Algorhythm closes $23M Azure Energy buy, resets C-suite, and takes $30M Costa Rica option

Algorhythm Holdings, Inc. (NASDAQ: RIME) said that on September 15, 2026 it closed an Azure Energy, LLC asset purchase for $23 million in company securities, named Andrew Thompson CEO and board chair, promoted Leticia Raele to interim CFO, and recorded a $4.025 million Streeterville note plus a 36-month $30 million option on 79.0286% of Azure Energy, S.R.L.

Algorhythm Holdings used a multi-item Form 8-K to document a simultaneous Azure Energy asset-purchase close, a securities-only $23 million purchase price, a Streeterville preferred-for-note exchange, a quantified Costa Rica equity option, and a full C-suite reset with named pay packages.

$23 million securities purchase closes Sept. 15

Under Item 1.01, on September 15, 2026 Algorhythm, through wholly owned Azure Holdings, LLC, entered an Asset Purchase Agreement with Azure Energy, LLC, with Azure Energy, S.R.L. joining for specified sections and the Tangen Family Trust and 1979, FLP as Optionors. Signing and closing happened the same day after a Marshall & Stevens Inc. fairness opinion.

Buyer took substantially all assets used in Seller’s firm-capacity renewable infrastructure business — converting waste and biomass into dispatchable power — and assumed only non-delinquent trade payables, post-closing obligations, and other liabilities specifically scheduled in the APA. Cash, receivables, and other scheduled assets stayed with Seller.

The aggregate purchase price is entirely Parent securities valued at $23,000,000: 4,076,312 common shares (19.99% of common outstanding as of September 14, 2026) plus 22,038 Series B preferred shares. Seller’s indemnification has a $25,000 per-claim de minimis threshold, a $230,000 aggregate limit, and a $2,300,000 cap (10% of the purchase price), plus a two-year North Carolina non-compete on waste-to-power / biomass-to-power development with a 2.5% passive-investment carve-out.

Separately, Optionors granted an exclusive, irrevocable 36-month option from Closing to buy 79.0286% of Azure Energy, S.R.L. for an aggregate $30,000,000 exercise price. Parent may pay up to 50% in cash and the remainder in Series B preferred; no separate premium is due just for the option grant.

Item 2.01 incorporates that disclosure and states Algorhythm will file Seller financial statements and required pro formas within 71 calendar days after the initial report’s due date.

Streeterville exchange creates a $4.025 million note

Also on September 15, Streeterville Capital, LLC surrendered 3,500 Series A preferred shares for Secured Pre-Paid Purchase #5 with $4,025,000 original principal, 9% annual interest, a three-year maturity from September 15, 2026, and a 110% prepay feature, relying on Securities Act Section 3(a)(9). Series A shares were cancelled and none remain outstanding. Item 2.03 treats the Exchange Agreement and PPP #5 as a $4,025,000 direct financial obligation. Item 3.02 says the acquisition securities relied on Section 4(a)(2), and Series B conversion shares remain unregistered pending applicable exemptions.

Series B certificate and conversion math

On September 18, 2026 the company filed a Certificate of Designation authorizing 100,000 Series B preferred shares at $1,000 stated value. Subject to stockholder approval, holders may convert at $0.2359 per common share. Items 3.03 and 5.03 incorporate that capital-structure change.

Thompson CEO/Chair; Smith COO; Raele interim CFO

Item 5.02 says that effective Closing the company terminated Gary Atkinson as CEO and Alex Andre as CFO and general counsel, not for cause. Atkinson also left the board, stating no disagreement over operations, policies, or practices. The board appointed Andrew Thompson, 46, as CEO and chairman; Ryan J. Smith, 39, as COO; and promoted Controller Leticia Raele, 48, to chief accounting officer and interim CFO. Thompson and Gregory D. Smith joined the board, expanding it from six to seven seats.

