jumping into commercial agreements that quickly. These are sort of medium-term opportunities that are in the pipeline. Those are the types of deals and agreements that I think will be just transformative, particularly as we're talking about the Apex SaaS platform with all of these guys. You know, the margin profile, I think that was part of your question, is definitely materially different from what we see in managed services. You know, with Apex, we're looking at closer to the traditional 90% SaaS margin, and it can scale very quickly. Hopefully that answered your question, Theodore.

What about a dedicated sales team for this?

Yeah. That's the other advantage that we've seen here over the last few weeks, is we've actually had quite a strong inbound flow of communication from some industry executives that had seen all of the media attention. You know, these are guys that have been inside the industry long enough where they've been. You know, they've seen how inefficient this empty miles problem is. I know a lot of different technology companies over the last 10-15 years, they've been trying to solve this problem. I think for a lot of these guys, it's been sort of a passion project.

When they saw what we've been doing and having conversations with Ajesh and Vivek, the founder and co-founder of SemiCab, and had a chance to do a demo of the platform, we've been able to attract some really high-caliber talent to the company to help lead up some of the sales efforts. Again, these things take time, but we're very, very optimistic about where the Apex platform can go here in the near-term future.

Okay. My other question, the question I have for you is on the restricted cash, what are the restrictions there, and how do you access that?

Yeah. Do you wanna tackle that, Alex?

Sure. The restricted cash consists of some of the cash that we received from Streeterville, and it's being held in a reserve account until such time as they are able to purchase securities from us. As that occurs, these funds get released to us. They have been releasing those funds to us over time since we first engaged in that transaction back in November.

Okay, thanks very much.

Sure.

Thanks, Theodore.

From Chardan Capital Markets, we have Jim McIlree.

Thank you. Good morning. You mentioned that it'll take some time to roll out Apex, and I'm curious about two things. One, if you can put a range around how much time you think it'll take for customers to roll it out. Secondly, maybe more importantly, what are the obstacles or objections that the customers have? Do they require to test it for some short or extended period of time? Can it only work on certain vehicles? Are they concerned about service and support? Are they concerned about your balance sheet? Just general things like that. What are the customers, the pipeline customers worried about before they-

Yeah. Yeah, no, that's a great question. I appreciate that, Jim. I think I wanna clarify something because I know that there's been a bit of a misconception too. In terms of the Apex platform, it's already rolled out. It's already developed. It's the product itself is available today for customers to utilize. As I mentioned in my prepared remarks earlier, it's not a TMS system, so we're not talking about a long, multi-month, expensive integration cycle to get the platform up and working. It's a relatively light, TMS-adjacent platform that's cloud-based that customers can basically connect to through some simple APIs. This is not a technology restraint in terms of having customers use it.

It's really more of a commercial agreement cycle that has to happen. I will say that we've had strong engagement and strong response. I think, you know, part of what our sales cycle looks like is when we engage with prospective customers, we ask them for real historical shipping data, you know, whether it's six months or a year of data. Then we basically take that data, and we have our SemiCab AI optimizer engine that just ingests all of that load data into it. Then it's able to spit out and say, "Look, if this customer had given us all of their shipping shipping loads over that period of time, we could have, you know, saved X million number of miles.

We could have driven down their freight spend by, you know, X millions of dollars, over that period." We basically bundle all of that data back up, and we give it back to the customer. That's really been, I think, a very profound selling tactic that, it's hard. You know, it's hard for a shipper to ignore those types of cost savings that could be, accessible to them without any loss of service. You know, it's not like they would see any, degradation in service in terms of pickups or deliveries. It's the same, quality of service that they would be used to seeing, but just done more efficiently. It's been, I think, I'm not gonna say an easy sell, but it's becoming easier.

One thing I will say, though, that has been, I think, probably the best takeaway from all of this media attention is, you know, I remember I went to a conference back in January. It was a large logistics conference, and we were there pitching and doing demos of our SemiCab platform. You know, when we would engage with customers and we'd start talking about multi-network or multi-enterprise collaborative shipping networks, you know, I could just see their eyes glaze over. You know, it was almost dismissed as being too theoretical.

