Company Clears All Outstanding Cashless Warrants from December Capital Raise

Rhea-AI Summary

Algorhythm Holdings (NASDAQ: RIME) announced the complete exercise of all outstanding Series B cashless warrants issued during their December 2024 $9.5 million public offering. The original offering included 4,200,000 common stock shares, 51,682,352 Pre-Funded Warrants, Series A Warrants for up to 55,882,352 shares, and Series B Warrants with a $0.34 strike price.

Following stockholder approval on January 13, 2025, for Nasdaq compliance, four institutional investors exercised all Series B Warrants by February 4, 2025. CEO Gary Atkinson highlighted this as a important step in completing their December capital raise, noting that the company has eliminated significant liabilities and secured sufficient capital for executing their business plan through their AI logistics business, SemiCab, and Singing Machine subsidiary.

Positive

• Successfully completed $9.5 million capital raise
• Eliminated significant balance sheet liabilities
• Secured sufficient capital for business plan execution
• Cleared all outstanding Series B warrants from capital structure

Negative

• Significant share dilution from warrant exercises
• Complex capital structure with multiple warrant series still outstanding

Insights

Financial Analyst

The complete exercise of Series B warrants marks a significant milestone in Algorhythm Holdings' capital structure optimization. The original $9.5 million December offering was structured with multiple securities components, including 4.2 million common shares and over 51 million pre-funded warrants, alongside Series A and B warrants. The elimination of Series B warrants through cashless exercise represents a important deleveraging event.

The warrant clearance yields several strategic advantages:

• Simplified capital structure that enhances appeal to institutional investors
• Reduced warrant overhang that often pressures stock price
• Improved balance sheet clarity by eliminating derivative liabilities
• Enhanced financial flexibility for future capital raising activities

This development is particularly meaningful given Algorhythm's focus on capital-intensive sectors like AI logistics through SemiCab and consumer electronics via Singing Machine. The cleaner capital structure, combined with the $9.5 million raise, positions the company to execute its growth strategy with reduced financial complexity and stronger institutional credibility.

However, investors should note that Series A warrants remain outstanding and the total dilutive impact from all warrant exercises needs careful consideration. The successful completion of this warrant cleanup, while positive for corporate structure, should be weighed against the overall impact on share count and ownership dilution.

Investors From December $9.5 Million Public Offering Exercise All Outstanding Series B Warrants

Fort Lauderdale, FL, Feb. 06, 2025 (GLOBE NEWSWIRE) -- Algorhythm Holdings, Inc. (“Algorhythm”) (NASDAQ: RIME), an AI-driven technology and consumer electronics holding company, today announced that all outstanding Series B cashless warrants have been fully exercised. These warrants were issued in connection with a public offering that closed on December 4, 2024. As part of that transaction, the Company entered into a securities purchase agreement (the “Purchase Agreement”) related to the public offering of 4,200,000 shares of its common stock, par value $0.01 per share (“Common Stock”), and 51,682,352 Pre-Funded Warrants to purchase shares of Common Stock (the “Pre-Funded Warrants”) in lieu of shares of Common Stock.

Pursuant to the Purchase Agreement, the Company also issued Series A Warrants (the “Series A Warrants”) to purchase up to 55,882,352 shares of Common Stock and Series B Warrants (the “Series B Warrants”). The Series B Warrants were issued with a $0.34 strike price and included an alternative cashless exercise provision. On January 13, 2025, the Company’s stockholders approved a proposal to authorize, for purposes of complying with Nasdaq listing rule 5635(d), the issuance of both the Series A and Series B Warrants, the shares of Common Stock underlying those Warrants, and certain Warrant provisions, all in connection with the offering and sale of securities that was consummated on December 6, 2024. Four institutional investors previously held all of the Series B Warrants. As of February 4, 2025, the last of these Series B Warrants were exercised and eliminated from the Company’s capital structure.

Gary Atkinson, the Company’s CEO, commented, “We are pleased to have successfully cleared all of the cashless Series B warrants from our capital structure. This is a key step in completing the transformational capital raise we launched in December 2024. As a result, we have largely eliminated all significant liabilities from our balance sheet and now have sufficient capital to execute on our business plan.”

“We look forward to focusing on driving shareholder value through our AI logistics business, SemiCab, and our Singing Machine subsidiary,” concluded Mr. Atkinson.

About Algorhythm Holdings

Algorhythm Holdings, Inc. is a holding company with two primary investments. First, the Company owns SemiCab Holdings, an emerging leader in the AI-enabled global logistics industry. Second, the Company owns The Singing Machine Company, the worldwide leader in the consumer karaoke industry.

SemiCab is a cloud-based Collaborative Transportation Platform built to achieve the scalability required to predict and optimize millions of loads and hundreds of thousands of trucks. To orchestrate collaboration across manufacturers, retailers, distributors, and their carriers, SemiCab uses real-time data from API-based load tendering and pre-built integrations with TMS and ELD partners. To build fully loaded round trips, SemiCab uses AI/ML predictions and advanced predictive optimization models. On the SemiCab platform, shippers pay less and carriers make more while not having to change a thing.

Since 2020, SemiCab has enabled major retailers, brands and transportation providers to address these common supply-chain problems globally. SemiCab's Orchestrated Collaboration^™ AI model has proven to increase transportation capacity, improve asset utilization, reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show the technology has the capability of saving shippers tens of billions of dollars annually through optimization. Further, SemiCab’s technology also has the potential to play a key role in the improved sustainability model globally. Based on its proven ability to improve truck utilization rates from 65% to over 90%, this results in a dramatic reduction in the carbon footprint of the industry. The optimization of existing truck utilization can add approximately 30% more trucking capacity without adding more trucks, drivers or driven miles which addresses common problems plaguing the industry like severe driver shortage and road congestion. Trucking optimization could also eliminate approximately 25% of CO2 emissions attributable to road freight.

For additional information regarding SemiCab: http://www.semicab.com

The Singing Machine Company, Inc. is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry's widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.

Investor Relations Contact:
investors@algoholdings.com
www.algoholdings.com

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as "expects," "anticipates," "believes," "will," "will likely result," "will continue," "plans to," "potential," "promising," and similar expressions. These statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements, including the risk factors described from time to time in the Company's reports with the SEC, including, without limitation the Company’s Transition Report on Form 10-KT for the transition period from April 1, 2023 to December 31, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this press release. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this press release to conform our statements to actual results or changed expectations, or as a result of new information, future events or otherwise.

FAQ

What was the total value of Algorhythm Holdings' (RIME) December 2024 public offering?

Algorhythm Holdings' December 2024 public offering was valued at $9.5 million.

How many Series B warrants did RIME clear from its capital structure in February 2025?

RIME cleared all outstanding Series B warrants, which were previously held by four institutional investors.

What was the strike price for RIME's Series B warrants issued in December 2024?

The Series B warrants were issued with a $0.34 strike price and included an alternative cashless exercise provision.

How many Pre-Funded Warrants did RIME issue in its December 2024 offering?

RIME issued 51,682,352 Pre-Funded Warrants to purchase shares of Common Stock.

When did RIME stockholders approve the warrant issuance for Nasdaq compliance?

Stockholders approved the warrant issuance on January 13, 2025, to comply with Nasdaq listing rule 5635(d).