Thompson’s employment agreement pays $375,000 base salary and up to 50% of base as an annual bonus opportunity — half for continued employment and half performance-weighted, with two-thirds of that performance half tied to raising capital sufficient for viability and one-third tied to generating at least $10,000,000 of fiscal-2026 revenue. As a Nasdaq Rule 5635(c)(4) inducement he received 2,119,542 restricted common shares (half vested at grant; half on the first anniversary). Without-cause / good-reason severance is two times base plus maximum bonus, up to 18 months of COBRA reimbursement, and full equity acceleration.

Smith’s employment agreement pays $280,000 base with the same 50% bonus opportunity structure, except two-thirds of the performance half is tied to CEO/Board operational objectives rather than a capital-raise gate, and the same $10,000,000 fiscal-2026 revenue one-third. He also received a 2,119,542-share Nasdaq 5635(c)(4) inducement (half vested at grant; half on the first anniversary) and the same two-times severance / COBRA / acceleration frame.

Raele’s agreement pays $270,000 base, up to 20% of base as a performance bonus, a $25,000 signing bonus, and another $25,000 if she remains employed through December 31, 2026. She received a stock option for 1,144,552 common shares at $0.2359 (25% vested at grant; 75% in equal quarterly installments over two years; expires September 15, 2036). Without-cause / good-reason severance equals base plus maximum bonus, up to 18 months of COBRA, and full equity acceleration including that option.

Separation pay, consulting retainers, and rabbi-trust funding

Separation agreements dated September 15 provide a $1,080,000 one-time payment to Atkinson and a $1,170,000 one-time payment to Andre, each for a general release.

Consulting agreements the same day keep both in an advisory role up to 20 hours a month for 18 months. Atkinson’s vehicle, G2M Consulting, LLC, receives $270,000 up front (repayable if the consultant terminates within six months), a $25,000 monthly retainer, 2,000,000 restricted common shares (1,000,000 on day 91; 1,000,000 on January 1, 2027, subject to a 4.99% beneficial-ownership limit), and immediate vesting of an option into 740,597 shares. Andre receives $222,000 up front (same six-month repayment feature), a $21,000 monthly retainer, 1,000,000 restricted common shares (500,000 on day 91; 500,000 on January 1, 2027, same 4.99% limit), and immediate vesting of options into 281,427 shares.

On September 11, 2026 the company established a Bryn Mawr Trust of Delaware rabbi trust for Section 409A deferred compensation owed to the departing executives and, on Closing, entered Funding Agreements acknowledging it lacks capital to fully fund the trust then. The trust must be funded within six months of September 11, 2026; unpaid balances accrue interest at the short-term applicable federal rate; and if deferred compensation is not fully paid by six months after termination, 80% of the overdue amounts automatically increase and additional common shares issue as liquidated damages.

What the furnished press releases add — and fence

Item 7.01 furnishes Exhibit 99.1 (leadership transition) and Exhibit 99.2 (acquisition close). Ex99.2 repeats the ~$23 million securities consideration and describes Azure as a Charlotte-based renewable biomass developer founded in 2025 by Andrew Thompson and Kevin Tangen. It also states company claims — more than $10 million of current contractual backlog, positive 2026 EBITDA expected to scale, management-estimated net present value exceeding $220 million on project equity interests, and team participation designing/building 72 facilities representing 17.5 GW — that are furnished press statements, not Item 1.01 purchase-accounting figures.

What this filing settles — and what it leaves open

Items 1.01/2.01 lock the Sept. 15 close, $23 million securities purchase price, share counts, the $30 million / 79.0286% Azure S.R.L. option, and indemnity frame. Items 1.01/2.03 lock the $4,025,000 PPP #5 obligation. Item 5.02 locks the officer/director reset, Thompson/Smith/Raele pay packages, Atkinson/Andre separation and consulting economics, and the rabbi-trust funding mechanics. This Form 8-K does not yet include Seller financial statements or pro formas, does not confirm stockholder approval for Series B conversion, does not state the unpaid deferred-compensation balance dollar total, and does not independently verify Ex99.2’s backlog, EBITDA, or NPV marketing metrics.