I think now what we're seeing after all the recent media attention is people are really now when people within industry are now looking at our platform and saying, "Yes, like, we think that the multi-enterprise network is kind of the next key change. It's the next step up in where freight technology is going." There's kind of been a broader kind of acceptance and adoption around what we're doing, whereas before it was just perceived as maybe being too theoretical. It certainly helped just the industry-wide perception as to what we're doing. Hopefully that answers some of your questions, Jim.

Yes, it does. Can I just press you a little bit on timing in terms of what you think the customers might require for their testing before they roll out? Because I'm assuming they're gonna test it first. They would test it for a month, six months, or is that discussion taking place yet?

Well, yeah. I mean, I think it's hard to give a broad. Like, it's not a one-size-fits-all response. I think every customer, depending on how large or small they are, will have different appetites. I mean, certainly when you're dealing with, let's say, a top five logistics service provider in the world that's multi-billions of dollar market cap, they're gonna be a little bit more cautious. They're gonna take a little bit more time. They're gonna test. The nice thing about our platform is we can enable sort of this concept of a private cloud network and a public cloud network. If we're dealing with a large enterprise shipper that has their own dedicated fleet, where they own their own assets, we can basically open up a private cloud for them.

They can put all of their own assets on that network, and it's completely private. You know, it's not open to what anybody else can see. What we've seen there is that you'd be shocked, or at least I've been shocked, at just how much inefficiency can happen within a large Fortune 500 shipper that's moving consumer goods all over the country. There's a tremendous amount of opportunities to make them more efficient. It's really hard for me to give you kind of an exact timeline just because we don't have anybody that's sitting there with, you know, pen in hand, ready to sign contracts today. There are many conversations that are ongoing.

They're all, I think, very optimistic, and I think every customer is going to have a different approach as to how quickly they want to jump in. It's just hard to give a date.

Okay. Thank you. Appreciate it.

Thanks, Jim.

Next, we'll hear from Brian Kinstlinger.

Gary, good morning.

Hey, morning, Brian.

Hey, you've really addressed my initial question. Just I guess sort of a follow-up on a few things you said. Obviously, there's been significant media attention, which is great, and you've also seen the dramatic increase in your cash position. As you think about the next 12-24 months or so, you know, what are maybe one or two key drivers that you believe could have the biggest impact on future revenue growth?

Well, yeah, that's a great question, Brian. I appreciate that. I think obviously a lot of the questions that have touched on here is sort of the SaaS model and how quickly we can turn on that high-margin business. I think internally, that's the thing that I know we're all excited about, that the SemiCab team is excited about. That's where we're investing into sales channels and pipelines and hiring people to support those types of SaaS opportunities and partnerships. That's the one thing that I think I would encourage everybody to be looking out for, and that's where we're going to be driving most of our attention is let's start landing some SaaS contracts. You know, that's what we're trying to do here.

That's going to be what I believe to be transformative to the financial profile of the business, right? I mean, that's recurring revenue, much higher multiples, and it's sticky. I believe that when a customer starts utilizing this, I mean, when we say to a customer we can reduce their empty miles by upwards of 70%, that's for anybody inside the industry like jaw-dropping type of numbers. I mean, we've seen it now where we've had some lanes where empty miles have been 10% or less. So when you take that type of technology and you get it into an enterprise customer that has huge scale, I mean, the amount of efficiency opportunities and savings is just really mind-blowing.

I think the platform has a lot of blue sky to capture all that. I think there's a tremendous amount of value that can get unlocked here. You know, we're still in the early stages. We're probably in the first or second inning. Again, I just think there's just a lot of excitement and enthusiasm around what this technology can unlock.

Excellent. That's helpful. Thank you for the question, and congrats.

Thanks, Brian.

That concludes our question and answer session. Gary, back over to you for any additional or closing comments.

Okay. Perfect. Well, again, I want to thank everybody for taking the time today to learn more about Algorhythm Holdings and doing a deeper dive into our 2025 year-end financial results. Also, particularly appreciate all the good questions today. We've just recently concluded our first quarter, ended March 31, and we'll be looking forward to sharing all of those results with you all next month. Take care, everybody. Thank you, and we'll talk again soon.

