Algorhythm Holdings, Inc. Files Form 8-K: Major Financial Obligation and Unregistered Equity Sales

Algorhythm Holdings, Inc. (NASDAQ: RIME) has filed a Form 8-K with the Securities and Exchange Commission, dated February 17, 2026. This filing contains several key disclosures that are highly relevant for investors and may significantly impact the company’s share price.

Key Points from the Report

• Creation of Direct Financial Obligation:
  • The company has entered into a major financial arrangement, as disclosed under Item 2.03. The information pertains to a direct financial obligation or an off-balance sheet arrangement, which is incorporated from Item 1.01. This signals new debt or financial responsibility that could impact liquidity, leverage, and future cash flows.
• Unregistered Sale of Equity Securities:
  • Under Item 3.02, Algorhythm Holdings reported the unregistered sale of equity securities. Details of this transaction are also incorporated from Item 1.01. Unregistered sales may dilute existing shareholders, affect trading dynamics, and signal capital-raising needs or strategic investor partnerships.
• Material Agreement with Streeterville Capital, LLC:
  • The company entered into a Deposit Account Control Agreement dated November 13, 2025, with Lakeside Bank and Streeterville Capital, LLC. This agreement has been referenced in previous filings and is crucial as it governs the control and access to certain company accounts, providing additional security to the lender/investor.
• Details of Equity Purchase Mechanics:
  • Streeterville Capital, LLC, as Investor, holds the right—but not the obligation—to purchase shares from Algorhythm Holdings at its sole discretion, via Purchase Notices. The purchase price for shares is set at 90% of the lowest daily Volume Weighted Average Price (VWAP) during the ten trading days preceding the measurement date, but not below a floor price of \$0.30 per share.
  • If the share price falls below the floor price, the investor can require payment in cash instead of shares. Similarly, if the company cannot issue shares due to exceeding exchange caps without approval, the investor may also demand cash payment.
  • Any shares issued under this agreement must be freely tradable, either through an effective registration statement or a valid exemption (such as Rule 144).
• Potential Dilution and Share Price Impact:
  • The arrangement gives the investor flexibility to convert outstanding balance into shares at a discount to market price, with mechanisms to protect against excessive dilution (floor price and exchange cap). However, such deals commonly result in dilution and selling pressure, especially if the investor exercises the right to convert at lower prices.
• Trading Information:
  • The company’s common stock, par value \$0.01 per share, trades under the symbol RIME on the Nasdaq Capital Market.
• Emerging Growth Company Status:
  • Algorhythm Holdings is not classified as an emerging growth company, which means it may have less flexibility in accounting standards transition and regulatory compliance compared to qualifying smaller companies.

Shareholder Considerations and Price-Sensitive Information

• Dilution Risk: The right of Streeterville Capital to purchase shares at a discount and at its discretion could lead to significant dilution for existing shareholders, especially if exercised at lower prices.
• Potential Selling Pressure: Issued shares are required to be freely tradable, meaning Streeterville Capital may sell them on the open market, further pressuring the share price.
• Floor Price Protection: The \$0.30 floor price offers some protection, but does not prevent dilution above this level.
• Material Financial Obligation: The direct financial obligation and Deposit Account Control Agreement indicate new borrowing or financial arrangement, which may affect the company’s financial stability and future earnings.
• Unregistered Equity Sales: The sale of unregistered securities often signals urgent capital needs and may impact investor sentiment.

Summary Table of Material Terms

Conclusion

This Form 8-K filing by Algorhythm Holdings, Inc. contains multiple price-sensitive disclosures. The ability for Streeterville Capital to convert debt into stock at a discount, with no obligation but full discretion, paired with the potential for unregistered equity sales, creates dilution risk and possible selling pressure. Investors should monitor subsequent Purchase Notices and related share issuances, as these will impact both the float and the trading dynamics of RIME shares. The new financial obligation and control agreement also warrant attention for possible effects on liquidity and future performance.

Investors are strongly advised to review this filing carefully and monitor further company disclosures for any material developments.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should perform their own due diligence and consult with a qualified financial advisor before making any investment decisions. All information is based on official filings as of February 17, 2026, and is subject to change without notice.

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