PLANO, TX - Stryve Foods, Inc. (NASDAQ:SNAX), a company in the food and kindred products industry, has entered into a financial agreement by issuing $505,000 in unsecured convertible promissory notes, as disclosed in a recent SEC filing. The notes were issued to a related party on Sunday to support inventory expansion, working capital growth, and general corporate purposes.
The notes, bearing a 1% original issue discount, will accrue interest at an annual rate of 12%. Upon the company securing a minimum of $3.0 million in gross proceeds from the future sale of equity securities, the notes will automatically convert. Holders can choose between a new non-voting preferred security offering a 12% annual return and convertible into Class A common stock at $2.50 per share, or the securities sold in the next equity financing round.
Moreover, $1.0 million of previously outstanding bridge promissory notes were exchanged for the new notes. These financial instruments are set to mature on December 31, 2024, at which point any remaining principal and interest will convert into the preferred securities if not previously converted or settled.
The issuance of these notes is part of a private placement, exempt from registration under the Securities Act of 1933, in accordance with Section 4(a)(2), indicating a non-public offering.
This strategic financial move is aimed at bolstering Stryve Foods' capital structure as it seeks to navigate its growth trajectory. The transaction was completed in compliance with applicable securities laws, and the details can be found in the form of Note attached to the SEC filing.
Investors and market watchers may view this development as a step by Stryve Foods to strengthen its financial position without immediately diluting existing shareholders, while simultaneously preparing for future capital raises.
The information is based on a press release statement and the company's SEC filing.
In other recent news, Stryve Foods has reported a rise in its financial performance and future targets. The company's retail sales velocity for the Stryve brand has seen a notable increase of 51% over a four-week period. For the first quarter, net sales reached $4.6 million, and a gross profit of $1.2 million was achieved. Despite a net loss of $3.9 million, the firm managed to improve its adjusted EBITDA loss by 35.2% year-over-year.
Stryve Foods has also seen changes in leadership with the appointment of Kevin Vivian as the new Chairman of the Board. Additionally, stockholders ratified the appointment of Marcum LLP as Stryve Foods' independent registered public accounting firm for the fiscal year ending December 31, 2024.
Looking forward, Stryve Foods maintains its net sales guidance for fiscal year 2024, projecting net sales to be in the range of $24 million to $30 million. The company plans to expand its distribution footprint and leverage its innovation pipeline to drive shareholder value. However, it acknowledges the need to secure outside capital for future growth. These are recent developments for the company.
InvestingPro Insights
Stryve Foods, Inc. (NASDAQ:SNAX) is actively working on expanding its operations and improving its financial flexibility, as evidenced by the recent issuance of unsecured convertible promissory notes. To provide investors with a deeper understanding of the company's current financial health, InvestingPro data and tips offer valuable insights.
InvestingPro Data highlights a market capitalization of $4.97M, suggesting a relatively small player in the industry. The company's revenue for the last twelve months as of Q1 2024 stood at $17.66M, but it is important to note a significant decline of 35.0% in revenue growth during the same period. With a gross profit margin of 14.08%, it becomes clear that Stryve Foods is facing challenges in maintaining profitability.
From the InvestingPro Tips, two critical points emerge: Stryve Foods operates with a significant debt burden and may have trouble making interest payments on its debt. These factors could be crucial for investors to consider, especially when the company is quickly burning through cash and has short-term obligations exceeding its liquid assets. Moreover, the valuation implies a poor free cash flow yield, and the company has not been profitable over the last twelve months.
Despite these challenges, analysts anticipate sales growth in the current year, and the stock has shown a strong return over the last three months. While the company does not pay a dividend, which may be a consideration for income-focused investors, the potential for sales growth could be an attractive prospect for those looking at the long-term potential.
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