Eric Nickerson

Eric Nickerson asked about the availability of the earnings call recording and the strategic focus on the U.S. market for SemiCab APEX compared to India.

Answer

CEO Gary Atkinson confirmed the call recording would be available on the website. He elaborated on the excitement for the U.S. APEX launch, citing its high SaaS margins (90-95%), rapid scalability due to its pure software, cloud-based nature, and easier deployment compared to the operational lift and truck access requirements in India. He clarified that while both markets offer significant growth, APEX in the U.S. offers faster scaling potential.

Eric Nickerson of Third Century Partners inquired about the availability of the earnings call recording and sought clarification on Algorhythm's strategic focus, specifically asking if the U.S. market, particularly with the APEX launch, is considered a more immediate and superior growth opportunity compared to their existing operations in India.

Answer

CEO Gary Atkinson confirmed that the call recording would be available on the company's website later today. Regarding the U.S. market, Mr. Atkinson expressed significant excitement for the APEX SaaS launch due to its high gross margins (90-95%) and rapid scalability, as it is a pure software product unconstrained by physical assets like trucking fleets. He clarified that while India presents massive growth opportunities, it requires more operational lift and access to trucks, making the U.S. SaaS business potentially faster to scale and more impactful on the company's financials, though both are considered complementary and valuable businesses.

The analyst asked about the company's investor relations, plans for future capital raises to fund Semicap's growth, and whether they were considering alternatives to equity financing, such as bank financing or factoring for receivables.

Answer

The company confirmed they have rehired Brendan Hopkins for investor relations. They acknowledged the need for future working capital and stated that while equity would likely be a component, the capital requirements are much smaller without the Singing Machine business. Critically, they are already in the process of establishing a factoring facility in India to manage the cash flow timing for receivables, which will help fund the growth.

Eric Nickerson of Third Century Partners questioned the company's plans for raising capital to fund Semicap's growth, asking if it would involve equity sales and if alternative financing like factoring had been considered for receivables.

Answer

CEO Gary Atkinson confirmed that future working capital will be needed and that equity would likely be a component, though the amounts required will be much smaller than in the past. He also revealed that the company is actively working to put a factoring facility in place in India to address the cash flow timing challenges with receivables.

Eric Nickerson of Third Century Partners inquired about the company's plans for future capital raises to fund Semicap's growth, asking whether it would be through equity sales or other methods like bank financing or factoring.

Answer

CEO Gary Atkinson confirmed the need for future working capital but noted the amount required for Semicap is much smaller than for the legacy business. He stated that while equity will likely be a component of future raises, the company is also actively pursuing a factoring facility in India to manage receivables and improve its cash conversion cycle.

Eric Nickerson acknowledged the positive step of redeeming the preferred stock but questioned the significant number of other related-party transactions, asking if there was a plan to reduce them as the company matures.

Answer

CEO Warren Kruger provided a detailed history, explaining that the related-party transactions were essential for the company's survival and growth since he took over in 2003. He personally guaranteed debt and made investments to keep the company afloat, leading to structures like sale-leasebacks on buildings with board members. While defending the necessity of these past actions, Kruger committed to taking the feedback to the Board for discussion on potential future restructuring.