Good day, everyone, and welcome to Algorhythm Holdings First Quarter 2025 Financial Results Earnings Call. My name is Paul, and I will be your operator. As a reminder, today's call is being recorded. We have a brief safe harbor 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 included in our current and periodic filings. I would like to now turn the call over to Gary Atkinson, Company CEO.

Thank you. Good morning, ladies and gentlemen. I want to start off this morning by thanking everyone for taking the time to listen in and participate in our first quarter 2025 earnings call. My name is Gary Atkinson, CEO of Algorhythm Holdings. I also have on the call with me today, Alex Andre, our CFO and General Counsel. By way of quick agenda, Alex will be providing a comprehensive update on our financial results of operations for the first quarter. But before Alex provides his comments, I would like to take a few minutes to talk about our vision for the business and to recap some accomplishments so far year-to-date. I'm thrilled at the work the team has accomplished this past quarter, and I believe we are in one of the most important times in our company's history to date. As we recently announced, we closed the acquisition of SMCB Solutions Private Limited, also known as SemiCab India. As some of you may recall, back in July last year, we acquired SemiCab's U.S. operations, intellectual property and technology and also brought over their entire team to form SemiCab Holdings, LLC under our Algorhythm Holdings company structure. What became clear to us was that SemiCab's technology was compelling with great potential, but it was their India subsidiary and its unique position in the market that made this opportunity too good to pass up. In my view, the transaction for SemiCab India is one of the most exciting, impactful opportunities for the company and its shareholders today. The opportunity that we saw was straightforward. With explicit Indian government support, more than 35 of the world's largest multinational Fortune 1000 companies in the consumer packaged goods industry saw the benefit of working together in a collaborative environment to solve one common problem, and that is the massive freight inefficiencies in the Indian market. Together, they created a consortium whereby the entire group could benefit from one shared transportation network, where trucks moved goods with vastly better efficiency metrics than the industry norm. And as a group, they could all receive the benefits of better transportation costs. In India, this platform is known as the National Digital Freight Exchange, or the NDFE. A very key point here is the NDFE was built in close collaboration with SemiCab. In many ways, it was built specifically to take advantage of the AI technology that SemiCab has created. In fact, today, SemiCab is the exclusive technology provider to the NDFE. From a financial perspective, the NDFE presents a very large business opportunity. The total freight spend across the NDFE group is over US$1.4 billion annually. SemiCab has analyzed much of the underlying shipping data and has identified approximately $400 million in annual freight spend that is ideally suited for optimization. This is our initial addressable market. When we first acquired SemiCab's U.S. operations, we immediately began funding SemiCab India. We knew that they were onboarding new pilot shipping contracts, names like Unilever, Apollo Tire, and Marico; we knew they needed to gain access to a larger carrier fleet to serve these new and growing client opportunities. We chose to fund all of this while we navigated the process of acquiring SemiCab India as an Indian legal entity. While the process admittedly took longer than expected, it is now complete. This was by far our most critical accomplishment year-to-date. To summarize, during the transition period between July of last year and now, we have seen SemiCab’s U.S. and India sales grow almost five-fold. They have almost doubled their number of clients. We now serve three of the top ten and five of the top 50 largest consumer packaged goods companies in the world. We have supported early critical pilot programs with clients like Procter & Gamble and Asian Paints, ramping each program successfully. We have added new pilot programs with Unilever and Marico, among others. We have increased our fleet substantially with access now to over 500 trucks when we need it, and we now have the capacity to increase our business in India to over $20 million on an annualized revenue basis as quickly as needed. We are currently lining up an additional 1,000 trucks over the second half of this year in preparation for further expected client expansion in India. In short, we see SemiCab India at an early stage of a major inflection point. We look forward to sharing updates on this progress in the coming months. At this point, I'd like to now ask our CFO, Alex Andre, to walk everyone through the results of operations for the first quarter of 2025.

