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REVENUE DISAGGREGATION | 9 Months Ended
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Sep. 30, 2024
Segment Reporting [Abstract] |
REVENUE DISAGGREGATION | NOTE 14 – REVENUE DISAGGREGATION The Company disaggregates revenues by product line and major geographic region as most of its revenue is generated by the sales of karaoke hardware and the Company has no other material business segments: Revenue by product line is as follows: SCHEDULE OF REVENUE BY PRODUCT LINE
|  |  | Three Months Ended |  |  |  | Nine Months Ended |
Product Line |  |  | September 30, 2024 |  |  |  | September 30, 2023 |  |  |  | September 30, 2024 |  |  |  | September 30, 2023 |
Classic Karaoke Machines |  | $ | 8,218,000 |  |  | $ | 14,636,000 |  |  | $ | 10,521,000 |  |  | $ | 17,363,000 |
Licensed Products |  |  | 180,000 |  |  |  | 36,000 |  |  |  | 377,000 |  |  |  | 32,000 |
Kids Youth Electronics |  |  | 379,000 |  |  |  | 297,000 |  |  |  | 546,000 |  |  |  | 451,000 |
Microphones and Accessories |  |  | 1,500,000 |  |  |  | 806,000 |  |  |  | 3,329,000 |  |  |  | 3,543,000 |
Music Subscriptions |  |  | 218,000 |  |  |  | 156,000 |  |  |  | 588,000 |  |  |  | 550,000 |
Logistics Services |  |  | 127,000 |  |  |  | - |  |  |  | 127,000 |  |  |  | - |
Total Net Sales |  | $ | 10,622,000 |  |  | $ | 15,931,000 |  |  | $ | 15,488,000 |  |  | $ | 21,939,000 |
ALGORHYTHM HOLDINGS, INC. and SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 and 2023 (Unaudited) Sales by geographic region for the periods presented are as follows: SCHEDULE OF SALES BY GEOGRAPHICAL REGION
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2024 |  |  | September 30, 2023 |  |  | September 30, 2024 |  |  | September 30, 2023 |
North America |  | $ | 10,466,000 |  |  | $ | 15,378,000 |  |  | $ | 15,208,000 |  |  | $ | 21,386,000 |
Australia |  |  | 50,000 |  |  |  | 263,000 |  |  |  | 174,000 |  |  |  | 263,000 |
Europe |  |  | 106,000 |  |  |  | 290,000 |  |  |  | 106,000 |  |  |  | 290,000 |
Total Net Sales |  | $ | 10,622,000 |  |  | $ | 15,931,000 |  |  | $ | 15,488,000 |  |  | $ | 21,939,000 |
The Company selectively participates in a retailer’s co-op promotion incentives by providing marketing fund allowances to its customers. As these co-op promotion initiatives are not a distinct good or service and the Company cannot reasonably estimate the fair value of the benefit it receives from these arrangements, the cost of these allowances at the time they are offered to the customers are recorded as a reduction to net sales. For the three months ended September 30, 2024 and 2023, co-op promotion incentives were approximately $908,000 and $1,637,000, respectively. For the nine months ended September 30, 2024 and 2023, co-op promotion incentives were approximately $1,257,000 and $1,901,000, respectively. The Company’s estimated reserve for co-op promotion incentives was approximately $1,833,000 and $1,277,000 as of September 30, 2024 and December 31, 2023, respectively. The estimated reserve for co-op promotions is a component of accrued expenses on the accompanying condensed consolidated balance sheets. The Company estimates variable consideration under its return allowance programs for goods returned from the customer whereby a revenue return reserve is recorded based on historic return amounts, specific events as identified and management estimates. The Company’s reserve for sales returns as of September 30, 2024 and December 31, 2023, was approximately $2,212,000 and $3,390,000, respectively. In conjunction with the recording of the revenue sales return reserve, the Company estimates the cost of products that are expected to be returned under its return allowance program whereby the estimated cost of product returns is recorded as an asset. The asset is separately stated as returns asset on the condensed consolidated balance sheets. The Company’s estimated cost of returns as of September 30, 2024 and December 31, 2023, was approximately $1,081,000 and $1,919,000, respectively. A return program for defective goods is negotiated with each of the Company’s wholesale customers on a year-to-year basis. Customers are allowed to return defective goods within a specified period of time after shipment (between six and nine months). The Company does make occasional exceptions to this return policy and accordingly records a sales return reserve based on historic return amounts, specific exceptions as identified and management estimates. The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in the reserve for sales returns on the condensed consolidated balance sheets.

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