$1,928,014 in outstanding liabilities is the claim at the center of Algorhythm Holdings' July 21, 2026 settlement with Continuation Capital, Inc., disclosed in a Form 8-K filed July 24. The Fort Lauderdale, Florida company (Nasdaq: RIME) agreed to issue up to 5,000,000 shares of common stock in one or more tranches until Continuation Capital has generated aggregate proceeds equal to 120% of that amount, or $2,313,617. The Circuit Court of the Twelfth Judicial Circuit in and for Desoto County, Florida approved the agreement on July 23, after a fairness hearing under Section 3(a)(10) of the Securities Act of 1933.
Settlement terms
Continuation Capital, Inc. (CCI), a Delaware corporation, acquired the underlying liabilities from their former holders before the settlement was signed. RIME issues shares in tranches; CCI sells those shares until the $2,313,617 aggregate proceeds target is met. One structural limit governs: CCI cannot hold more than 19.99% of RIME's issued and outstanding common stock at any given time. The offer and sale is exempt from Securities Act registration under Section 3(a)(10), with no underwriting discounts or commissions paid.
Share authorization and dilution
Up to 5,000,000 shares are authorized under the settlement, each carrying a $0.01 par value. Proceeds per tranche depend on the prices CCI achieves when selling shares, so the path to $2,313,617 varies with each sale. The 8-K does not disclose RIME's total shares outstanding, meaning the 19.99% ceiling translates to an undisclosed absolute position limit at any moment.
Executive employment terms
On July 22, 2026, RIME amended and restated employment agreements for CEO Gary Atkinson and CFO and General Counsel Alex Andre. Atkinson's second amended and restated agreement replaces his prior version dated February 23, 2026. Andre's amended and restated agreement supersedes his original agreement from February 12, 2025. Both executives now carry the same change-of-control structure: a lump-sum payment equal to base salary plus annual bonus for any year in which a change of control occurs, payable each time such an event takes place during the term of employment. Both agreements include compliance provisions under Sections 280G, 4999, and 409A of the Internal Revenue Code. Alex Andre signed the 8-K as CFO and General Counsel.