That concludes our meeting today. You may now disconnect.

Good day, everyone, and welcome to the Algorhythm Holdings Third Quarter 2025 Financial Results Earnings Call. My name is Elvis, and I'll be your operator today. As a reminder, this call is being recorded. We have a brief safe harbor statement, and then we'll get started. This call contains forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statement found in our current and periodic filings. Now I'll turn the call over to Gary Atkinson, company CEO. Please go ahead, Gary.

Thank you. Good morning, ladies and gentlemen. Thank you for joining our third quarter 2025 earnings call. My name is Gary Atkinson, company's CEO. I'm also joined this morning by Alex Andre, company's CFO and General Counsel. I appreciate you taking the time to hear about the progress we've made as Algorhythm continues on its growth as a leading AI-driven logistics technology company. This quarter was a major milestone for us. It was the first reporting period since we completed the sale of our legacy Singing Machine business and transition to a clean financial presentation reflecting only our core operations at SemiCab. This is the new Algorhythm, a lean, technology-first organization focused squarely on disrupting freight logistics through artificial intelligence and network optimization. Before diving into our recent progress, I want to restate the core problem that SemiCab is solving and why our conviction in this business continues to grow. First, the global truckload transportation market is massive. It has a total addressable market of approximately $3 trillion per year. Second, the industry remains massively inefficient. On average, one out of every 3 miles driven by a truck is empty. These empty miles cost shippers and carriers over $1 trillion annually, not to mention the hidden impacts of unnecessary road congestion, wasted fuel and avoidable CO2 emissions. Third, SemiCab is uniquely positioned to address this problem. We are one of the first freight technology platforms to embed our AI-driven collaborative optimization model directly into the core of our architecture. Our platform is designed by default, to continuously optimize every single load we process automatically, finding multilateral mattress to reduce empty miles. And finally, we're seeing the proof. It's working. In India, our real-world case studies show many examples of truck utilization rates improving to approximately 85%, outperforming industry average by more than 20 percentage points. If done at scale and with proper execution, we believe SemiCab can be an integral part of the infrastructure that coordinates all full truckload movements around the world. Alex will go into more detail shortly, but I want to call out several major achievements from the last few quarters. During the third quarter, revenue increased approximately 1,300% year-over-year, representing an annualized run rate of about $7 million. This year, we've added 4 new Fortune 500 clients in India, and we've converted 5 pilot programs into multimillion dollar contract expansions. Across all awarded expansions, we are now tracking toward approximately $10 million in annual contractual run rate. This is a forward-looking metric and dependent on continued access to trucks, but it is a strong indicator of the direction and scale that we're moving ahead with. We anticipate further customer activity before year-end, and we look forward to updating you as progress continues. With that, I will now turn the call over to Alex Andre, our CFO, who will walk through the third quarter financial results.