Thank you, Gary. Hello, everybody. As Gary mentioned, the financial periods that I'm going to cover today consist of the three-month periods ended March 31, 2025 and 2024. Please note that if you review our 10-Q and financial statements that we completed a 1-for-200 reverse stock split in February of 2025. And in accordance with GAAP, all of our numbers in that report and the financial statements reflect that reverse stock split. Sales decreased to $2 million during our first quarter of 2025 from $2.4 million during the first quarter of 2024, primarily due to lower sales of Singing Machine karaoke products. Sales of our karaoke products account for the majority of our revenue during the first quarter of 2025. Karaoke is a traditionally seasonal business. So, consistent with past years, our revenue was lower than what we typically generate during other periods. Sales were negatively affected by increased inflation over the past year and the fact that karaoke products are more of a discretionary buy. We are now facing a new challenge with the recent trade war, an increase in tariffs on goods imported from China, which is where all of our products are manufactured. As a result of these challenges, we expect total annual sales of our karaoke products to decrease over the next 12 months due to the effects of the tariffs on our business. However, we expect revenue generated from our SemiCab business to increase substantially over the next 12 months as we generate more business from our growing customer base. Gross profit stayed about the same for both periods at $500,000. While sales decreased, cost of goods sold decreased by a corresponding amount due to a corresponding decrease in production. Our gross margin improved from 21% to 25% due to a decrease in returns. Selling expenses increased to $760,000 for our first quarter of 2025 from $630,000 for the first quarter of 2024 due to an increase in online marketing and social media advertising campaigns that we engaged in. Our G&A expenses increased to $2.5 million during the first quarter of 2025 from $2.1 million for the first quarter of 2024 due primarily to $0.5 million in investments that we made in the development of our SemiCab business. Other expenses increased to $6.5 million from $25,000 last year due to an increase of $6.5 million for one-time non-cash losses associated with the change in fair value of the Class A and B warrants that we issued in the public offering of securities that we completed in December of 2024. The Series A and Series B warrants had features and contingencies that necessitated liability treatment rather than equity treatment. This resulted in us recording an $8.9 million loss on the issuance of warrants on our income statement during the fourth quarter of 2024 and a $16.6 million warrant liability on our balance sheet at December 31, 2024. Our stockholders’ equity was negatively impacted by this with the effect of the warrant liability being a decrease in our stockholders’ equity from $5 million to an actual deficit of $11.6 million at December 31, 2024. During the first quarter of 2025, all the contingencies on the warrants were satisfied and the Series B warrants were exercised in full. This resulted in the $16.6 million warrant liability being reclassified to stockholders’ equity as of March 31, 2025. As a result, we achieved stockholders’ equity of $3.3 million on our balance sheet at March 31, 2025. During the first quarter of 2025, the fair value of the Series A and Series B warrants was re-measured at their respective re-measurement dates, and we recorded a one-time non-cash charge of $6.5 million on the income statement that I described a moment ago. Now that the warrants are reflected in stockholders’ equity on our balance sheet, we will not incur any further non-cash losses related to the periodic re-measurement of the warrants. As I mentioned earlier, as of December 31, 2024, we had a stockholders’ deficit of $11.6 million. As a result, we were not in compliance with the NASDAQ listing requirement that we maintain stockholders’ equity of at least $2.5 million. At March 31, we had stockholders’ equity of $3.3 million, and we’re back in compliance with all the NASDAQ’s listing requirements. We did not receive any formal communications from NASDAQ as a result of the stockholders’ deficit that we had at December 31, 2024, and are in full compliance with all of NASDAQ’s listing standards. Finally, the net loss attributed to controlling interest that we show on our income statement consisted of a loss of $103,000 that was allocated to SemiCab Inc. as a result of its 20% membership interest that it holds in SemiCab Holdings, LLC, which owns our SemiCab business. That concludes my discussion of our Q1 2025 financial results. Thank you, Gary.

