Key Highlights

• On June 29, 2026 a $3,500,000 portion was partitioned and swapped for 3,500 Series A Preferred shares.

• The newly created Series A Preferred Stock carries a $1,150 stated value per share and accrues a 9% annual preferred return.

• Redemption is set at 110% of the applicable liquidation amount, with default provisions that can lift the stated value to 15%.

Algorhythm Holdings Inc. (NASDAQ: RIME) disclosed a structured financing move that re‑allocates a portion of its existing secured pre‑paid purchase into newly issued preferred equity. The transaction involves Streeterville Capital, LLC and was finalized on June 29, 2026.

Secured Pre‑Paid Purchase Overview

Algorhythm originally executed a Secured Pre‑Paid Purchase #4 valued at $10,355,000. The agreement, originally dated August 21, 2025, set the framework for multiple pre‑paid purchases.

Partition and Exchange Agreement

On June 29, 2026 the parties agreed to partition a $3,500,000 segment from the outstanding balance of the secured purchase. The partitioned amount was exchanged for 3,500 newly created Series A Preferred shares. Following the exchange, the remaining balance of Secured Pre‑Paid Purchase #4 stood at $7,202,371.69.

New Series A Preferred Stock Terms

The Certificate of Designation filed in Delaware identifies 15,000 authorized Series A Preferred shares, each with a par value of $1.00. Each issued share carries a stated value of $1,150 and an annual preferred return of 9% that compounds daily and is payable quarterly. In a default scenario, the stated value can automatically increase to 15%, with the adjustment available up to three separate events.

The shares are non‑convertible and lack voting rights except in limited circumstances. The board may redeem the preferred shares at a cash price equal to 110% of the applicable liquidation amount.

Impact on Existing Capital Structure

The exchange did not generate cash for Algorhythm; instead, it reduced the outstanding pre‑paid purchase balance. Holders of common stock will now have their rights qualified by the senior preferences of the Series A Preferred shares, including consent rights over certain corporate actions. The new preferred issuance also imposes covenants restricting future issuances, asset pledges, and major corporate transactions.

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.