Thank you, Gary. Hello, everyone. The quarterly report that we will be filing with the SEC later today will present our financial results for the 3 and 9 months ended September 30, 2025 and '24. As Gary mentioned, we sold Singing Machine on August 1. Under applicable GAAP provisions, we reflected all financial results attributable to Singing Machine as discontinued operations in our financial statements. As a result, our balance sheet, income statement and statement of cash flows only reflect the financial results of our continuing operations, including the operations of SemiCab. Singing Machine's financial results for all periods reported in our financial statements are reflected in select line items referencing discontinued operations. Moving on to our third quarter financial results. Sales for the 3 months ended September 30, 2025, increased to $1.7 million from $100,000 last year, primarily due to the acquisition of SMCB Solutions Private Limited on May 2, 2025. SMCB, which owns our SemiCab business in India was responsible for $1.7 million of revenue that we achieved during the third quarter of 2025. SemiCab's legacy U.S. business was responsible for the $100,000 of revenue that we generated during the third quarter of 2024. We recently announced the SemiCab's annualized revenue run rate have tripled more than 7 million since January 2025. This growth was reflected in the revenue that we generated this quarter. We expect SemiCab to generate around $2 million during our fourth quarter. During the next 12 months, we expect revenue to increase substantially with SemiCab's annualized revenue run rate increasing to between $15 million and $20 million by the end of next year. This will be largely attributable to the growth in our SemiCab India business but will also reflect some revenue that we expect to generate from SemiCab's new U.S.-based SaaS business that we recently announced. Gary will discuss SemiCab's U.S. SaaS business later during this call. Gross loss for the 3 months ended September 30, 2025, increased to $351,000 from $32,000 last year, with gross margin percentage decreasing to negative 20% this quarter from negative 25% last year. Gross loss is a function of the revenue that SemiCab generates from the managed services that it provides in India and the freight handling and servicing costs that compromise its cost of sales that it incurs in connection with the provision of those services. SemiCab pays for access to trucks and generates revenue by using these trucks to complete shipments for its customers. SemiCab enters into contracts for access to trucks when it enters into new territories, then begins generating revenue in these territories as it acquires customers there. SemiCab does not fully utilize the trucks that it is paying for when it first enters new territories as it obtains customers in the territories and is awarded more routes from its customers, it will be able to more fully utilize the trucks it has under contract. This will result in the amount of revenue generated from the trucks going up, spreading a larger revenue base over the relatively small cost of the trucks it is using in the territories. We expect gross loss to decrease over the next 12 months as the growth in revenue that SemiCab generates from obtaining additional routes from its growing customer base exceeds the increase in the cost of sales that it will incur as it enters into contracts for access to additional trucks. Operating expenses for the 3 months ended September 30, 2025, decreased to $1.2 million from $1.8 million last year. The decrease was due primarily to cost reduction measures that we implemented during the past couple of quarters and a decrease in operating expenses that we incurred during the 3-month period ended September 30, 2024, in connection with our acquisition of the assets of SemiCab's U.S. business on July 3, 2024. We expect general and administrative expenses to increase over the next 12 months as we continue to invest in the growth and development of our SemiCab business. Net loss for the 3 months ended September 30, 2025, decreased to $1.8 million from $2.1 million last year. The decrease was due primarily to the cost reduction measures that we implemented during the past couple of quarters, and a decrease in operating expenses that we incurred during the 3-month period ended September 30, 2024, in connection with our acquisition of the assets of SemiCab's U.S. business on July 3, 2024. Net loss available to common stockholders is expected to remain at similar levels over the next 12 months. We expect cost reduction activities that we are engaged in to beneficially impact our net loss, but expect this to be offset by increases in the investment we will make in the growth and development of SemiCab. That concludes my overview of the third quarter financial results.

Perfect. Thank you, Alex. Before we open up the call to questions, I would like to close by highlighting a new initiative that we announced last week that we believe will meaningfully accelerate our growth and further transform our business. The launch of SemiCab Apex, our new SaaS platform for the U.S. and global markets. Apex is an important evolution of our go-to-market strategy and a major expansion of our business model. It offers a combination of high margins, rapid scalability and global adaptability delivered through cloud-based software that is frictionless for customers. Here are a few key reasons why we are so excited about Apex. Apex is a high-margin SaaS product. Because Apex is delivered entirely as software without any physical freight operations, it carries significantly higher gross margin. As adoption increases, we expect Apex to significantly improve our blended company margins and strengthen overall profitability. Apex scales quickly. Unlike our managed services business, Apex does not require access to trucking fleets to grow revenue. Apex can be deployed within any enterprise shippers business that manages their own dedicated fleet or Apex can be implemented with a 3PL warehouse or carrier network. Apex is also extremely easy to implement. We designed Apex to integrate into existing TMS or transportation management systems via commonly used APIs without requiring a major IT integration project. This dramatically reduces customer friction and speeds up time to market. Apex is globally deployable. Because we are solving a global inefficiency that is not dependent on region-specific physical operations, Apex can be deployed in the U.S., India, Europe, Middle East or any market around the world where shippers need better visibility, planning and optimization. I'll close on this note. Apex is the future of SemiCab. We're building toward a world where our platform powers millions of loads every day across tens of thousands of shippers globally, where we are positioned to generate recurring revenue and transaction fees on each and every one of these loads that is coming through the SemiCab platform. With that, I would now like to open the call for any questions.

