Investment Thesis
Algorhythm Holdings exhibits critical financial distress with 81.3% YoY revenue collapse, negative gross margins (-28.2%), and unsustainable operating cash burn of -$5.4M annually. Despite maintaining $7.7M in cash and zero long-term debt, the current ratio of 0.90x, severely negative operating margins (-181%), and deteriorating fundamentals suggest viability concerns within 12-24 months without significant turnaround.
Strengths
- Maintains $7.7M in cash reserves providing near-term liquidity cushion
- No long-term debt reducing financial leverage and restructuring risk
- Asset base of $18.5M provides potential recovery value in liquidation scenario
Risks
- Revenue collapsed 81.3% YoY to $2.4M indicating severe market rejection or business line failure
- Negative gross margin of -28.2% reveals fundamental business model dysfunction with costs exceeding revenue
- Operating cash burn of -$5.4M annually creates 18-24 month runway at current depletion rates
- Current ratio of 0.90x signals liquidity stress and potential inability to service short-term obligations
Key Metrics to Watch
- Quarterly revenue trend—stabilization or reversal of 81% decline critical for survival
- Gross margin recovery toward positive territory indicating operational fix
- Monthly cash burn rate and updated runway to cash depletion
Financial Metrics
Revenue
2.4M
Net Income
-5.1M
EPS (Diluted)
$-0.52
Free Cash Flow
-5.5M
Total Assets
18.5M
Cash
7.7M
Profitability Ratios
Gross Margin
-28.2%
Operating Margin
-181.0%
Net Margin
-212.8%
ROE
-161.2%
ROA
-27.7%
FCF Margin
-227.1%
Balance Sheet & Liquidity
Current Ratio
0.90x
Quick Ratio
0.72x
Debt/Equity
0.00x
Debt/Assets
82.8%
Interest Coverage
-127.76x
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: 2026-05-16T10:08:11.744401 |
Data as of: 2026-03-31 |
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