RYTHM, Inc. (RYM)·Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue accelerated to $4.043M, up 98% QoQ (from $2.042M), with gross margin ~34%; losses widened as SG&A ramped to support distribution and brand investments .
• No formal guidance provided; management emphasized mainstream retail wins (Circle K rollout to 1,000+ stores and Target pilot) as growth catalysts for Señorita THC Margaritas and the launch of RYTHM Beverages .
• Balance sheet showed $35.6M cash at 9/30; however, related-party notes reached $82.0M and total debt obligations (ex-interest) schedule $90.6M, and related-party payables stood at $86.4M, elevating financing and governance considerations .
• Street consensus (S&P Global) was unavailable for EPS/revenue/EBITDA this quarter, limiting beat/miss analysis; investors likely focus on distribution momentum versus operating burn and related-party exposure (Green Thumb) [Values retrieved from S&P Global].

What Went Well and What Went Wrong

• What Went Well

  • Rapid sequential topline growth: revenue rose 98% QoQ to $4.043M on expanding beverage distribution and brand IP acquisitions (Señorita, MC Brands; RYTHM/Dogwalkers/Beboe IP) .
  • Mainstream retail traction: Señorita rolling out to “over 1,000” Circle K stores nationwide and a Target pilot in Minnesota; management highlighted “growing acceptance and accessibility” of THC beverages .
  • Clear consumer narrative: “Adult consumers… increasingly choosing THC beverages as an alternative to alcohol,” positioning the portfolio “to capture this demand… as America’s THC Company,” per Interim CEO Ben Kovler .

• What Went Wrong

  • Operating loss widened to $(8.888)M as SG&A jumped to $10.263M to support growth; net loss increased to $(10.665)M (vs $(7.360)M in Q2) .
  • Financing/related-party concentration: $82.0M related-party convertible notes outstanding and $86.4M related-party net payable (services, interest, chargebacks), highlighting governance and counterparty risks .
  • Controls and contingencies: Material weaknesses in ICFR remain; litigation reserves and ongoing cases persist (e.g., $887K accrual for an employee claim; Bud & Mary’s/Bowdoin matters under escrow arrangements) .

Financial Results

• P&L vs prior year and prior quarter

• Disaggregation of revenue (segments/products)

• Quarterly trend (FY25)

Balance sheet snapshot (end of period):

• Cash and cash equivalents: $35.573M at 9/30/25 .
• Total assets: $115.154M; Total equity: $11.722M; Related-party debt current/non-current: $10.0M/$72.0M; Long-term debt: $8.0M .

Guidance Changes

No formal quantitative guidance was provided for revenue, margins, OpEx, OI&E, tax, or segment metrics in the 8-K/press release or 10-Q.

Earnings Call Themes & Trends

Note: We searched for a Q3’25 earnings call transcript but did not find one in the document set; consequently, the table below relies on Q3 press release and Q3 10‑Q MD&A. No Q2/Q1 call transcripts were available.

Management Commentary

• Strategic reset: “It’s a new day, a new name and a new strategic direction for RYTHM, Inc.… We now own some of the most iconic and trusted THC brands, including RYTHM, Dogwalkers, incredibles, Beboe and others.” — Ben Kovler, Chairman and Interim CEO .
• Category momentum: “Adult consumers… are increasingly choosing THC beverages as an alternative to alcohol, creating a long tailwind for growth… [we are] well-positioned to capture this demand… as America’s THC Company.” — Ben Kovler .
• Distribution wins: “Señorita… debuted in select Minnesota Target stores… [and] began rolling out to over 1,000 Circle K convenience stores nationwide.” — Ben Kovler .

Q&A Highlights

We could not locate a Q3’25 earnings call transcript; no Q&A detail was available in the documents reviewed. Where clarifications were needed, we relied on the 10‑Q MD&A for narrative context on revenue mix, related-party arrangements, and financing structure .

Estimates Context

• S&P Global consensus for Q3’25 EPS, revenue, and EBITDA was unavailable; therefore, no beat/miss determination versus Street is possible this quarter. Values retrieved from S&P Global.

Key Takeaways for Investors

• Distribution is the near-term catalyst: Circle K rollout (1,000+ stores) and Target pilot validate mainstream access for THC beverages; track sell-through and reorders to confirm durability .
• Scaling with margin: Gross margin at ~34% suggests a viable product margin structure; watch if mix and volume can offset rising SG&A to narrow operating losses .
• Related-party concentration risk: Significant obligations to and reliance on Green Thumb (notes, services, licensing) is a key governance/credit factor; monitor conversions, service fees, and any covenant/equity implications .
• Liquidity vs burn: $35.6M cash provides runway, but operating cash outflow and investment needs require vigilant monitoring; financing flexibility may hinge on note terms and market conditions .
• Controls and legal overhang: Material weaknesses in ICFR and pending litigations remain; remediation progress and settlements could influence investor confidence and cost structure .
• Portfolio/IP strategy: Recent acquisitions (incredibles; RYTHM/Dogwalkers/Beboe) plus licensing back to GTI provide dual revenue streams (product + licensing); execution on brand activation and compliance is crucial .

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Supporting Details and Cross-References

• Press release (8‑K Ex.99.1): revenue $4.043M; QoQ growth; SG&A; operating loss; distribution wins (Circle K, Target) .
• 10‑Q: detailed P&L comps, revenue disaggregation (non-licensing vs licensing), gross margin commentary, balance sheet, debt, related-party arrangements, cash flows, ICFR, and legal matters .
• Prior quarters: Q2’25 financials from 8‑K exhibit; Q1’25 net loss from equity roll-forward; Q1’25 revenue derived from 9M less Q2/Q3 .