Great. Thank you, Alex. And before I shift over to taking questions, I just want to wrap up with a few closing remarks here. So I started the call by unpacking the SemiCab business. We’ve also fielded many questions in the recent months on the future of our consumer electronics karaoke business, the Singing Machine. We have been monitoring this business closely over the past two to three holiday seasons. We have seen this business face supply chain challenges, volatile retail demand, and various economic headwinds. The recent uncertainties driven by the global shift in tariff policy has only further added more uncertainty. We do clearly see India benefiting from the recent global trade restructuring. They already have seen domestic growth and now will benefit from manufacturing shifting away from China to India. As a corporate strategy, we are all in on SemiCab, particularly SemiCab India for the near-term growth expectations. With difficult decisions to make regarding capital allocation and the best return on investment, we continue to seek out strategic alternatives for the Singing Machine business. In my opinion, SemiCab presents too much growth potential for shareholders for us not to make it our top priority. With that being said, I do want to thank everybody for their time and interest. Before we wrap up, we do have a little bit of time left, so I do want to take this opportunity to take in a few questions from the audience.

At this time, we will open the question-and-answer session. Our first question comes from Ed Woo of Ascendiant Capital.

Great. Thanks for answering my questions. On SemiCab, do you have to spend much more on the software development? Or in what state is the software that you're using right now for your customers and for your various pilots with your customers?

Yes. That's a great question, Ed. I'm glad you brought that up. So the nice thing about the acquisition that we made with SemiCab is that this business was fairly commercially secured and scaling already. So the business was started back in 2019 and built from scratch. And so now we've basically acquired a technology platform that is well beyond its growing pain period. It's now a platform that is already commercially transacting with major multinational enterprise customers, handling thousands and thousands of loads every month. And so for us, that was one of the main benefits that we saw as we weren't basically investing into speculation or an idea. We were investing into a working and proven software platform. So in terms of just ongoing, I mean, obviously, with software, nothing is ever 'done', right? There's always maintenance that needs to be done, feature updates. But by and large, the overall main platform is working. It's transacting and doesn't need any large software development or investment.

And then the acquisition of SemiCab India. Besides the operations right now going on in India, is there any business or pilots in the U.S. or other markets outside of India?

Yes. So we acquired SemiCab, the U.S. division as well. So in the U.S., there's two main–one of the two main business platforms that SemiCab offers, right? So we've got the managed services aspect of the business, and that's the traditional sort of trucking model that takes advantage of the AI platform. And that's operational primarily in India. That's the main driver of revenue. And then we have a new business model that we're looking to bring to the U.S. And it's something we haven't quite announced yet, so I don't want to publicly talk about it yet. But we are operating in two geographies, and we are looking to address the U.S. market, and we will be making some announcements relatively soon regarding that.

Great. Thank you for answering my questions and I wish you guys good luck. Thank you.

Thank you.

All right, Ed, thank you.

And our next question comes from David Scott of Catalyst International.

Great. Hi, Gary. Great job. So can you go back to this–you said something about $400 million in India that SemiCab thinks is well suited for what they do. Can you just kind of help us understand like how fast that might actually happen?

Yes, absolutely. Yes. Thanks, David, thanks for the question. So yes, like I mentioned earlier, I mean, the National Digital Freight Exchange is a very, very large consortium of over 35 major multinational Fortune 1,000 companies. As a group, they do over US$1.4 billion in annual freight spend. And so we do see – this is a very real, this is kind of our initial addressable market. We do see opportunities there to go after about $400 million of that freight spend that has already been kind of run through our freight optimizer and is business that we believe we can go after in a very aggressive way. So it is real. It will take in terms of timing; I see that being something that we can address in the relatively near-term future. So I'm talking over the next two to three years. But that is kind of the size of the immediate pie. And that's honestly not even really going after new logos or new clients within the group. That's all achievable within the existing customers that we're serving now.

Okay. Thank you.

Okay. Thanks for the question.

And it appears that we have no further questions at this time. I will now turn the program back to our presenters for closing remarks.

Okay. Well, I want to thank everybody again for your time and interest this morning. We look forward to sharing more updates here in the near-term future, particularly on the SemiCab business and look forward to talking to you all again next quarter. Thanks, everybody.

Thank you. This does conclude today's first quarter 2025 earnings call. Thank you for your participation. You may disconnect at any time.