Investment Thesis
Algorhythm Holdings is in severe financial distress with negative stockholders equity of -$1.9M, indicating technical insolvency. The company is burning cash at $5.4M annually with only $1.6M in liquidity and negative gross margins of -29.9%, suggesting a fundamentally broken business model unable to generate positive returns on revenue.
Strengths
- No long-term debt obligations
- Some cash reserves remaining ($1.6M)
- Minimal capital expenditure needs suggesting lean cost structure
Risks
- Negative stockholders equity indicates balance sheet insolvency
- Severe liquidity crisis with current ratio of 0.55x; insufficient current assets to cover current liabilities
- Massive revenue collapse of 81% YoY to only $4.4M indicates collapsing demand
- Negative gross margins of -29.9% reveal broken unit economics and core business model failure
- Operating cash flow of -$5.4M annually will exhaust remaining $1.6M cash within months
- Total liabilities exceed total assets by $1.9M creating solvency risk
Key Metrics to Watch
- Cash burn rate and months of cash runway remaining
- Revenue stabilization or further decline
- Gross margin improvement toward breakeven
- Stockholders equity recovery from negative territory
- Operating cash flow return to positive territory
Financial Metrics
Revenue
4.4M
Net Income
-15.9M
EPS (Diluted)
$-6.41
Free Cash Flow
-5.5M
Total Assets
12.7M
Cash
1.6M
Profitability Ratios
Gross Margin
-29.9%
Operating Margin
-181.0%
Net Margin
-361.4%
ROE
N/A
ROA
-124.7%
FCF Margin
-124.1%
Balance Sheet & Liquidity
Current Ratio
0.55x
Quick Ratio
0.36x
Debt/Equity
N/A
Debt/Assets
114.6%
Interest Coverage
-233.76x
Long-term Debt
0.0
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-09T11:20:21.367684 |
Data as of: 2025-12-31 |
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