Algorhythm Holdings, Inc. Q3 FY2023 earnings call

• Gary discussed seasonality of the business, noting retail sell-through of products despite economic concerns. - Lionel detailed financials: net sales decrease, gross profit changes, operating expenses changes including one-time expenses, and credit agreement status. - Mentioned strong retail sell-through of products placed despite economic risks, and core demand drivers for products remaining unchanged.

For the three months ended December 31, 2022, net sales were $7.1 million compared to $21.2 million in the same period of 2021. For the nine months ended December 31, 2022, net sales were $35.9 million compared to $44.7 million in the same period of 2021. Decreases in net sales were seen across all major customers, attributed to factors like excess inventory from prior year, economic concerns, and co-op promotion incentives.

• Core demand drivers for products remain unchanged; karaoke category is expanding. - Excited about emerging automotive segment launched and demoed at CES. - Plans to raise cash via equity offering, utilize dynamic discount programs, deal with payroll tax reimbursement, and sell excess inventory to address liquidity.

• As of December 31, 2022, the company was in default of the credit agreement with Fifth Third Bank for not maintaining a required financial covenant. - Negotiations with Fifth Third to obtain a waiver and renegotiate covenants, but no assurance of success.