[Operator Instructions] We have a question from [ Brian Tantalo ] an investor.

Congratulations on a great quarter. I appreciate the update. Just one quick, you talked about Apex, sounds extremely exciting. What -- can you just explain what the go-to-market strategy is? What we should be looking for as points of progress?

Yes, absolutely, Brian. Thanks for that question. I'm happy to talk more about Apex. I mean, again, we are very, very excited about this product launch, particularly in the U.S. So in terms of sort of the go-to-market strategy, we've identified 3 different verticals that we're going to be going after with the Apex product. So the first one that we touched on are enterprise shippers. So these would be fast-moving consumer goods companies, very similar in profile to the companies that we're servicing in India and basically, any enterprise customer that has its own dedicated fleet. So for example, let's say, customers like a Pepsi or a Coca-Cola or a Walmart or basically large clients that have 50% to 60% of their trucking is internally managed, they could deploy SemiCab Apex platform right sort of on top of their TMS system. And so it's a very -- we're not asking a customer to replace their entire TMS system. We're just asking them to add some API hooks that go into our cloud-based Apex platform to help optimize what they're already doing. So that's one distinct vertical. The other one we're looking at is essentially 3PL warehousing customers that offer freight brokerage services. They could be then utilizing the SemiCab Apex platform to offer new services to their existing customers. So it would sort of be like a white labeling of our platform where 3PL warehouses could advertise themselves as a 5PL service provider and basically white label our platform to their customers. So that's another way of generating revenue. And then finally, the last segment that we've identified is the carriers themselves. So if you're a large transporter with thousands of trucks, you could utilize SemiCab to help improve what you're currently already doing. And so that's sort of the 3 different verticals that we've identified, and we're going to be sort of growing our sales team over time as we progress our conversations with those different customer groups. So hopefully, that answers the question.

It was helpful. Congratulations again.

Next, we have Eric Nickerson of Third Century Partners.

I came on to the call just as you were finishing up your comments and opening up for questions. All I really want to ask is, is this call going to be -- is it going to be on the website so I can listen to it there?

Yes. This call is recorded. It will be available up on our website a little bit later today once the recording becomes available. And we can share it out with you, Eric.

Okay. Good. I'll do that. Just one other question. A moment ago, you said you're particularly excited about the United States. Is that to say that you think the U.S. market is going to be a better immediate place to attack than India? Did I hear you right?

Well, I mean, yes, so I don't want to -- I think the thing that I'm so excited about the U.S. and the Apex launch in particular is the margins on SaaS are typically 90% to 95% gross margins. So the ability to transform the financials of the company are just much more meaningful with the Apex launch and also the ability at which it can scale. Right now, I'd say, one of the sort of gating items on the growth in India is just access to trucks. Whereas here, with the Apex launch in the U.S. we're not limited at all by any physical access to really anything. It's pure software. It's cloud-based. It can scale as fast as a customer wants to scale and so there's no -- it's just a much easier to scale and deploy as opposed to India, which is not to say we're not excited about the growth in India. I mean we've got massive, massive growth opportunities in India, but it does require more of an operational lift just because you need to have access to trucks. You need a full team on site to manage. So they're both good businesses. We both think they complement each other well. It's just one can move a lot faster than the other.

Okay. Good. I won't bother you with the stuff, it will probably just make you repeat what you've already said. I'll listen to the call on the transcript...

[Operator Instructions] And we have no further questions at this time. Gary, I'll turn the program back over to you for any closing comments.

All right. Well, that concludes our prepared portion of the call today. I want to just thank everybody for taking the time to join us and we look forward to continuing to update everybody into the near-term future as we continue to scale the business, add clients, expand clients and continue to grow. So thank you again for all your support, and we'll be talking soon. Thank you.

That concludes our meeting today. Thank you for joining. You may now disconnect.