RDE, Inc. (NASDAQ:GIFT), a retail-catalog and mail-order house, has entered into a secured financing agreement with Spars Capital Group LLC, obtaining a $2 million promissory note, the company disclosed in a recent SEC filing. The note, bearing an 11.5% annual interest rate, is set to mature on January 20, 2025, and can be prepaid without any penalties.
The agreement, signed on September 20, 2024, includes an origination fee of $20,000. It is secured by a blanket lien on RDE's assets, as per the terms of the Security Agreement, and is subordinate only to a line of credit that RDE owes to Pathward, National Association, which amounts to $6,459,000.
This strategic financial move comes as RDE continues to navigate the competitive retail landscape. The terms of the agreement stipulate customary conditions, ensuring a structured approach to the company's financial management.
Notably, Spars Capital is linked to Elliot Bohm, a board member of RDE and the President of CardCash Exchange, Inc., a subsidiary of RDE. The involvement of an affiliate in the transaction indicates a strengthening of internal financial support for RDE's operations and initiatives.
In other recent news, RDE Inc. has appointed Steve Handy as its new Chief Financial Officer. Handy, with over two decades of financial leadership, has been instrumental in significant growth and IPO successes, including a 700% revenue growth at Sacks Parente Golf, Inc. in the first half of 2024. His previous roles include CFO positions at Opti-Harvest, Inc., Tix Corporation, SM&A, and Dot Hill Systems, and a Senior Auditor at Deloitte & Touche LLP.
CEO of RDE, Inc., Ketan Thakker, expects Handy's expertise in public markets to contribute to the company's growth strategy. Handy expressed his commitment to building shareholder value at RDE, Inc., especially during a significant growth phase.
InvestingPro Insights
As RDE, Inc. (NASDAQ:GIFT) secures new financing to bolster its capital structure, certain metrics and insights from InvestingPro paint a broader picture of the company's financial health. With a market capitalization of $75.4 million, RDE's size in the market is modest. Yet, it's crucial to note that the stock has seen a significant drop, with a one-week total return of -18.26%, reflecting a potential investor concern about the company's recent performance.
InvestingPro Tips suggest that RDE's stock price often moves counter to market trends and highlights that the company has been operating without profitability over the last twelve months. This is underscored by a negative operating income margin of -14.08% and a substantial year-over-year revenue decline of -40.27%. Additionally, RDE's gross profit margins are considered weak at 12.31%, which could be a factor in the stock's recent price movements.
For investors considering RDE's future prospects, it's important to weigh these financial metrics against the company's strategic decisions, such as the recent financing agreement. For those seeking more in-depth analysis, InvestingPro offers additional tips to help navigate the complexities of RDE's financial landscape.
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