Algorhythm Seeks Reverse Split, Nevada Move, and Equity Boost

TL;DR

**RIME is making desperate moves with a reverse split and massive dilution to Streeterville Capital, LLC; get out now.**

AI Summary

Algorhythm Holdings, Inc. (RIME) is holding its 2025 Virtual Annual Meeting on November 20, 2025, to address several critical proposals impacting its corporate structure and financial flexibility. Key proposals include the election of seven directors, a potential reverse stock split with a ratio between 1-for-2 and 1-for-10, and reincorporation from Delaware to Nevada. The company also seeks to amend its 2022 Equity Incentive Plan to increase authorized shares to 5,000,000 and approve the issuance of common stock to Streeterville Capital, LLC in pre-paid financing transactions that may exceed 20% of outstanding shares. Additionally, stockholders will vote on ratifying M&K CPAs as the independent auditor for fiscal year ending December 31, 2025, and approving adjournments if necessary. These actions are aimed at enhancing RIME's financial position and operational framework, particularly the reverse stock split which could impact share price and the financing deal with Streeterville Capital, LLC.

Why It Matters

This DEF 14A filing reveals Algorhythm Holdings' strategic pivot to address its capital structure and operational base, which could significantly impact RIME investors. A reverse stock split, ranging from 1-for-2 to 1-for-10, aims to boost share price, potentially to maintain Nasdaq listing compliance, but often signals underlying financial distress and can lead to further dilution. The reincorporation to Nevada might offer perceived corporate governance or tax advantages, while the substantial equity issuance to Streeterville Capital, LLC, potentially exceeding 20% of outstanding shares, suggests a critical need for financing and could dilute existing shareholders. These moves are crucial for RIME's competitive standing and long-term viability.

Risk Assessment

Risk Level: high — The proposal for a reverse stock split (1-for-2 to 1-for-10) often indicates a company is struggling to maintain its stock price, potentially to avoid delisting, which is a high-risk signal. Furthermore, the approval to issue shares to Streeterville Capital, LLC that may collectively equal or exceed 20% of the 2,641,778 issued and outstanding shares of common stock on the Record Date, represents significant potential dilution for existing shareholders, directly impacting their ownership percentage and the value of their holdings.

Analyst Insight

Investors should carefully evaluate the potential for significant dilution from the Streeterville Capital, LLC financing and the implications of a reverse stock split on RIME's stock price stability. Consider reducing exposure if you are a current shareholder, and new investors should exercise extreme caution given these high-risk proposals.

Key Numbers

• 1-for-2 to 1-for-10 — Reverse Stock Split Ratio (Range for proposed reverse stock split)
• 5,000,000 — Authorized Shares (Proposed new total for 2022 Equity Incentive Plan)
• 20% — Dilution Threshold (Potential issuance of shares to Streeterville Capital, LLC exceeding this percentage of outstanding shares)
• 2,641,778 — Outstanding Shares (Total common stock outstanding as of September 29, 2025 Record Date)
• 95,694 — Commitment Shares (Shares issued to Streeterville Capital not entitled to vote on Proposal 5 per Nasdaq rules)
• November 20, 2025 — Annual Meeting Date (Date of the 2025 Virtual Annual Meeting of Stockholders)
• September 29, 2025 — Record Date (Date for determining stockholders entitled to vote)
• 33 1/3% — Quorum Requirement (Percentage of outstanding shares required for a quorum at the Annual Meeting)
• 880,593 — Quorum Shares (Number of shares required for a quorum (33 1/3% of 2,641,778))

Key Players & Entities

• Algorhythm Holdings, Inc. (company) — Registrant
• RIME (company) — Ticker symbol
• Streeterville Capital, LLC (company) — Recipient of pre-paid financing shares
• M&K CPAs (company) — Independent registered public accounting firm
• Gary Atkinson (person) — Chief Executive Officer and Chairman of the Board of Directors
• Delaware (regulator) — Current state of incorporation
• Nevada (regulator) — Proposed state of reincorporation
• Nasdaq Stock Market (regulator) — Listing rules authority
• $5,000,000 (dollar_amount) — Proposed increase in authorized shares for 2022 Equity Incentive Plan
• 2,641,778 (dollar_amount) — Shares of common stock issued and outstanding on Record Date

FAQ

Industry Context

Algorhythm Holdings operates in a dynamic technology sector where innovation and strategic financial management are crucial for growth and market positioning. Companies in this space often face pressure to maintain competitive share prices and access capital efficiently to fund research and development or expansion. The proposed actions, such as a reverse stock split and equity financing, are common strategies employed by companies seeking to improve their financial standing and meet exchange listing requirements.

Regulatory Implications

The proposed reverse stock split and potential significant share issuance to Streeterville Capital, LLC could impact Algorhythm's compliance with Nasdaq listing rules, particularly regarding minimum share price and dilution thresholds. Reincorporating to Nevada may also introduce different corporate governance regulations compared to Delaware. Ratification of the independent auditor is a standard regulatory requirement.

What Investors Should Do

1. Review the details of the proposed reverse stock split (Proposal 2) and its potential impact on share price and ownership percentage.
2. Evaluate the implications of the reincorporation from Delaware to Nevada (Proposal 3) on corporate governance and potential future legal frameworks.
3. Understand the potential dilution from the pre-paid financing with Streeterville Capital, LLC (Proposal 5), especially if it exceeds 20% of outstanding shares.
4. Vote on the amendment to the 2022 Equity Incentive Plan (Proposal 4) to increase authorized shares to 5,000,000.

Key Dates

• 2025-11-20: 2025 Virtual Annual Meeting of Stockholders — Date for voting on critical proposals including director elections, reverse stock split, reincorporation, and equity plan amendments.
• 2025-12-31: Fiscal Year End — The independent auditor is being ratified for this fiscal year.
• 2025-09-29: Record Date — Determined the stockholders entitled to vote at the Annual Meeting, with 2,641,778 shares outstanding.

