Algorhythm Holdings, Inc.

Good day, everyone, and welcome to the Algorithm Holdings Third Quarter 2025 Financial Results Earning 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 CEO. I'm also joined this morning by Alex Andre, company CFO and general counsel. I appreciate you taking the time to hear about the progress we've made as Algorithm 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 transitioned to a clean financial presentation reflecting only our core operations at Semicabs. This is the new algorithm, 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 three 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 matches 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 semi-cab 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 four new Fortune 500 clients in India, and we've converted five pilot programs into multi-million 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 FCC later today will present our financial results for the three and nine months ended September 30th, 2025 and 24. As Gary mentioned, we sold SingMachine on August 1st. Under applicable GAAP provisions, we reflected all financial results attributable to SingMachine 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 Semicat. Seeing machines' financial results for all periods reported in our financial statements are reflected in the select line items referencing discontinued operations. Moving on to our third quarter financial results, sales for the three months ended September 30th, 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 that SEMICAB's annualized revenue run rate had tripled to 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 three 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 three 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 three-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 three 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 the decrease in operating expenses that we incurred during the three-month period end of 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.