Glossary

DEF 14A

A filing with the SEC that provides detailed information about the annual meeting of shareholders, including proposals to be voted on, director nominations, and executive compensation. (This document outlines the key proposals and information shareholders need to consider before the 2025 Annual Meeting.)

Reverse Stock Split

A corporate action where a company reduces the number of its outstanding shares by consolidating them into fewer, proportionally more valuable shares. (Algorhythm is proposing a reverse stock split with a ratio between 1-for-2 and 1-for-10 to potentially increase its share price.)

Reincorporation

The process of changing a company's legal state of incorporation, in this case, from Delaware to Nevada. (The company is seeking shareholder approval to move its legal domicile to Nevada, which may have implications for corporate governance and taxes.)

Equity Incentive Plan

A plan that allows a company to grant stock options, restricted stock, or other equity-based awards to employees and executives. (Algorhythm seeks to amend its 2022 Equity Incentive Plan to increase the number of authorized shares to 5,000,000.)

Pre-paid Financing Transactions

Financial arrangements where a company receives funds upfront in exchange for future delivery of stock or other securities, often involving warrants or other dilutive instruments. (The company is seeking approval for stock issuances to Streeterville Capital, LLC in pre-paid financing transactions that could lead to significant dilution.)

Quorum

The minimum number of shareholders or shares required to be present at a meeting for business to be legally transacted. (A quorum of 33 1/3% of outstanding shares (880,593 shares) is required for the Annual Meeting to proceed.)

Householding

A cost-saving measure by the SEC where a single copy of proxy materials is sent to multiple shareholders residing at the same address. (This explains how proxy materials are delivered to shareholders and how they can opt out of this practice.)

Year-Over-Year Comparison

This DEF 14A filing focuses on significant corporate actions for the 2025 Annual Meeting, including a proposed reverse stock split and reincorporation, which were not prominent features in previous filings. The potential for substantial dilution from the Streeterville Capital financing is a new and critical consideration for shareholders. Information on executive compensation and financial performance metrics like revenue and margins are typically detailed in the Annual Report (10-K) and are not the primary focus of this proxy statement, though the proposals here aim to improve the company's financial flexibility.

Filing Documents

• formdef14a.htm (DEF 14A) — 1186KB
• formdef14a_001.jpg (GRAPHIC) — 8KB
• proxy_001.jpg (GRAPHIC) — 563KB
• proxy_002.jpg (GRAPHIC) — 366KB
• 0001493152-25-018323.txt ( ) — 4380KB
• rime-20241231.xsd (EX-101.SCH) — 5KB
• rime-20241231_def.xml (EX-101.DEF) — 9KB
• rime-20241231_lab.xml (EX-101.LAB) — 60KB
• rime-20241231_pre.xml (EX-101.PRE) — 41KB
• formdef14a_htm.xml (XML) — 147KB

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 51 PAY VERSUS PERFORMANCE 55

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 58 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 59 ANNUAL REPORT ON FORM 10-K 61 OTHER BUSINESS 61 APPENDIX A: Certificate of Amendment A-1 APPENDIX B: Reincorporation Resolutions B-1 APPENDIX C: Plan of Conversion C-1 APPENDIX D: Nevada Charter D-1 APPENDIX E: Nevada Bylaws E-1 APPENDIX F: Amendment to 2022 Equity Incentive Plan F-1 i NOTE REGARDING FORWARD-LOOKING STATEMENTS This Proxy Statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may relate to our future financial performance, business operations, and executive compensation decisions, or other future events. You can identify forward-looking statements by the use of words such as "anticipate," "believe," "could," "expect," "intend," "may," "will," or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements. We have based these forward-looking and financial condition. The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in the section titled "Risk Factors," and elsewhere, in the Annual Report on Form 10-K for our fiscal year ended December 31, 2024, as well as the other reports we file with the Securities and Exchange Commission. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this Proxy Statement relate only to events as of the date of this Proxy Statement. We undertake no obligation to updat

financial statements for the fiscal year ending December 31, 2025 under Proposal 6;

financial statements for the fiscal year ending December 31, 2025 under Proposal 6; " FOR " the approval of one or more adjournments of the Annual Meeting, if necessary or appropriate, to solicit additional proxies in favor of the Reverse Stock Split Proposal, the Nevada Reincorporation Proposal, the 2022 Plan Amendment Proposal or the Pre-Paid Financing Proposal if there are not sufficient votes at the Annual Meeting to approve and adopt the Reverse Stock Split Proposal, the Nevada Reincorporation Proposal, the 2022 Plan Amendment Proposal or the Pre-Paid Financing Proposal. In the event any other matters are properly presented at the Annual Meeting, or any postponement or adjournment thereof, the person named as proxy will vote in accordance with his discretion with respect to those matters. What if I am a beneficial owner and do not give voting instructions to my broker or other nominee? If you fail to provide your broker with voting instructions before the Annual Meeting, your broker will be unable to vote on the non-routine matters. Your broker may use his or her discretion to cast a vote on any routine matter for which you did not provide voting instructions. Who is paying for this proxy solicitation? We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors, officers, and employees may also solicit proxies by mail, in person, by telephone, or by other means of communication. Directors, officers, and employees will not be paid any additional compensation for soliciting proxies. We will also reimburse brokerage firms, banks, and other agents for the cost of forwarding proxy materials to beneficial owners. 6 What is "householding"? The Securities and Exchange Commission ("SEC") has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy statements with respect to two or more security holders sharing the same address by deliver

View Full Filing

View this DEF 14A filing on SEC EDGAR